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Ethiopia: Financial sector resists opening doors to foreign banks
In addition, Ethiopia has also been allocating huge budgets from its coffers through increased tax revenues, on average amounting to 20 percent annually.
Ethiopia exports mainly primary agricultural products worth around US$3 billion per annum, leaving it with an approximately US$10 billion trade deficit. The continued widening gap between the country’s imports and export earnings along with the absence of foreign banks in the country, has been causing shortages of hard currency in Ethiopia.
One of the panelists, whose foreign private company has invested in several sectors in Ethiopia, expressed concern about the problem of remitting shareholder profits caused by shortage of foreign currency.
Amidst all these challenges, government officials insist that it is not yet time to open the financial sector to foreign banks even though the country has very ambitious development targets aimed at making Ethiopia a middle income one by 2025.
Next door, adjoining where The Economist was hosting it discussion, officials of South Africa’s Standard Bank were gathered for the opening of their first office in Ethiopia. They were following in the footsteps of another African bank, Eco Bank, which opened its office in Addis Ababa last year.
Both banks are hoping that Ethiopia, which is working to join the World Trade Organization, will open up its financial sector for foreign banks sooner or later.
Remittances
According to new date from the World Bank, remittances to Ethiopia from its diaspora community has increased in the past couple of years and expected to grow by over 50 percent in the next 3 years.
The National Bank of Ethiopia says the official receipt of remittances hit US$1.5 billion an approximately 88 percent jump over its value in the previous year. Global remittances sent home from some 250 million migrants are projected to grow by about one percent to US$588 billion.
Source: Africa Review
