East Africa: Strengthening Banks to Enhance Trade, Investment

East Africa: Strengthening Banks to Enhance Trade, Investment

Posted on :Thursday , 7th January 2016

 The introduction of banks in Ethiopia goes back hundred years. All along the road the so introduced banks have carried out a range of business transactions, contributing a lot to the country's socio-economic development. Strengthening these institutions is not only promoting trade and investment but it is also igniting both local and international business interactions.

 
Apart form providing loans and deposit services, banks play a crucial role towards society's saving culture. They as well become financial sources for execution of the country's mega projects. Hence, it is unquestionable that expanding financial institution services throughout the country boosts local investment and creates enabling environment of business. By far it hastens nation's march towards middle income economy.
 
Banks in Ethiopia have carried out various business activities. They keep government accounts, do some export financing and undertake various tasks both for the government and business communities.
 
Hence, to sustain the overall economic growth of Ethiopia and remain strong; enhancing the nation's collaboration with local private financial and continental financial institutions like African Export-Import Bank (Afreximbank) would multiply over financial access sources and provide an opportunity for Ethiopian entrepreneurs and investors to mobilize additional finance to support public investment and private sector development.
 
Furthermore, as trade remains an important engine for Ethiopia's growth, encouraging Ethiopian banks and business communities to extend the stock of finance options available for expanding businesses must be made a point. This helps to reinforce Ethiopia's development ambitions.
 
According to the National Bank of Ethiopia, the existing partnership with Afreximbank has proven to be a success in supporting projects in Ethiopia in excess of 100 million USD in facilities covering transactions in infrastructure and financial services sectors. Indeed, more partnership and support are needed to other sectors of the country's economy.
 
What is more, Ethiopia would like to continue its partnership with Afreximbank to continue nurturing and facilitating the growth of trade and finance on the African continent. In this case, the Commercial Bank of Ethiopia and Afreximbank have built a rewarding and long standing relationship aimed at supporting the growth of Ethiopia's trade. They have jointly facilitated the importation of power and energy equipment valued at over 90 million USD.
 
Ethiopia has a sound institutional framework for participating in an international trade and regional integration. It is a member of the Common Market for East and Southern Africa (COMESA) and the Intergovernmental Authority on Development (IGAD). Besides, the country has signed all regional integration protocols. Ethiopia also continues negotiating an economic partnership agreement with the European Union. It is also negotiating to join the World Trade Organization. Hence, Ethiopian entrepreneurs and business sectors should take advantages of these various trade agreements to pop up on to regional and international markets.
 
Recognizing the fact that banks are key instruments in facilitating the nation's economic development and business transactions, the government has been active in spreading financial institutions across the country. Currently, the branches of the Commercial Bank of Ethiopia (CBE) have shot up to 980. There is no gainsaying that new branches would have an immense contribution in introducing modern banking systems, developing the communities' saving culture and creating conducive atmosphere for accessing loans helpful to expand investment and related activities. Moreover, new branches will not only promote saving culture but they also rescue the customers' money from theft.
 
Nowadays, CBE has been engaged in facilitating the country's business proceedings; introducing Mobile Banking Technology and Internet Banking and providing financial loans to local and international investors. Customers are trying to fine-tune with the technology. By using the Mobile Banking, they can easily check their account balance and transfer money.
 
Nonetheless, in light of Ethiopia's geographical and population size, with no doubt, working aggressively to ensure the nationwide availability of financial institutions that hasten local, foreign trade and investment pays off. Besides, as currently beneficiaries of Internet Banking are growing, among other modern banking system, more awareness creation works and bank branch expansion ventures are pivotal and timely to pave the road to economic development.
 
To conclude, towards the furtherance of the nation's overall economic growth and to remain strong, enhancing collaboration with local private and continental financial institutions would increase financial access sources and provide an opportunity for Ethiopian business communities and investors to mobilize finance to support public investment and private sector development. Expanding nation's banking services and introducing Mobile Banking system must be pursued. Demanding attempts should be given to assist trade and investment expansion in Ethiopia.

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