Commercial Bank of Ethiopia (CBE) started transferring 25 million dollars to the state logistics monopoly, which is challenged with obtaining foreign currency, on a monthly basis. The forex will be used to cover the shipment and transportation cost of imported wheat and fertiliser.

The Bank started transferring the foreign currency to the Ethiopian Shipping & Logistics Services Enterprise last month following a letter from the National Bank of Ethiopia (NBE). CBE will provide the value from the foreign currency it surrenders to the central bank.

Commercial banks are supposed to surrender 30pc of their foreign currency earnings to the accounts of NBE. The scheme was started two and a half years ago to allocate forex for the procurement of strategic goods such as petroleum, wheat, fertiliser and sugar, as well as payments made to cover the country's expenses for shipping imported items.

The Enterprise, which needs a minimum of 45 million dollars every month from CBE to ship and transport commodities, will use the value to cover shipping rental fees as well as port services. Of the allotment, 20 million dollars is for container rentals and operational expenses. It also collects 15 million dollars monthly from private banks.

"Out of our total demand of foreign currency," said Roba Megersa, CEO of the Enterprise, "we get only 30pc of it."

The foreign currency crunch has dominated the country's economy, and it has become even more severe over the past couple of years. In the last fiscal year, the net foreign assets of the NBE and the commercial banks decreased by 758 million dollars and 112.5 million dollars, respectively. As of September 30, 2019, the gross foreign reserve coverage stood at 1.7 months of imports of goods and non-factor services.

The central bank made the intervention to ensure that the two commodities were delivered on time, Roba explained. The Enterprise, which has 100 million dollars in its foreign currency account, generates the forex from the services it provides to its foreign clients, including ship rental and transporting shipments between ports for other countries.

So far, the Enterprise has transported one million tonnes of wheat, which is imported for market stabilisation and humanitarian assistance, to the Port of Djibouti, 75pc of which has already been transported into the country.