Providing efficient and reliable financial service not only benefits the economy, but it also ensures a sustainable development that paves way to improve the livelihood of citizens. The move is important in realizing equitable resource share up to the grassroot level.
And according to National Bank of Ethiopia, over 16 private and two governmental banks are operating alongside 17 insurance companies, a pension fund and about 31 micro finance institutions nationwide; though most of them are confined to urban areas.
So, considering this, what measures should be taken to fine-tune an efficient financial management, and enable the country to take the next step in the development ladder?
Former president of Ethiopian Chamber of Commerce and Sectoral Association, Kibur Gena, says the financial sector is a delicate business that should be well managed in acritical fashion, because many variables could impact it.
‟If a crisis erupts in the financial sector; it is not only capable enough to totally distort the market, but also to lead a nation into unrest. The possible remedy is sharpening regulations as demand arises.”
The country’s financial sector is booming more than ever before, but the accessibility to rural areas still remains a challenge due to the urban-focused trade investment. This is despite the government’s effort to expand public bank branches and microfinance institutions to rural areas to bridge the gap, he opines.
The grassroot communities should get the banking services, be made aware of it and develop saving culture to run small business that could improve their livelihoods. And to do so, according to Kibur, the governments’ immersion in the sector as well as the restriction for international banks should be maintained.
“I prefer public banks with independent leadership because it builds confidence to local business and foreign. Given that the priority of public banks is to offer services with low interest rate, and engage small businesses like SMEs (small and micro-scale enterprises), every nation should establish and own public bank to expedite inclusive development.”
Mentioning that Germany has strong public bank financial system that improved the livelihood of citizens, Kibur argues that it is important to shape the financial sector in line with best performing practices. Public banks offer loan for development with low interest rate, as well as build efficiency in executing responsibilities transparently and accountably, because the ultimate goal is not profit rather actualize corporate responsibility, he furthers.
According to him, even though the financial sector is growing, it is not the right time for foreign banks to operate right now.
And he further notes that efforts to liberalize the sector should be handled in a very watchful fashion in a way that actualize economic as well as human development efforts. Moreover, in bid to capacitate the financial sector and ensure sustainable development in investment, the National Bank should weigh each transaction as well as loan services qualities, Kibur indicates.
Zafu Eyesuswork Zafu, also former president of Ethiopian Chamber of Commerce, and a corporate leader with global experience in insurance business, agrees on the progress of the country’s financial sector whilst showing reservation on its pace, its confinement to urban areas, and looseness of its regulation.
As to him, building healthy financial sector is the most crucial pillar for any nation to expedite development. ‟In my view, efforts to curb ill-practices such as money laundering, money eliciting and contraband should be maintained and further strengthened.”
He also admits that even though financial policies and directives issued by the pertinent stakes shaped the sector and let private financial institutions operate in the economy to reinstate investments, a lot has remained to cover.
Efforts to safeguard the legal procedures by pertinent stakes is not well handled, as sabotage practices threw the legal approaches out of the window, with deliberate engagements to benefit groups and individuals taken for granted for many years, he adds.
“We are witnessing corrupt money crippling the quality and standard services in the financial sectors, and individuals engaged in illegal money circulation leading the country to forex crunch that crippled the import-export sector”.
Asked to mention examples of such acts, Zafu points out the importing of second-hand vehicles, which is costing the nation through high emission of carbon and sub-par performance. Money transaction, and the whole procedure of the construction sector, which is mushrooming in urban areas, is not well managed, including the quality inspection, he further notes.
To address the problems, National Bank of Ethiopia should employ well-defined tools in supervising the financial sector. Eyesuswork highlights that the leadership of the reformist Prime Minister Dr. Abiy Ahmed needs to put sound directions and approaches in the sector for the common good of the nation. Besides, he adds, it is pivotal to scale up international practice with corporate governance in the sector.
Further, the incumbent should take firm stand, and keep on addressing the gaps in line with nation’s economic development by developing a comprehensive strategic plan that could ensure transparency and accountability in the financial sector, he concludes.
Herald December 12/2018
BY ISTEAB TESHOMEMENG
