Central Bank Orders Banks Freeze Loans
The decision by the central bank to suspend all collateral-based loans in August 2021 was the most-read story of the year. The National Bank of Ethiopia (NBE) order to the senior executives of commercial banks was an unexpected measure communicated to them through text messages. The suspension included the disbursement of loans that had already been approved. The text messages did not specify how long the suspension was to last. Neither were officials at the central bank forthcoming to explain the rationale behind their abrupt measure. According to senior government officials, the decision was made to curtail "economic sabotage." The freeze lasted nearly four months and left an undeniable mark across all economic sectors. Although regulators at the central bank had exempted importers, coffee producers and petroleum companies from the freeze before reinstating collateralized loans at the end of November, the move was detrimental to the manufacturing sector, construction industry, and the financial sector.