ADDIS ABABA – As part of its efforts to safeguard depositors and contribute to financial stability, the Ethiopian Deposit Insurance Fund (EDIF) announced plans to incorporate upcoming foreign banks into its system, requiring them to pay a similar premium rate as local banks.
Ethiopia has been undertaking various legal and operational reforms to attract foreign banks. These banks are expected to begin collecting deposits from the public once they enter the Ethiopian financial market.
EDIF CEO Desalegn Ambaw (PhD) told The Ethiopian Herald that foreign banks will be required to pay a premium of 0.3% of their total annual deposits in Birr, which is similar to the current rate paid by local banks.
He added that the Fund, which currently has 86 member financial institutions, insures deposits of up to 100,000 Birr per depositor, per institution, providing a robust safety net in the event of institutional failure.
EDIF’s Operations Director, MergaWakweya, noted that foreign banks will become members of the Fund and pay the same premium rate. According to him, the law mandates that foreign banks pay this specified premium amount, regardless of their anticipated financial capacity.
Desalegn also stated that EDIF plans to expand its investment activities in the future by purchasing bonds, in line with the growth of its capital.
“The main reason we currently invest in Treasury bills is to maintain quick access to cash in case of unexpected
bank failures. However, we may begin investing in bonds once we have greater confidence in the stability of our fund and revenue streams,” he explained.
EDIF receives financial and technical support from various partners, including the Ministry of Finance (MoF), the World Bank, and other international institutions, to enhance its services and learn from global best practices, according to the CEO.
Although bank failures are not anticipated in Ethiopia in the near future, EDIF remains vigilant and is working to strengthen its capacity to insure depositors. It has also signed a trilateral agreement with the MoF and the National Bank of Ethiopia to secure financial backing in case of emergencies, Desalegn stated.
EDIF’s 86 member institutions include 31 commercial banks and 55 microfinance institutions. Its insurance coverage extends up to 100,000 Birr per depositor, per financial institution, and covers checking accounts, savings accounts, time deposits, joint accounts, foreign currency deposits, voluntary savings, and compulsory savings accounts.
BY YOHANES JEMANEH
THE ETHIOPIAN HERALD THURSDAY 17 APRIL 2025
