ADDIS ABABA: – The recent economic reform has registered tangible economic achievements including change in forex, fostering private sector investment in Ethiopia’s economy, said Governor of the National Bank of Ethiopia (NBE).
The gap in exchange rate falls from nearly 100% to near 5%.
According to a press release sent to The Ethiopian Herald, the European Chamber in Ethiopia (EuroCham) recently organized its monthly CEO networking event.
During the event, NBE Governor Mamo Mihretu delivered his speech. He praised the business community for its unwavering partnership despite ongoing challenges, and its participation is crucial for fostering Ethiopia’s effort to a more competitive economy.
Describing the reform as historic, the Governor added, “This is a reform that we take immense pride in as it modernized Ethiopia’s monetary framework.”
Furthermore, Mamo elucidated that the bank consolidated nearly 87 directives and regulations into a single FX directive that allows exporters to retain 50% of their FX earnings.
Elaborating the immediate impacts of the reform, Mamo noted that there is a sharp reduction in the parallel market premium, which fell from nearly 100% to near 5%.
“Remitters sending money from abroad now receive bank rates that are as competitive as that offered by Hawala companies. FX transaction volumes have surged as banks purchase 500 million USD and sell 700 million USD in average per month over the past quarter. The reform has doubled the FX reserves in Ethiopia’s banking system from 3.1 billion USD to 5.9 billion USD,” he said.
As to the presser, the governor responded to the queries raised from the members of EuroCham, who hailed the reformsas a basis for a sustainable economy. He stated that it was necessary to replace an unsustainable system that constrained development.
Support is being provided to affected businesses via working capital loans. Franco Valuta is restricted for merchandise traders and wholesalers but now allowed.The central bank is developing specific banking regulations tailored for operations within the Free Trade Zone, he added.
Similarly, Ben Depraetere,Board Chair of the European Chamber in Ethiopia, on his part echoed EuroCham’s commitment to collaborate with NBE and government Ministries to improve the business climate in Ethiopia.
He expressed that the chamber represents over 185 members from the European FDI communities who have invested in Ethiopia, adding: “Some of our members are among the top five taxpayers in Ethiopia, create thousands of jobs, substantially contribute to foreign currency generation and contribute to the government’s tax collection targets.”
BY DANIEL ALEMAYEHU
The Ethiopian Herald December 1/2024
