Fortune News | Jan 28,2023
Jan 19 , 2019
By TEMESGEN MULUGETA ( FORTUNE STAFF WRITER )
The Commercial Bank of Ethiopia launched international electronic remittances, allowing the electronic transfer of money from a foreign country into Ethiopia. The Commercial Bank of Ethiopia launched international electronic remittances, allowing the electronic transfer of money from a foreign country into Ethiopia.
The state commercial bank's money transfer service is the first of its kind for Ethiopia and was launched in partnership with WorldRemit, an online money transfer service, after signing an agreement last July.
The service allows individuals with WorldRemit accounts outside of Ethiopia to send money instantly online to customers of the Bank, who can access the funds without having to visit a branch office.
It was piloted from December 6th to 31st of last year, and an equivalent of 44,000 Br in foreign currency was transferred through it.
“It costs almost one third of what it had cost for the same transaction [through other services],” said Elfagid Aregahegn, head of Business Development & Operations at WorldRemit's Ethiopia branch.
WorldRemit, a remittance service established to help the diaspora send money to their countries of origin, operates in over 50 countries and facilitates money transactions to over 145 countries around the world for a fee that ranges from one to five dollars.
Headquartered in London, with regional offices in the United States, Canada, Australia and New Zealand, the nine-year-old WorldRemit has three million customers. It conducted 7.5 million transactions in the Middle East and Africa alone last year, through which 1.2 billion pounds have been remitted.
The agreement with the Commercial Bank allows WorldRemit and any of its customers to transfer funds to one of the 20 million bank accounts in Ethiopia, as well as transfer to the 1.2 million electronic customers of the Bank.
“We have a plan to become a world-class bank by 2025, which is why we began this new international electronic money transfer,” says Befkadu Cherenet, director of a payment service at Bank, which has over 1,340 branches in the country.
The nation’s revenue from remittances has shown an increase in the past fiscal year, reaching 5.1 billion dollars, after remittance growth rates stayed stagnate in the previous year.
Global remittances are projected to top 700 billion dollars this year, with the majority of the money flowing to low and middle-income countries. The estimated amount of remittances in Sub-Saharan Africa last year stood at 45 billion dollars.
An expert applauds the international electronic remittance service.
"The service will help reduce informal money transfers and the black market trade. It will also facilitate the injection of foreign currency into the Ethiopian economy," says Frezer Tilahun, a lecturer at Haramaya University’s College of Business & Economics. "This new system can only achieve its target if the growth of other sectors supplants it."
The growth and strength of the telecom industry, on which electronic financial transactions depend, will make or break the success of this service, Frezer said.
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