@NationalBankofEthiopia – Page 2 – Ethiopian Business Review

Ethiopia and France have solidified their ongoing economic partnership with the signing of a significant financial agreement aimed at advancing Ethiopia’s reform agenda. The agreement, concluded between Ethiopia’s Ministry of Finance and Agence Française de Développement (AFD), signals a critical step in supporting Ethiopia’s economic transformation through both budgetary and technical assistance.

The deal includes a USD27 million budget support package, with USD11.34 million already disbursed in December 2024, alongside a USD4.07 million grant for technical assistance. On December 21, 2024, Ethiopian Finance Minister H.E. Ahmed Shide and AFD CEO Rémy Rioux finalized the budget support agreement, while today’s technical assistance agreement was signed by State Minister of Finance H.E. Dr. Eyob Tekalign and AFD Country Director Mr. Louis-Antoine Souchet.

This agreement focuses on strengthening Ethiopia’s Homegrown Economic Reform (HGER) 2.0 through strategic reforms in key sectors. The technical assistance will be managed by the Ministry of Finance and the National Bank of Ethiopia, with a strong emphasis on financial sector reforms, restructuring State-Owned Enterprises (SOEs), refining Public-Private Partnership (PPP) regulatory frameworks, and implementing sectoral reforms across multiple agencies.

State Minister of Finance Dr. Eyob Tekalign expressed that this partnership represents a significant milestone in Ethiopia’s reform journey. He explained that while the budgetary support will provide vital fiscal space, the technical assistance would play a pivotal role in enhancing the country’s Public-Private Partnerships, improving governance within SOEs, increasing financial sector competitiveness, and strengthening institutional capacity for effective policy execution.

Dr. Eyob further acknowledged AFD’s ongoing support, highlighting the flexibility of the technical assistance program, which accommodates multiple partners and ensures value for money.

In a similar vein, Mr. Louis-Antoine Souchet, AFD’s Country Director, reaffirmed his institution’s commitment to Ethiopia’s reform agenda. He emphasized that this collaboration was a reflection of France’s sustained investment in Ethiopia’s economic sustainability and public sector efficiency. AFD, he added, would continue to foster peer-to-peer exchanges and knowledge-sharing between French and Ethiopian institutions, ensuring successful reform implementation and long-term economic resilience.

In a groundbreaking collaboration, Global Bank Ethiopia, Lucy Insurance S.C., and Kacha Digital Financial Services have launched “Agar,” Ethiopia’s first digital insurance and loan service, marking a transformative step in the country’s financial sector. Tailored to meet the needs of insurance customers, meter taxi drivers, and salaried employees, this innovative service offers digital loan and savings solutions, effectively breaking the barriers posed by traditional insurance models.

Historically, the Ethiopian insurance sector has been anchored in cumbersome paperwork and rigid documentation systems, limiting its reach and growth. Many potential clients, particularly those viewing insurance as a luxury, have been hesitant to engage with traditional services. Adefris Wesen, CEO of Lucy Insurance, acknowledges this limitation, emphasizing, “The traditional insurance system inhibited the sector’s growth, reflected in its minimal contribution to the country’s GDP.” With the advent of “Agar,” however, digitalization is set to revolutionize service delivery, enhance accessibility, and bolster the sector’s contribution to the nation’s economy.

In line with Ethiopia’s ambitious Digital 2025 initiative, the National Bank of Ethiopia (NBE) has been instrumental in promoting digital financial services. Hailemariam, Advisor to the Deputy Governor of NBE, highlights the pivotal role digital finance plays in fostering financial inclusion, adding, “This partnership will contribute to Ethiopia’s Digital 2025 initiative and enhance accessibility, while ensuring accountability, cybersecurity, and consumer protection.”

“Agar Digital Insurance” stands as Ethiopia’s first insure-tech product, allowing users to seamlessly purchase insurance via mobile phones without the need for branch visits. By eliminating paperwork, the service offers a hassle-free digital experience. Available through the Kacha mobile app, it not only enables users to purchase insurance but also provides digital loans to ease premium payments. Customers can opt for flexible repayment schedules, from 1 to 9 months, ensuring uninterrupted coverage even during financial challenges.

In addition, two new services were unveiled today: Agar for Drivers, which offers meter taxi drivers quick access to digital loans for urgent vehicle repairs or expenses, and Agar for Salaried Employees, a salary advance loan service that allows employees to access a portion of their salary before payday without collateral.

This dynamic, digital-first approach is poised to make insurance and financial services more accessible, affordable, and efficient, propelling Ethiopia’s financial sector into a new era of innovation and inclusion.

Ethio Telecom has delivered impressive financial and operational results, posting a 7.9% increase in subscriptions, a 43% surge in top-line growth, and a 55.5% rise in EBITDA margin year-on-year. These gains pushed the state-owned telecom giant’s provisional revenue to ETB 61.9 billion for the first half of the Ethiopian fiscal year 2024/25. The figures were presented during a six-month performance dialogue with Ethiopian Investment Holdings (EIH).

A major contributor to this success is Telebirr, Ethio Telecom’s rapidly expanding digital finance platform. According to EIH, Telebirr facilitated transactions worth ETB 1.03 trillion for over 51.5 million users during the reporting period, generating ETB 1.67 billion in revenue, underscoring its growing role in Ethiopia’s digital economy.

EIH commended Ethio Telecom’s strategic execution, digital innovation, and contributions to financial inclusion. Looking ahead, the holding company advised Ethio Telecom to maintain its growth trajectory by enhancing service quality amid intensifying competition, optimizing operational efficiency, and staying attuned to global telecom and banking trends to ensure seamless industry collaboration.

Despite Ethiopia’s increasing exposure to seismic activity, the country’s insurance sector remains dangerously underdeveloped in covering earthquake-related risks. With tremors occurring more frequently and infrastructure already showing signs of vulnerability, experts warn that failing to act could leave businesses and homeowners facing devastating financial losses.

Speaking to DW, Dr. Isaias Gebreyohannes, a civil and environmental engineering expert at Addis Ababa University, pointed out a major flaw in Ethiopia’s approach to earthquake preparedness. While building codes exist to mitigate seismic risks, gaps in compliance, poor design, and substandard construction practices have made many structures susceptible to damage. He warned that while recent earthquakes have been of low magnitude, their frequency is increasing, and the lack of insurance coverage is a serious concern.

Insurance industry leaders echo this warning. Habtamu Debela, Director of the Ethiopian Office of the African Reinsurance Corporation, also told DW that Ethiopia’s insurance market has lagged behind in offering earthquake coverage. Unlike other countries where governments have mandated such policies, Ethiopia lacks the necessary regulatory framework to drive insurance adoption. As a result, businesses, homeowners, and even public institutions remain financially exposed.

For a country that seeks to position itself as a regional economic hub, this is a glaring vulnerability. Infrastructure investments, real estate development, and business continuity all depend on risk mitigation measures, and insurance is a critical pillar. Without it, the financial burden of a major earthquake would fall entirely on property owners and the government, straining public resources and slowing economic recovery.

The Cooperative Bank of Oromia is celebrating its 20th anniversary with a strong track record of financial growth and economic impact. Since its establishment on March 8, 2005, the bank has expanded its reach and influence, playing a key role in Ethiopia’s financial sector. With over 14.5 million customers and more than 15,000 employees, it has positioned itself as a major financial institution driving inclusive banking and digital innovation.

The bank has disbursed over ETB 18.4 billion in collateral-free digital loans through Michu digital loan, benefiting more than 1.2 million account holders. These loans have enabled small businesses to expand, create jobs, and improve service accessibility. Some entrepreneurs have secured loans exceeding ETB 2 million, helping them scale their businesses from home-based operations to fully established commercial ventures. This initiative has strengthened Ethiopia’s micro and small business sector, offering financial solutions to those previously underserved by traditional banking.

Coopay e-Birr, the bank’s mobile wallet service, has processed transactions worth ETB 2.6 trillion, making it the third-largest mobile financial service provider in Ethiopia. It has surpassed private banks in digital transactions, showcasing the bank’s success in driving financial inclusion through technology. Its digital-first approach has led to the creation of Ethiopia’s only dedicated banking innovation center, where cutting-edge solutions continue to improve financial accessibility.

Beyond its financial services, the bank remains committed to social responsibility. As part of its 20th-anniversary celebration under the theme 20 for 20th Anniversary Celebration, it has launched nationwide initiatives, including blood donation drives, environmental clean-up campaigns, visits to charitable institutions, and Ramadan events for customers in various cities. The bank has also organized hackathons to encourage innovation and continues to gather customer feedback to refine its services.

In tandem with this, Cooperative Bank has launched an incubation center with the vision of becoming a hub of innovation and knowledge. The center is designed using local expertise and resources, reflecting the community’s strengths. Among its unique features is the Soof Omar Knowledge Cave, a space where employees focus deeply in a serene, natural environment in the heart of Bole, Addis Ababa. The center aims to foster ideas that will benefit future generations. “The center celebrates the cultural and historical richness of Ethiopia, drawing inspiration from figures like King Abba Jifar, King Kawo Tona, and King Fasiledes, and embodies the diverse cultures of Ethiopia’s people,” said Deribie Asfaw, CEO of Cooperative Bank of Oromia.

A key highlight of the celebration is the honoring of Sinqe Branch on International Women’s Day, a groundbreaking initiative within the Cooperative Bank of Oromia. Fully operated by women, Sinqe Branch is named after Siinqee, a traditional women’s rights system central to the Geda system. To mark International Women’s Day, the bank is hosting a special event at the Sinqe branch, where female leaders will come together to celebrate and discuss women’s empowerment in the financial sector. This initiative underscores the bank’s ongoing commitment to gender equality and inclusive economic development.

The Cooperative Bank of Oromia was founded to address the financial needs of cooperatives and rural communities. Over the past two decades, it has expanded to every corner of the country, bringing banking services to areas with limited infrastructure. By scaling up collateral-free loans, pioneering digital finance, and investing in technology-driven solutions, the bank has positioned itself as a leader in Ethiopia’s financial sector.
As the bank celebrates this milestone, it remains focused on its core mission: empowering communities, driving economic growth, and redefining banking accessibility.

The National Bank of Ethiopia’s (NBE) latest foreign currency auction has sparked confusion among industry stakeholders after concluding at a significantly higher rate than the prevailing market price. While the USD exchange rate stood at ETB 124.0086 on the market, the auction saw USD60 million sold at an average rate of ETB 135.62 per dollar. This unexpected outcome has raised concerns about its impact on the broader market.

A financial expert close to the banking sector explained that for banks, participating in the auction is often their only option to secure the foreign currency needed to cover essential expenses. He noted that NBE holds these auctions to manage forex distribution and stabilize market fluctuations.

In a recent policy shift, NBE has transferred a significant portion of fuel import-related forex responsibilities to commercial banks. Fuel imports require large sums of foreign currency, which could strain reserves. “With payment deadlines for fuel imports approaching, banks likely raised their bids to ensure they could meet their obligations,” the expert said.

Smaller banks also participated aggressively, bidding at higher rates. “They prefer the auction as it offers a better deal compared to purchasing from larger banks, which often charge high commissions,” he added.

A seasoned economist highlighted the uncertainty surrounding future auctions, which has led banks to maximize their forex purchases whenever possible. While acknowledging the auction system’s benefits, he cautioned that the latest auction’s near ETB 136 per USD rate could exert inflationary pressure on the economy. “Exporters may withhold their goods, anticipating further depreciation of the ETB and higher profits in future auctions,” he warned.

According to NBE, 27 banks participated in the auction. Sources indicate that only 12 banks secured foreign currency, with winning bids ranging from a minimum of ETB 130 to a maximum of ETB 141 per dollar. Notably, a single bank reportedly obtained just USD200,000 at the highest rate of ETB 141 per dollar.

Source: The Reporter

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