@IMFNews – Ethiopian Business Review

The Ethiopia Securities Exchange (ESX) has announced that Ethiopia’s interbank money market (IMM) has surpassed ETB 500 billion in total transaction volume within just six months of operation, marking a significant milestone in the country’s financial sector.

Launched in October 2024 by the National Bank of Ethiopia (NBE), the IMM was established to facilitate short-term borrowing and lending among banks, enhancing liquidity management and improving financial market efficiency. Governed by the Interbank Money Market Rules, the platform has rapidly gained traction, reflecting growing investor confidence and increasing market activity.

The milestone underscores the evolving landscape of Ethiopia’s banking sector, where structured platforms like the IMM are strengthening market transparency and fostering economic stability. As momentum builds, this achievement highlights the potential for further financial sector reforms, deeper investor participation, and a more resilient financial ecosystem in Ethiopia.

The Ethiopian Customs Commission has announced sweeping changes to the regulation of goods imported without foreign currency payments (Franco-Valuta), as part of a broader financial sector overhaul.

The National Bank of Ethiopia (NBE) confirmed the repeal of the decades-old Establishment Proclamation No. 691/2000, replacing it with the more robust NBE Proclamation No. 1359/2017. The move grants the central bank stronger oversight powers while scrapping the previous Council of Ministers Regulation No. 88/1995, which governed Franco-Valuta imports.

In a transitional measure, the Customs Commission will continue processing foreign exchange license requests under existing procedures—but with stricter scrutiny. Non-commercial Franco-Valuta requests from government agencies, NGOs, and international organizations must now be vetted by Customs Operations Managers and approved only by senior Customs Office Managers.

The NBE has ordered meticulous record-keeping, requiring monthly reports on Franco-Valuta transactions to prevent misuse. The changes signal Ethiopia’s push to modernize trade finance controls while managing forex shortages—a critical issue for import-dependent industries.

Businesses and institutions must adapt quickly, as further directives are expected. The reforms aim to curb abuse of forex exemptions, ensuring hard currency is prioritized for essential imports.

Last night, the Sheraton Addis’ Lalibela Hall buzzed with energy as high-ranking government officials, banking and fintech CEOs, prominent business leaders, shareholders, and distinguished guests gathered to celebrate the Cooperative Bank of Oromia’s 20th anniversary. The event was a testament to the bank’s remarkable journey, blending lively celebration with reflections on its transformative impact on Ethiopia’s financial sector.

The bank’s remarkable journey traces back to visionary Haile Gebre Lube, widely regarded as the father of Ethiopia’s cooperative movement. Two decades ago, he championed a revolutionary idea: that cooperation represented the most powerful weapon against poverty. His grassroots mobilization effort saw community members contribute up to 100 ETB each, collectively amassing an impressive ETB 750,000 in seed capital.

This people-powered movement formally established a project office in 2002, with cooperative societies forming the majority of initial shareholders. After securing its commercial license in October 2004, the bank commenced operations in March 2005. Today, maintaining its cooperative roots, over 55% of the bank’s ownership remains in the hands of cooperative societies.

Mamo Mihretu praised the institution as one of the nation’s fastest-growing and most innovative financial institutions. “The Cooperative Bank of Oromia exemplifies modern banking through strong leadership, driving financial inclusion while maintaining its cooperative principles,” he stated.

The governor particularly commended the bank’s responsiveness to regulatory guidance and its alignment with national development goals. “The bank’s leadership has demonstrated exceptional commitment to implementing government directives and supporting economic progress,” Mamo noted. “During our transition to a market-based foreign exchange system, which introduced new market dynamics, Cooperative Bank stood out in its swift and effective adoption of these changes.”

With a customer base of 17 million, the bank’s mobile wallet, Coopay e-Birr, has become one of Ethiopia’s top platforms, processing mobile transactions totaling 3 trillion Birr. The bank has empowered over 1.2 million micro, small, and medium enterprises (MSMEs) with its digital, collateral-free loan offerings called Michu, significantly enhancing financial access for entrepreneurs and small businesses. Michu is Ethiopia’s first uncollateralized digital lending product, powered by Kifiya’s Qena, AI-driven digital lending platform developed in partnership with Mastercard Foundation.

“This platform strengthens collaboration between fintechs and traditional banks, representing a breakthrough in unconventional banking solutions for Ethiopia,” said the governor.

CEO Derbe Asfaw highlighted the bank’s role in transforming living standards by integrating advanced technology and digital solutions. Under its leadership, the bank has launched several innovations, including the SACCO-Link application, which enables cooperatives and unions to engage in digital banking, and the first Coop Remit, a blockchain-based money transfer service in Ethiopia.

Financially, the Cooperative Bank of Oromia has seen substantial growth, with total assets now standing at ETB 189.4 billion and deposits reaching ETB 169.45 billion, reflecting a strong ETB 52.3 billion increase in the last nine months. The bank operates 745 branches and employs 15,000 individuals, positioning itself as a key player in Ethiopia’s banking sector.

The bank’s commitment to sustainability is also evident in its expansion of eco-friendly branches, which operate on renewable energy. Throughout its 20th-anniversary celebrations, the bank has focused on social responsibility and community-driven projects under the initiative “Project 20 for 20th Anniversary.”

As it looks to the future, the Cooperative Bank of Oromia remains committed to driving economic development and financial inclusion across Ethiopia, making it a vital institution in the country’s evolving banking landscape.

The Commercial Bank of Ethiopia (CBE), in collaboration with global payment leader MasterCard, has introduced both plastic and virtual international prepaid cards, a move set to enhance digital payment accessibility in Ethiopia.

The launch, officiated by CBE President Abe Sano and MasterCard Africa President Mark Elliott, marks a major step toward modernizing Ethiopia’s financial ecosystem. These prepaid cards will enable users to conduct international transactions with greater convenience, supporting online purchases, travel expenses, and cross-border payments.

CBE officials emphasized that the initiative aligns with the bank’s ongoing efforts to expand digital financial services and provide customers with secure, flexible, and globally accepted payment solutions. The virtual card, in particular, is expected to cater to the rising demand for secure online transactions, while the plastic version offers a physical alternative for international spending.

The Ministry of Transport and Logistics has announced that the Ethio-Djibouti Railway has steadily increased its transportation capacity, with plans to handle 50% of Ethiopia’s export cargo in the near future. The railway has consistently boosted its cargo capacity by 14.2% annually, solidifying its critical role in Ethiopia’s trade infrastructure.

Currently, the railway plays a pivotal part in the export of Ethiopian coffee, transporting 98% of the country’s coffee exports. It also handles a diverse range of goods, from fertilizers and livestock to heavy machinery, buses, and new trucks, showcasing its capacity to manage both multimodal and unimodal container loads.

In addition, the railway is instrumental in transporting perishable goods in containerized form, maintaining quality, and ensuring that products reach foreign markets in optimal condition—vital for safeguarding Ethiopia’s expected income from foreign trade.

Looking ahead, the Ethio-Djibouti Railway Corporation has set ambitious targets. It aims to cover 50% of Ethiopia’s freight transport needs, increase train frequency to 14 trains per day, and enhance the speed of freight trains to 58 km/h. Furthermore, the corporation is moving toward a fully digitalized rail service, focusing on improving operational efficiency and customer satisfaction.

Recent strides include obtaining multimodal operating and freight forwarding licenses, expanding its service offerings, and positioning itself as a key player in Ethiopia’s freight and logistics sector. The railway’s growth reflects not only its expanding capabilities but also Ethiopia’s ongoing efforts to improve trade efficiency and strengthen its position in the global market.

Kenya and the International Monetary Fund (IMF) have mutually agreed to terminate the ninth review of their multi-billion-shilling funding programme, originally set to run until 2025. The move, confirmed by both parties, signals a critical shift in the country’s financial strategy as the government grapples with mounting debt and fiscal shortfalls.

According to MSN News, a global news platform operated by Microsoft, the decision effectively halts the disbursement of USD 490 million (KSh 63.4 billion) under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF), alongside an additional USD360.9 million (KSh 46.7 billion) earmarked for climate financing under the Rapid Support Facility.

In an exclusive interview with TUKO.co.ke, economist Churchill Ogutu pointed to Kenya’s inability to meet key structural benchmarks and fiscal targets as a major factor behind the decision.

“Hardly surprising that the ninth review could not be completed,” Ogutu stated. “The IMF closely monitors fiscal targets such as revenue collection and structural reforms. Kenya has struggled to meet these requirements, making it increasingly difficult to justify continued disbursements.”

According to MSN News, the National Treasury’s 2025 Budget Policy Statement had already hinted at the shift, indicating that there would be no further IMF financing in the next fiscal year. This stands in contrast to April 2021, when Kenya entered the programme amid economic shocks and liquidity concerns.

Despite the termination, Ogutu suggested that Kenya could still seek a fresh agreement with the IMF, albeit under different terms.

“The successor programme could take various forms—a financed one, a non-funded one, or a precautionary one. It’s a wait-and-see on what direction the government takes,” he explained.

However, without immediate IMF support, Kenya may have to rely on costlier external and domestic borrowing, including Eurobonds and syndicated loans. Experts warn that such alternatives could further strain the country’s rising public debt.

As reported by MSN News, Kenya’s total public debt stood at USD 77.14 billion (KSh 11.02 trillion) in January 2025, with external borrowing at USD 39.32 billion (KSh 5.09 trillion) and domestic borrowing at KSh 5.93 trillion. The government’s aggressive borrowing strategy has seen it take on an additional KSh 440 billion in just seven months under President William Ruto’s administration.

While Kenya must still repay the IMF funds already disbursed, Ogutu noted that if the ninth review had gone through, the country’s borrowing under the programme would have reached its ceiling.

Ethiopia’s Interbank Money Market Surpasses ETB 500 Billion in Transactions

Ethiopia Scraps Old Forex Rules for Imports, Tightens Franco-Valuta Controls

From Grassroots to ETB 189B: The Cooperative Bank of Oromia’s 20-Year Journey in Redefining Inclusive Finance

CBE and MasterCard Launch International Prepaid Cards

Ethio-Djibouti Railway Aims to Dominate 50% of Ethiopia’s Export Cargo

IMF Disbursements Suspended as Kenya Fails to Meet Conditions