In recent years, the number, coverage and accessibility of banks and financial institutions have improved significantly in Ethiopia, hence promoting national savings and investment. However, the economic growth necessitates further expansion of financial institutions to meet the ever rising demand. Besides, banks also need to play a key role in facilitating local and international business interactions, particularly import-export trade.
Despite the global financial crisis of 2008- 09, the food and fuel price shocks of 2007 -08 and 2011-12 and the energy crises of 2011, Ethiopia’s GDP growth has proved resilient averaging 10.9 percent over the past decade. The export sector plays a key role in sustaining this growth achievement. And without a well developed banking system, the import-export industry would not be successful.
The African Export-Import Bank (Afreximbank), headquartered in Cairo, Egypt, was established in Abuja, Nigeria in 1993 by African Governments, private and institutional investors as well as non-African financial institutions and private investors for the purpose of financing, promoting and expanding intra-African and extra-African trade. Recently, the bank has organized a business forum here in Addis and pledged support for export focused Ethiopian business. The Bank announced that it will support Ethiopian entrepreneurs seeking to engage in export manufacturing, especially to add value to coffee, cotton, textile, leather and other commodities.
On the occasion, Vice Governor of National Bank of Ethiopia(NBE), Getahun Nana said that the existing partnership with Afreximbank has proven to be a success in supporting projects in Ethiopia in excess of 100 million USD, and facilitating transactions in infrastructure and financial services.
Trade remains critical for the country’s economic success particularly through the promotion of greater value added industries and industrial development, the Vice Governer said adding, “Enhancing our collaboration with Afreximbank would provide an opportunity for Ethiopian entrepreneurs and investors to mobilize additional finance to support public investment and private sector development.”
Trade is considered as important engine of the country’s growth and Getahun said banks should be encouraged to extend the cache of finance options available for expanding businesses. “Ethiopian entrepreneurs and business sector therefore should aim at taking advantages of the various trade agreement instruments to tap into new regional and international markets,” he added.
Agriculture remains the mainstay of the economy as the large share of the workforce involved in the sector. Growth in the sector was driven primarily by production aimed at the domestic and international markets. However, Getahun noted the diversification of the economy has seen the share of output in agriculture decline giving way to higher value-added manufacturing, infrastructure development and services. Growth was even faster in the construction sector and non-tradable services such as domestic trade and transport. The diversification and broad based nature of the economic growth contributed to the resilience of the economy during international financial and energy crisis’s, according to him. The non-agricultural sector could further be promoted by effectuating support measures such as improved access to training and finance, introducing incentives and tax breaks among others, the Vice Governor underlined.
Commercial Bank of Ethiopia (CBE) Communication Manager Ephrem Mekuria said that the CBE has formed meaningful partnership with Afreximbank and would like to continue nurturing it to facilitate the growth of trade and finance in the continent. CBE is shareholder of Afreximbank and over the years, the two institutions have built a rewarding and long standing relationship aimed at supporting the growth of Ethiopia’s trade. Afreximbank and CBE have jointly facilitated the importation of power and energy equipment into the country valued over 90 million USD.
As clearly indicated in the GTP, Ethiopia need to create and nurture relations with international sources of finance, Ephrem said adding, strengthening export performance through improved competitiveness helps Ethiopia tap into its significant export potential and further facilitate its economic transformation. “It is vital that Ethiopia build its agricultural and manufacturing foundations by adding quality and value to its exports through partnership with multilateral financial institutions such as Afreximbank” Ephrem said
African Export-Import Bank East African Regional Manager Kudakwashe Matereke said that Afreximbank thrives on cooperation and views partnership as critical for the attainment of its strategic objective in the areas of trade promotion and economic development. Afreximbank is prepared to avail its full array of programs and facilitates in support of the Ethiopian economy he further indicated adding, Ethiopia is a founding shareholder and participating state of the bank.