January 2017
CBE forced to take over as it can’t find buyers for Turkish
-owned Saygin Dima.
After repeated attempts to transfer the ownership of
troubled multimillion Br textile company Saygin Dima, the
Commercial Bank of Ethiopia (CBE) has taken control of the
company. The bank is still looking into options for the
administration of the company. Saygin Dima, which used to
be owned by Turkish investors, has been in the foreclosure process
for the past six months. However, the factory has failed to
generate any interest from buyers. The foreclosure came after
the former owners failed to pay their loans.
The factory was established in 2008 as a joint venture between
the Ethiopian Government and Turkish investors. The investors
then relocated their factory from Turkey to Ethiopia.
At the time of the set up, the government had a 60pc share in
the company, valued at 625 million Br. The Turkish investors
controlled the remaining 40pc. The distribution of shares in
the company was dictated by the government. The company’s
machinery alone had an estimated value of 406 million Br.
The company managed to secure loans of 574 million Br loan
from CBE following the partnership deal.
The factory, located in Sebeta-Dima, 24km southwest of Addis
Abeba, opened in 2011. The plant was established on 17ha plot
of land with a capacity of producing daily 30tn of yarn, 40,000m
of fibre and 50,000m of finished fibers. But during the five years
of its operation, the company could not produce any more than
50pc of its production capacity.
The partnership did not last long. The government dissolved the
partnership due to the unsatisfactory performance of the company.
Above all, its export performance did not meet expectations.
Last year, the company declared that it was only able to earn
105,000 dollars.
Such disappointment is not unique for Saygin. The whole textile
sector has not met expectations. Last year, earnings dropped
by 21pc to 77.8 million dollars, while a 17pc plunge in volume
saw the supply of only 14,800 tonnes of product to the
international market.
The impact of the under performances of these textile producers
has hit banks hard. Last year, banks in the country disbursed
31pc of a 75.5 billion Br loan to the sector. In what can be
considered a sign highlighting a sector-wide problem, the
Development Bank of Ethiopia (DBE) registered 60pc of its
nonperforming loans in the sector.
“We will make a decision on how and who will manage (Saygin Dima
) soon,” Belihu Takele, acting communication manager of CBE
told Fortune.
Earlier this year, Saygin Dima came under attack following civil
unrest in some parts of the Oromia Regional State.
“We are also looking on how to revive and restore some of
the damaged machines and properties,” Belihu added.
One bank executive familiar with the textile industry commented,
“If they are opting for this option, they better give control of
the company to someone who knows the sector.”
Source — Addis Fortune Addis Fortune (Addis Ababa)