The Governor of the National Bank of Ethiopia, however, warns about impending strong competition from expatriate banks
The National Bank of Ethiopia on Tuesday said that Ethiopian Commercial Banks have demonstrated better performance in the past four years despite external and internal challenges that Ethiopia has been experiencing.
It was during a meeting with representatives from banks that the governor of the National Bank said that there has been growth in the financial sector.
Yinager Dessie attributed the growth to government reforms in the financial sector.
Interest-free banking, authorization of movable assets as collateral, the regulation that allowed Ethiopians in the diaspora to invest in the finance sector, and regulation that allowed capital market and microfinance to grow themselves to the level of a Bank are some of the reform measures he cited as examples.
He also weighed their growth by the market share difference between government and private banks. He said that it is in a good state as the disparity in the share is minimal.
The Banks have also demonstrated effective performance in terms of volume of deposits and loan repayment management.
Digital Banking is said to have witnessed higher transactions. The introduction of Telebirr, a mobile money transfer service from the state-owned Ethiopia Telecom, has contributed to it, according to Yinagar Dessie. He added that electronic transactions will contribute to achieving the plan for 2025.
Furthermore, Ethiopian Commercial Banks had a very good performance in terms of meeting corporate social responsibility under circumstances of multifarious challenges Ethiopia has been experiencing over the past four years.
Half of the contributions to Gebeta Lehager, a mega project Prime Minister Abiy Ahmed initiated, were from the Banks, according to the Governor of the National Bank of Ethiopia.
While rating the growth of commercial banks in Ethiopia over the past four years as something good, Mr. Yinager Dessie advised the banks that they need to do more in consideration of future challenges.
One of the recommendations he made is to make loans available to rural communities and small enterprises, and the lower stratum of society.
Mobile and digital banking is another area of improvement – something the banks need to work on in consideration of reaching out to the rural communities as well – he recommended.
Furthermore, the governor talked about impending strong competition from expatriate banks, when they start operating in the country and told the banks to prepare strategies for it.
Mr. Yinager sees additional roles for the banks in terms of illegal practices and fraud in the system. He advised banks to cooperate with security forces to recover the money that is out of the banking system and make it part of the circulation in the banking system.
To share information or for submission, send e-mail to email@example.com
Telegram Channel : t.me/borkena
Join the conversation. Follow us on Twitter @zborkena to get the latest Ethiopian News updates regularly. Like borkena on Facebook as well. To share information or for submission, send e-mail to firstname.lastname@example.org