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International Financing Trade with Ethiopia

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Ethiopia, one of Africa's most populous countries, is still failing to win the broad confidence of trade finance and insurance markets, in spite of its good payment record and commitment to an IMF-supported economic reform program that is heavily supported by donors. The country's poverty and bureaucratic financial system dissuade underwriters and banks from operating on any but the most cautious terms. Private banks are now beginning to appear in a local finance sector formally dominated by the state, but they are still at an early stage of development. The government still seems cautious about foreign investment in strategic sectors. Foreign exchange reserves were in the $700 million to $900 million range for most of last year, but this year they slipped sharply, before settling safely above the $500 million mark.

Discuss the risks and methods for managing same for a US company trading with Ethiopia.

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Financing Trade with Ethiopia
Case Assignment Background
Review the following web site that deals with the complexities of financing foreign trade. It is a web site of the government of the UK.
tradehttp://www.businesslink.gov.uk/bdotg/action/layer?r.l1=1073858802&topicId=1074298396&r.l2=1073859086&r.s=tl:
Then move to the following:
More and more overseas markets are opening up for foreign trade. This creates many new opportunities for the resourceful entrepreneur. However, financing trade in a relatively new and untested market such as Ethiopia entails many risks and challenges.
Case Assignment Task
Do your own research on foreign trade financing.The look through the reference web-site at the top of the present page. Then write a five page paper answering the following questions:
What would your biggest concerns be if you were financing trade with Ethiopia?
What could be done to minimize the risks?
Ethiopia: Insurers and bankers are cautious, despite reforms and a fairly peaceful present condition.
International Trade Finance; London; Dec 5, 1997; Anonymous;

Abstract:
Ethiopia, one of Africa's most populous countries, is still failing to win the broad confidence of trade finance and insurance markets, in spite of its good payment record and commitment to an IMF-supported economic reform program that is heavily supported by donors. The country's poverty and bureaucratic financial system dissuade underwriters and banks from operating on any but the most cautious terms. Private banks are now beginning to appear in a local finance sector formally dominated by the state, but they are still at an early stage of development. The government still seems cautious about foreign investment in strategic sectors. Foreign exchange reserves were in the $700 million to $900 million range for most of last year, but this year they slipped sharply, before settling safely above the $500 million mark.
Assignment Expectations:
A five page paper detailing the risks and methods for managing same for a US company trading with Ethiopia.

Ethiopia is the one country within continental Africa that never got colonized as a result of its strong identity and culture. With their unusual business-related customs, Ethiopia follows the Coptic or Julian calendar, which contains twelve thirty-day months as well as a thirteenth month of about five or six days. Over the course of time, this has resulted in a seven-year difference between their calendar system and that of the Gregorian or Western calendar. Regardless of such differences, business is done in accordance to that of the Western calendar (Cultural Guide, n.d.). Of the world's 183 economies, Ethiopia is ranked 104th in regards to the ease investors have when carrying out business within the country. One of Africa's most populous nations, such statistics continue to dog the country ...

Solution Summary

The solution discusses international financing trade with Ethiopia.

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