Ermias Amelga banned from Banking, why?

By T, Staffer of De Birhan Media 
05 Feb. 2012

Ermias Amelga

The National Bank of Ethiopia (NBE) has notified Ermyas Amelga, founding shareholder and former board chairman of Zemen Bank— the only one-branch bank in Ethiopia— that he was banned from holding a position in any bank for an unspecified period of time, The Reporter Newspaper Reported. The letter, which Ermyas received on Tuesday, however, did not state the reasons and the details of the case that led to the decision. 

Last year Ermias and Tekle Aleminh, board director of Zemen bank were banned for what the NBE called "banking irregularities". However, Ermias was re-elected by shareholders. US educated and experienced young entrepreneur, Ermias Amelga has been able to establish some of the most innovative and profitable businesses in Ethiopia. His first soft drink company lost its business due to a newspaper article that negatively affected the business.  Highland Springs, Ethiopia’s first bottled water company was foreclosure under the Ethiopian Revenue and Customs Authority (ERCA) due to an excise tax dispute on the order of 30 million Br and it finally closed down. It was his major creative outcome. Access Capital and Real Estate are both his brain children too. He is one of the resilient ex-pats in Addis who struggled through the bureaucratic and political business environment of Ethiopia to make their creative ventures blossom. His idea of forming a money market in Ethiopia, Ethiopian Share Dealing Group is one of the many innovative projects that he had but were unsuccessful due to the autocratic regime that denied him permission to realise them. 

Neither Access Capital Homes nor its subsidiary, Access Real Estate, leased any plot directly from the City Government. It rather bought land from private landlords, this has reportedly caused it to be marked by the regime. 

Importantly, Ermias has introduced one of the "untouchable" practices in the banking industry through Zemen Bank; such as lending based on the viability of projects (away from traditional collateral based loans) and a commercial bank operating with a one branch concept but relying on much technology. Mainly the issue of advancing loans without collateralizing assets put him into loggerheads with many while it opportune many who were "helpless". 

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Having talked of all his positives above, now let's read some of his "deficiencies" that one insider of the Chain businesses has leaked to De Birhan, 

Masterly the cause of the ban is the suspicion that Ermias might have siphoned off some money from the Bank to Access Capital and the Real Estates. There is probably a political tone too. He had never implemented 20 percent of what he promised when he collected money from the public offering shares in Access Capital. To mention few: Access Car Assembly, two cars displayed at the Sheraton for Access' annual meeting promising to sell additional share but soon the Chinese company which was supposed to work with them started the business with another company. This shows his interest of starting many, finishing none. Access Gold Mining (in fact he bought digging dozer for over a million birr without even concluding an agreement with the landholders).

Access Coal Mining (he also changed his mind one morning after spending over two years on the project  huge sum of money. Access Resort Hotel - unimplemented (he also said we bought Imperial Hotel...but still the hotel has been  closed for one year because of lack of finance of renovating it. I heard that he is trying to access finance from PTA Bank of Africa now.  He seems to be interested in real estate, selling pictures of apartments and villas, but never gave a single house for the people who paid for the house he promised around Megenagna area. He dives into projects with "passion" before completing another. He collects money with promises and seems to have been into using his power at the Bank to Finance the projects sometimes, this is reportedly what the Bank said was its reason to ban him. They consider it as an irregularity. The government considers him to have been involved in "land grabbing" in the city, he bought around 30 plots in Addis Ababa for real estate. Top professionals at the Bank and Access Capital VPs have resigned because of his irrational move and unnecessary intervention into their mandates. When it comes to the Bank, his wing is in real battle with another wing led by Eskindir Joseph (shareholder of both the Bank and Access capital, Access real estate). The later also wants to use the Bank to finance his real estate apartment projects copying  Ermias. 

Most consider the ban on Ermias to have got a political premises. The regime considers him a neoliberal. Now that many Share Companies have boomed in the country and many shareholders are complaining about deception, lack of transparency, wrong promises and irregularities, it calls for a stronger regulatory body. However, when business is politicised it becomes less viable and discouraging. It is also prudent not to discourage and despair one in a million entrepreneurial young Ethiopians like Ermias Amelga.