Ethio Lease set to wind down operations in Ethiopia

NAIROBI (Reuters) -Equipment leasing company Ethio Lease, Ethiopia’s only foreign-owned firm to obtain a financial services licence from the central bank, said on Wednesday it was winding down operations in the east African country.

The National Bank of Ethiopia granted a financial services license to Ethio Lease in 2019 – the first such for a foreign firm – as part of the government’s economic reforms aimed at opening up the economy.

New York-based African Asset Finance Company, the owner of Ethio Lease, has instructed the company to begin the process of voluntary liquidation, Ethio Lease said in a statement.

Explaining the rationale behind its move, Ethio Lease said the central bank’s 2021 amendment to a directive applicable to the business made it impossible for the company to write new leases.

It said the amendment ruled that all lease agreements should have fixed payments denominated in Ethiopian birr instead of foreign currency and payable in birr against the exchange rate during settlement.

“The combination of this amendment and another directive which prohibits foreign-owned leasing companies from borrowing Ethiopian birr has made it impossible for any foreign-owned leasing company to operate in the country,” the company said.

“Despite their sustained efforts, Ethio Lease and its investors have been unable to achieve resolution with the Ethiopian government.”

The central bank governor declined to comment.

The license at the time was seen as part of the reforms promised by Prime Minister Abiy Ahmed when he took office a year before.

Ethio Lease’s license enabled it to lease equipment such as MRI scanners, tractors and drilling rigs to companies that could not import such equipment themselves due to foreign exchange shortages.

(Reporting by Bhargav Acharya in Johannesburg and Duncan Miriri in Nairobi; Editing by Jason Neely, Alexander Winning, Nellie Peyton and Sharon Singleton)