Nine companies compete for Abyssinia Banks's 45 Million Br E-Banking Installation in Ethiopia

Mergers, Acquisitions and Financial Results

Nine international companies are competing for Abyssinia Bank's core banking solution installation project estimated to cost 45 million Br; the project will lead to the launch of an e-banking system by the bank, or to Abyssinia joining other banks with the same ambition.

"Once we are done with the installation of the infrastructure system, then we are willing to join with any bank," Chanyalew Yelma, acting president of the Bank, told Fortune.He was referring to a private banking syndicate formed by three commercial banks - Awash, United and Nib - on February 19, 2009, to start an integrated multi-channel banking system.

Officials at the bank hope that the finalization of the 45 million Br project will enable them to start banking services through Automated Teller Machines (ATMs), Points of Sale (POS) and Internet before the end of the current year.

The nine contending companies - three Indian, two Middle Eastern, two European, one US based and one African - are from the about 15 companies who bought the tender document from the bank; the remaining ones had not returned the documents with their offers for the bid announced on January 19, 2009, within the deadline Abyssinia had set from January 26 to March 26, 2009.

The nine companies waiting for the decision by Abyssinia Bank's Tender Committee, which started evaluating the technical capacity and financial offers of the companies on March 27, 2009, are ETA-info Tech of Dubai; Path Solutions of Lebanon; Neptune Plc of the United Kingdom; Techno Brain Ltd of Tanzania; Delta Informatique of France; Transnational Computer Technology of El Segundo, California (US); as well as HCL Infosystem, Infrasoft and Virmati Software & Telecommunication Ltd of India.

About seven private and state banks, including some younger than Abyssinia, had already installed the core banking system ahead of one of the earliest private commercial bank in the country.

Sysfocon, an Indian company, has been advising Abyssinia in its core banking system project from the start; it was involved from the preparation of the bid document up to the evaluation. The company will also continue providing consultancy services to the bank in the implementation stage, Chanyalew said.

Though it started working on the key IT infrastructure that is considered a foundation to the launch of advanced services, including e-banking, the IT and Procurement department at Abyssinia are now busy on the bank's drive to have the core banking solutions operational before 2009 ends and join those already on this banking block. So far, the bank has been using an in-house developed system.

"The bank has been undertaking a comprehensive study of the infrastructure and experiences of other banks to select the most appropriate banking technology companies," Getachew Negash, Public Relations manager of the bank, told Fortune in justification of Abyssinia's late entrance to e-banking.

More than a week ago, Abyssinia became the seventh commercial bank to host the settlement and clearance of payments for the Ethiopian Commodity Exchange (ECX), though it was the first bank that the latter approached.

"Abyssinia was the first bank which ECX approached prior to launching trade operations," Eleni told Fortune.

Abyssinia and ECX, represented by Chanyalew Yilma, acting president and Eleni Gabre-Medhin (PhD), CEO, respectively, signed the agreement on March 24, 2009, at the latter's trading facility in Cheleleq Alsam Building, along Smuts Street near Mexico Square. Chanyalew pledged his bank's commitment to providing the required service.

Under the agreement, Abyssinia handles online settlement services for the daily commodity transactions at ECX through its settlement system, which has already been networked to the commodity exchange institute.

Through the electronic banking system the ECX gets from the seven commercial banks, it transfers money from buyers to sellers' accounts whenever there is an effective transaction at the trading floor. The commodities exchange facilitator, operating as a third party, is in charge of making decisions on transfers of money across accounts.

ECX is preparing to start new frontiers of electronic trading, futures trading and inventory financing which enable the use of warehouses receipts for bank loans security.

The commodities exchange institute has signed similar agreements with the state owned Commercial Bank of Ethiopia (CBE) and the privates Dashen, Awash International, United, Nib International and Wegagen banks.

Though preceded by younger banks like United and Nib, Abyssinia managed to join the group after it finalized the installation of online banking solutions two months ago.

ECX depends on the availability of an electronic banking interface to facilitate the transactions it hosts, for which it takes 0.2pc of the total value of every effective transaction as a service charge.

Addis Fortune