Money to burn

Following the deposit of over eight billion birr worth of old notes in the NBE vaults located on Sudan Street (between the National Theatre and the Ministry of Health) in the new and previous NBE buildings as well as another of the bank’s vaults located in the same area near the Artistic Printing Press, the central bank has run out of space to store the new birr notes printed by French company, Francois Charles Oberthur Fiduciarie (FCOF).

Members of the bank’s executive management, who were anxious about where to store the latest batch of new birr notes that arrived two weeks ago, decided to burn the old notes in a hole dug inside the sugar factory. The first batch was destroyed on September 14, 2006.

The Currency Management Department informed the bank governor Teklewold Atnafu that there was no space to deposit the new consignment of birr notes as the vaults were overflowing with out-of- circulation notes. This resulted in governor Teklewold’s decision to burn the old currency, according to sources at the NBE.

The NBE governor has also set up a five-member taskforce that will study the overflow of the NBE vaults, the handling of the currency management as well as finding a lasting solution to this overflow problem. Subsequently, six NBE directors visited the vaults on September 5, 2006, for discussions on how to resolve the situation.

One of the main reasons for the old note build-up was that two of the four incinerators, purchased from British company INCINCO for half a million birr in 1999, did not have the capacity to burn the large amount of notes at a satisfactory pace, disclosed NBE sources. Currently, these incinerators, which are located in the basement of the NBE buildings, were not functional.

The other reason for the note overflow was that the Currency Management Department does not have adequate manpower to separate the old birr notes from the ones that are valid for re-circulation.

“The top management officials have seen that the vaults still hold over half a million birr worth of old notes dating as far as back as the Derg regime,” said a source from NBE.

Federal police forces, members of the bank’s security and staffers from the Currency Management Department have been accompanying the birr cargo to Wonji since last week.

NBE sources disclosed that this was not the first time that the bank had transported and destroyed old birr notes in Wonji; according to them, NBE had started burning its out of circulation notes as far as 30 years ago.

The most recent trip to the fires was made when over two billion birr worth of notes were moved and burnt at the same location six months ago. Nevertheless, the long held process of continuous incineration was stopped for reasons that are still unknown. A member of NBE’s management staff told Fortune that “unless the bank aggressively continues with the burning of the old notes in Wonji, the overflow problem will not be resolved as there are old birr notes in other banks in the country that will ensure constant build-ups in the vaults”.

Ahmed Seid, head of the Currency Management Department, was not available for comment. The Commercial Bank of Ethiopia alone has over two billion birr worth of collected old notes in its safe, sources disclosed. ‘ Addis Fortune.

September 2006
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