
By most predictions, the past fiscal year should have been a devastating one for the banking industry. The country’s political situation was dire, and there was a liquidity shortage earlier in the year, the likes of which had not been seen for two decades. The banks' commitments in the corporate social responsibility sphere also grew, with contributions to massive projects such as ''Dine for the Nation'' tightening their balance sheets. In the fourth quarter, a once in a generation pandemic closed most of the world, and Ethiopia moved forward with limited lockdowns.
It was not all well, no doubt, but it was also not all bad either for the country’s fledgling banking industry. Outstanding loans, excluding corporate bonds, increased by a fifth in value; deposits mobilised by banks increased by 15.8pc to a little over one trillion Birr; and they added nearly a thousand new branches to their network, increasing the total by about 20pc.
In the face of it, it seems that the banks have weathered what is perhaps their most challenging year in more than two decades. But look under the surface, experts and industry insiders say, and there is reason to worry.
This is hard to deny since the National Bank of Ethiopia (NBE) had to essentially bail them out with an injection of 14.5 billion Br in loans owing to their unprecedented liquidity crisis. Also coming at a momentous time was the repeal of the mandatory bond that compelled them to surrender 27pc of their gross loans and advances.
Industry insiders add that all of these have not improved the banks' circumstances as much as would have been liked.
"Except for the banks with solid capital, I didn't see substantial growth of other banks," said Zafu Eyessuswork, the board chairperson of Hibret Bank and a veteran of the financial sector.
Neither is the future as rosy as the banks would like, at least for those currently in business. Space is increasingly getting crowded, with over a dozen banks queued to join the industry, and the country's telecom monopoly, Ethio telecom, is set to engage in financial services. Experts caution that the industry’s wellbeing is a product of the economic environment.
“It's very difficult to have a healthy financial sector while the economy is unstable,” said a macroeconomist.
You can read the full story here
PUBLISHED ON
Feb 06,2021 [ VOL
21 , NO
1084]
View From Arada | Jun 19,2021
My Opinion | Jul 24,2021
Radar | Jul 18,2020
Editorial | May 04,2019
View From Arada | May 15,2021
Fineline | Dec 14,2019
Fortune News | Feb 05,2022
Editorial | Apr 16,2022
Viewpoints | Mar 28,2020
Sunday with Eden | Jan 11,2020
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
August 28 , 2021 . By HAWI DADHI
The streets of Addis Abeba are as varied as they are many, although too many of them have yet to be named. From the narrow alleyways of the...
May 21 , 2022
There was a great deal of handshaking and patting each other on the back at the Hyatt...
May 14 , 2022
Diana Yohannes is one of those actively engaging in social media platforms with her T...
May 7 , 2022
The Ethiopian Economic Association (EEA) recently proposed the formation of a macroec...
April 30 , 2022
There is no ambiguity in the UNDP's assessment of Ethiopia’s economic performance a...
Put your comments here