By DAWIT ENDESHAW
Fortune Staff Writer
Zenebche Zelek, a  23 was waiting to receive money sent from Doha Qatar at Commercial Bank of Ethiopia (CBE), Arada Giorgis branch, on Cunningham Street when Fortune approached her on January 1, 2015.
She confirmed by the bank two days ago to collect 264 dollar sent by her friend for Christmas holiday from Commercial Nominees (CN); a subsidiary company of CBE.
Established in 1965 with a 98pc share owned by the Commercial Bank of Ethiopia (CBE) and a two percent share owned by the then Mortgage Bank of Ethiopia (now Construction & Business bank of Ethiopia), CN is one of the different outlets involved in the money transfer business. The chain includes major companies such as Western Union and Express Money, and a host of others established by Ethiopians such as Bole Atlantic international.
With 634 branches throughout the country, the major share of the country’s remittance comes trough the CBE. For 2013/14 fiscal year the bank has registered 5.5 billion dollars from foreign exchange, which is far more than the 720 million dollars in the previous fiscal year.
According to data from World Bank sample survey 39pc of Ethiopians are with relatives abroad. Out of these, 18pc are regular remittance recipients, with an average sum of 120 dollars received at least five times a year. And it is estimated that two million Ethiopians living abroad registered 400 million dollar of remittance flow. Remittances from them accounted for just two percent of the GDP in 2010. This compares poorly to Uganda’s 4.3pc, Sudan’s 5.5pc and Kenya’s 5.7pc. Kenya, with less than half the population of Ethiopia, at 43 million, has 25 million people living in other countries.
Moreover data from National Bank of Ethiopia (NBE) indicated that Ethiopia has managed to collect 622 million dollars of remittance during the first quarter of 2013/14 and 702.7 million dollar on the same season of 2014/15.
This data is a sum total of individual transfers both in cash and in kind, transacted via formal sector and an estimation of underground remittance. The bank has no exact figures showing the weight of underground remittance.
According to a research by Alemayhu Geda, a lecturer at Addis Abeba University, Kibrom Tafere and Melekt Amedu, in 2011, the contribution of remittance to GDP is almost above export earning and source of foreign exchange.
Such flow of money has its own seasonality; as holiday seasons. Flow of remittances reaches to its peak from August to January. Particularly months of September and January inflows are the highest where New Year, Christmas, Epiphany and Easter will be celebrated.
Although the data by NBE shows 12pc increment in remittance inflow, research by WB on recent outlooks and development concerning remittance inflow show that recent anti immigrant sentiment trough out the Middle East may have had an impact on the total value of remittance inflow.
When Fortune visited the Arada Giorgis branch of the CBE, there was only a short line of people waiting to receive their money. Webayhu Dejene, 28, there to receive money sent from Saudi Arabia, seemed surprised.
“I was not expecting to see such a short line during this season,” she said.
A branch of the Bank of Abyssinia (BOA) around Temenja Yaj also seemed less in holiday mood on January 2, 2015, the eve of Mawlid and two working days for Christmas. But the bank’s vice president, Aklilu Wubet says that it was too early to conclude that the remittance flow was too small.
The reason for the short lines, according to Abdullfetah Mohammed, country representative of Bole Atlantic, a money transfer company, could be that there are now a large number of branches that have been opened by all the banks. His company, which started operation in 2002, solely works with CBE since 2007. CBE has opened 137 new branches in 2013/14 fiscal year alone. He also mentioned the influence of black market as another factor influencing the formal market.
BoA has been working with six international money transfer companies, such as Western Union, Dahabshiil, Xpress Money, and Turbo Cash.
Such companies to work with financial institution like BoA must be approved by the NBE; agreement signed between remittance service providers and commercial banks must be presented to NBE.
Nowadays these remittance service providers are increasing in numbers, intensifying the competition among commercial banks, added Aklilu.
The BoA was established in 1996 by 131 shareholders and 32 staff workers, with an authorized and paid up capital of 50 million Br and 17.8 million Br, respectively. Currently, the Bank has 103 branches across the country with 1.5 billion Br in authorized and 929.3 million Br in paid up capital, with a total deposit balance of 9.4 billion Br.
During 2013/14 fiscal year the bank has gained 89 million Br from foreign exchange dealings and rates fluctuation.
The research also show that remittance flow to sub Saharan Africa increased by 3.5pc and reached to 32 billion dollar, although Ethiopia’s share could be affected by the deported immigrant workers from Ethiopia. But still the same researches indicated that the flow of remittance in developing countries is expected to accelerate to annual average of 8.4pc, raising flows to 436 billion dollar in 2014 and 516 billion dollar in 2016.
For now Zenebche seems happy for collecting her money in a short period of time. “With this money I will celebrate the holiday with my brother and consumed it for purchasing commodities,” said Zenebech.
For more about this report, please click here