Ethiopia revising policy to open door for foreign banks

Indicating that the Government of Ethiopia is engaged in policy revision to open its doors for foreign banks, Prime  Minister Abiy Ahmed told domestic banks to modernize their systems with information technology (IT) and prepare themselves for the completion with the soon coming foreign banks.

“We will bring foreign banks because we need additional wealth and hard currency,” he said. He noted that in countries where there are foreign banks, relatively hard currency shortage will be minimized. He advised the banks in the country to modernize their systems with IT and prepare themselves for the upcoming competition with foreign banks Ethiopia is set to open its doors for.

He stated that the country is working on policy improvement to open its doors for foreign banks liberalizing the financial sector of the country. Prime Minister Abiy Ahmed made the remark this morning responding questions raised by the members of parliament.

The banks in the country have also extended a total loan of 147 billion Birr within the first six months of the year, of which 70 billion went to service, 50 billion Birr to industry, and the remaining went to agriculture sector. Over 68 percent of the loan went to the private sector, according to Abiy Ahmed.

The total assets of private banks in Ethiopia over the last six months has increased to 2 trillion Birr of which 159 billion belongs to the shareholders (7.8% of the total). Saving has increased to 1.5 trillion from around 1.3 trillion same period last year.

Abiy has also indicated that Ethiopia attracts $1.63 billion foreign direct investment (FDI) during the first six months of the current budget year of the country started July 8, 2021.

The amount has increased by about 10 percent compared to same period last year, according to Abiy. He also indicated that the tax income of Ethiopia in six months period has increased by 15 percent compared to same period the previous year. He also indicated that the expenditure of the government has increased to 297 billion Birr showing growth of 39 percent from the same period last year.

Abiy indicated that during the last rainy season, Ethiopia has covered 13 million hectares of land with major crops and collected 336 million quintals of produces.

Abiy indicated that in two rounds so far using irrigation the country has covered 600,000 hectares with wheat farms. During the current irrigation period, some 25 million quintals wheat is expected from the current irrigation farms by mainly the smallholder farmers.

For importing fertilizers, Ethiopia has spent $1.1 billion which is some 600 million dollars more than the country’s spending same period last year.

Export, import
Last year the country has earned a total of around $3.6 billion from export of commodities mainly agricultural goods such as coffee.

Import of Ethiopia on the other hand has continued also to grow. Last six months import has increased by 25 percent, according to Abiy. The Main commodities include food items such as wheat.

Some one billion worth agricultural commodities mainly wheat is produced domestically and helped the country to cut its hard currency spending on import. This includes malt barley, which is currently fully covered with domestic product.

On domestic businesses Abiy indicated that some 200,000 new trade licenses are obtained during the first six months of the year, while over 845,000 existing businesses have renewed their trade licenses.

In relation to the developments of industrial parks in the country, Abiy indicated that currently a total of 177 sheds are built in industrial parks in Ethiopia, Out of these 158 given to private sector of which 104 have commenced operation.