ADDIS ABABA – Aside from dismantling parallel market chains, the establishment of independent foreign exchange bureaus would have a paramount importance to transforming the country’s financial ecosystem, economists remarked.
Approached by the Ethiopian Press Agency (EPA), Addis Ababa University Economic Lecturer Atlaw Alemu (PhD) said that the National Bank of Ethiopia has taken bold steps to equipping illegal actors with legal licenses in the parallel market to freely evolve in the transaction system.
He has also indicated that it opens venues for any potential business entities and banks to freely access and flow foreign exchange thereby boosting the government’s economic earnings from the sector.
Mentioning the negative impacts in which the parallel market posed in the entire economic growth, the economist emphasized that this move promotes FDI, technology transfer, infrastructure development and job creation there by contributing to the overall economic development of the country.
According to him, this directive is also being implemented in Kenya, Djibouti and other countries in Africa. Indeed, the measure would minimize drug dealer’s engagement and other border crossing crimes.
Welcoming the directive and underlining the possible down sides if not managed well, he stressed that it is ideal to explore lucrative sources of exchange earnings more than ever.
Another rationale, Wachamo University Economist Dawit Hayeso (PhD) noted that the existence of market-based forex rate allowed conducting such transactions on the legal basis to freely negotiated exchange rates with their customers. Similarly, it would have a great significance on enhancing free market competitiveness and balancing the mismatch between the parallel markets with banks.
Apart from curbing illegal market chains, he said, adding that it bridges the gaps witnessed in the exchange rates in the two markets.
More importantly, it will create ample opportunity for the local manufacturers to sell out their products at reasonable prices and boost export trades, he added.
It was learnt that the National Bank of Ethiopia (NBE) has recently announced the directive that allows business entities owned by an Ethiopian national, non-resident Ethiopian, or foreign citizen of Ethiopian origin to operate in the independent FX bureaus.
Following the announcement, NBE Governor Mamo Mihretu highlighted that, “With the licensing of Independent FX Bureaus, we are marking yet another important milestone in opening up Ethiopia’s financial sector, and also bringing it in line with global norms and best practices.”
The Governor added that the launch of FX Bureaus reflects NBE’s on-going implementation of its Strategy Plan commitments to meaningfully transform the size, shape, and scope of Ethiopia’s financial sector in the coming years.BY ASHENAFI ANIMUT
THE ETHIOPIAN HERALD WEDNESDAY 14 AUGUST 2024
