BY ABEBE WOLDEGIORGIS
As the nation is critically preoccupied in striving to meet the greatly increasing hard currency demand which plays a dominant role in stabilizing the macro-economy, the Commercial Bank of Ethiopia (CBE) is trying its level best to raise the amount of reserve. To this end, various measures have been taken, Yohannes Liku, the International Banking Service Foreign Currency Manager in the Commercial Bank of Ethiopia said.
While making an interview with the local media recently, he said that based on the National Bank’s Instruction, side by side with providing regular saving services to customers, CBE has opened extra saving accounts to people working in the international organizations and embassies those are paid by foreign currencies here in Ethiopia to save in the foreign currency they earn.
When the bank invites the workers of these institutions to save their money in hard currency, it provides the privilege of gaining interest from their account in the same exchange. In addition, they are allowed to open another account to put their currency obtained from the interest.
Yohannes further said that, Ethiopians residing abroad and those have Ethiopian origin can open their bank account in the Commercial Bank of Ethiopia by the type of currencies of their residential countries. Ethiopian Embassies assigned to operate abroad are at the service of the Diaspora communities to get the Banking access at their respective countries.
The community members reside there need to provide the necessary documents to the embassy which it submits to the Commercial Bank of Ethiopia. Following accessing the necessary document, the Bank opens the account in foreign currency so that, the community members can get the service easily.
The other modality the Bank introduced to raise the currency reserve is providing prize to citizens who get remittance from abroad while exchanging the hard currency in to the local currency. People who exchange more money will positively own more chance to win the prize. This enables the bank to bring the illegally channeled foreign currency in to the formal banking system and exchange it in local currency. In addition, it helps to block the door of the emerging inflation and criminal activities related to finance.
The National Bank of Ethiopia (NBE) on its part has been taking various measures to enhance the amount of foreign currency reserves. According to Ristu Fikadu, a senior Banker, among the measures is the recent directive that allows Diaspora Ethiopians to open bank account by hard currency and explains how they utilize it. As to him, the previous directive stipulated Diaspora Ethiopians to use 30 percent of their foreign currency deposited in Bank for importing vehicles and other goods. But the new directive removes the article and gives right to the Diaspora customers to deposit 70 percent of their currency for 28 days and to import goods.
The former directive also indicated that individuals can hold cash out of bank up to 100 thousand and organizations up to 200 thousand Birr. The new directive, however, increased the amount for individuals up to 500 thousand and organizations can hold up to 1.5 million Birr out of Bank.
In addition, directives also enacted with regard to deposited and circulated money. It also formulated instructions which clarify how importers and exporters open bank accounts and kinds of items they transact. But there is confusion on the parts of businessmen in this regard particularly the conversion rate of foreign currencies such as Dollar, Pound and Euro in to Birr. Explicit definition of the conversion rate is essential because the incoming amount of remittance from abroad is getting high from time to time.
Exporters also can open account in foreign currency. For instance, if one exports nigger he/she can deposit the earned currency in his/her account.
To elucidate further, if an Ethiopian Diaspora living abroad put 100 thousand Dollars in his account the government possess 30 percent of the deposited amount automatically with the exchange of Birr based on the daily exchange rate. The client’s money is deposited in his/her account in Birr. Out of the remaining 70 percent, 45 percent is deposited in hard currency as it is and the remaining 55 percent is converted in to Birr. That means the bank purchases the dollar from the depositor based on the day’s exchange rate.
The previous directive inhibited exporters or importers to import goods as their wish. They were only allowed to import goods related to their export items. For example, an exporter who exports coffee or nigger and earns Dollar was allowed to import goods utilized as inputs to produce coffee or nigger; but the new directive revokes the previous directive and allows the exporter to import whatever he likes. As long as he has a license to export, he can import goods whatever he likes by the 45 percent of the deposited 70 thousand Dollars.
According to the Directive No FXD 69/2021 eligibility criteria of the National Bank of Ethiopia, individuals or enterprises may open foreign currency account in any Banks in Ethiopia.
In this regard, both Ethiopians residing abroad and foreign nationals of Ethiopian origin are allowed to save their money in Ethiopian banks. The criteria to be eligible for this privilege are they need to present necessary documents to open an NR foreign currency account in domestic banks.
The documents include: application forms properly filled and signed by the account holder; none resident Ethiopians shall present resident permit /certification, authenticated and registered by pertinent authority to confirm the Ethiopian nationals living and working abroad for more than one year and subject to renewal up on presentation of valid documents on a yearly bases; to none resident Ethiopians living and working in neighboring and middle east countries authenticated valid resident permit and or valid work permit by the Ethiopian Embassies and legation residing abroad subject to renewal up on presentation of valid documents on a yearly base; and for individuals with valid passport and/or identification card of foreign nationals of Ethiopians origins of the applicant.
As mentioned above, Ethiopia needs foreign currency for its development endeavor more than ever. Hence, encouraging citizens to deposit their money in foreign currency is vital to raise the national hard currency reserve. However, the instrumental means of earning the currency should be increasing export volume, it is stressed.
The Ethiopian Herald 23 April 2021
