. Mobile money transaction stands far below Sub-Saharan
The expansion of banking services offered by the Commercial Bank of Ethiopia (CBE) and private banks is creating access to the unbanked population, yet financial experts comment that the services should be redeemed from ‘business as usual’.
According to the National Bank of Ethiopia (NBE), the number of branches by government and private banks has reached over 4,300, whilst the number of bank agents has also risen to 10,500. As to Mukemil Bedru, Business Lecturer at Addis Ababa University, owing to the enabling policy environment in the banking industry, the role and intervention of private banks have been hugely intensified over the past two decades.
Mukemil says the measure taken by the National Bank of Ethiopia (NBE) has enabled banks to expand branches; hence, become accessible to both rural and urban communities. Information obtained from NBE, for instance, stated that over 568 billion Birr was deposited at CBE accounts by the end of 2017. The bank also disbursed over 560 billion Birr to public and private businesses during the reporting period. However, Mukemil argues that the current distribution of bank branches, particularly the private ones, is highly confined to urban centers and left out the vast unbanked society in rural areas.
Zafu Eyesuswork Zafu, an expert in the financial sector, says that Ethiopian adults who have access to modern financial institutions are not more than 22 percent which is even less than Sub-Saharan Africa’s standard that stood at 34 percent.
For Zafu, poor infrastructure and internet connection are hindering the electronic banking service from thriving. For his part, an economist and scholar of international finance, Zemedeneh Negatu says that banking accessibility in Ethiopia has remained among the lowest in Africa.
As the second populous country and 4th largest economy in Africa, the number of bank branches in Ethiopia is far from being sufficient, he notes. In addition to expanding branches, other important aspects, such as access to mobile banking and agent banking systems need to flourish, Zemedeneh says.
The expert indicates that banks could transform Ethio-telecom’s potential subscribers to get access to modern banking services. “This in turn, reduces the cost of branch expansion and new staff deployment.” Supporting the idea, Zafu recommends that banks need to look for ways to bring the huge unbanked society to their services.
Both experts agree that there is a potential market in the country, but as the industry demands smart intervention, banks are expected to devise systems that fit the realities on the ground. The ways and means of financial inclusivity need also to take into consideration the fact that the majority of the population dwells in rural areas.
Along with the expansion of services, banks need to exert maximum efforts to increase the efficiency in terms of service delivery and adjust themselves to the dynamics in the global banking industry, the experts note. The banking industry has many actors aboard, and there are ample opportunities to work in partnership for mutual benefits, they conclude.
The Ethiopian Herald Friday Edition, January 3/2020
BY BILAL DERSO
