Friday, December 9, 2022
HomeBusinessEthiopia taking tougher measures against black market currency exchange; new regulations introduced 

Ethiopia taking tougher measures against black market currency exchange; new regulations introduced 

National Bank of Ethiopia introduced several regulatory measure in a crackdown against black market currency exchange

black market currency exchange
Ethiopia’s national currency seen in a magnifying glass ( Photo source : Remitly )

borkena 

Reports emerging this week from Ethiopia indicate that Ethiopia is taking tougher measures against black market foreign currency change.  

The problem sounds a little complicated as it involves a number  of actors. Even top-level officials working in the banks are linked to the nexus of illegal money transfer services. 

Earlier this week, Ethiopia announced that it has closed the bank accounts of about 392 people who were allegedly engaged in black market currency trading and illegal money transfers from overseas. 

Tends were observed whereby account holders withdraw money from the Bank as many as 80 times a week without any business transactions. The pattern that is observed is the transfer of money between different account holders. 

The rate of exchange was at some point, this past week, as high as two-fold from the rate of exchange in the banks. 1 $US was fetching as high as 120 Ethiopian Birr. In the Banks, it was selling for under 53 birr. 

The development reportedly worsened price inflation in the country. 

The accounts of the suspects are under investigation and the Ministry of Justice is involved in it, based on the report from the reporter. 

Government regulatory response 

In an effort to reverse what has now become a prevalent foreign currency black market ( something that is leading to the loss of considerable revenue to the government in addition to aggravating inflation), the National Bank of Ethiopia has introduced a series of regulatory measures. 

The amount of cash holdings for individuals (outside of the bank) is now 100,000 Ethiopian birr and it is 200,000 for businesses.  With that, the National Bank is introducing financial incentives to those who inform designated law enforcement whenever there are excess holdings and foreign currency holdings. 

The anonymous informants could get up to 15 percent of the seized cash value once the court ruled that the holding is illegal. Apart from foreign currency, the government is cracking down on what it calls illegal trade in gold and the acquisition of it in unauthorized quantities. 

The government is also imposing restrictions on importing certain goods – whose absence would not cause harm domestically.  

It is considering reactivating procedures whereby importers under the Franco-Valuta arrangement will produce documents to verify the source of their foreign currency holdings. 

It was practiced in the bank in the past and was deactivated in what is said to be an effort to minimize red tape for members of the business communities. 

Why is the government reintroducing the system? Because the government says there are business people engaged in buying foreign currency from the black market and taking the money out of the country under the guise of Franco-Valuta business activity. 

The volume of imports to Ethiopia is said to be over $18 billion.  

__

To share information or for submission, send e-mail to info@borkena.com 

Business Listing 

Telegram Channel : t.me/borkena

Join the conversation. Follow us on twitter @zborkenato get the latest Ethiopian News updates regularly.Like borkena on Facebook as well. To share information or for submission, send e-mail to info@borkena.com

advertisment

2 COMMENTS

  1. Thank you for this article i loved it and i wanted to mention that for accurate black market exchange rate in Ethiopia you can also check it on ethioblackmarket.com

  2. Thank you for this article i loved it and i wanted to mention that for accurate black market exchange rate in Ethiopia you can also check it on ethioblackmarket.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here