For twelve years now, private banks have been on the rise in the left, right and center of the country in addition to playing a major role in the development activities of the nation.
Some people believe that merging all banks can help harvest the fruit of success apart from beefing up the economic muscle of the country shortly. If they all work hand-in-glove talking the country to the next height of success in the sphere of development will not be a pipe dream.
Targeting at posing questions revolving around the aforementioned facts and other related aspects, The Ethiopian Press Agency Journalist had sat down with Kibur Gena who served as the president of Ethiopian Chamber of Commerce. At this moment in time, he is head of African chamber of commerce. Excerpts:
Would you please explain as to who is the responsible body to set up a bank? Also could you tell us its significance?
At the outset, as history indicates, private banks had been privately owned. The history of most countries demonstrates in black and white this reality on the ground. The major role of banks was merely depositing and dispensing money time and again. As time passed by the whole thing kept on changing its shape and form. Ethiopia’s case is no diffrent.
Seeing that there are wide spectrums of rules and regulations with the purpose of establishing a bank, nobody could establish a bank out of the blue. Though the rules pertaining to establishing a bank varies from country to country, it could be effected either individually or in groups.
In the same way, the benefit we secure out of a bank is multi dimensional. It is crystal clear that in the presence of banks people do not need to hoard their money and/or gold in a safe place at home. Given banks nearby, people could also borrow money for various purposes. In this day and age, assortment of services rendered by banks all over the country, are turning out to be at the height of fashion. The banks themselves have become generators of money apart from giving the kiss of life to the economy by circulating money.
If depositors all of a sudden withdraw all their money, banks for sure will remain empty. In actual fact, this kind of thing will not happen. The proceedings of all banks are one and the same.
During the Derg regime big projects like opening banks were not given due emphasis as their importance was in doubt. Derg officials were attaching significance to shifting everything to the public. Most of the banks found in the global arena are dominantly private ones. But government banks are not many in number.
According to researches, government banks play a major role in getting themselves involved in development activities of the country. As a matter of fact, government banks make use the profits they get for building the nation whereas Private Banks spend their profit for private purposes. That is why it is said government banks are more important than private ones.
Can we conclude that bank proceedings depend on government policy?
Yes, we can. The government’s policy directions and philosophy make some sectors to be private, while others to be government’s. Among them, bank and insurance sectors are issued licenses. That is why they are expanding their wings to every nook and cranny of the country. The dos and don’ts of the proceedings are given through the National Bank of Ethiopia.
What is the benefit of having private banks in the country?
Private Banks are better service renderers. They put new technologies into effect in a little while. Their service is unparalleled. Government banks do not shilly-shally to open branches in far flung corners whether they make profit or not.
On the flip side, private banks open branches fully targeting at getting profit. It is an undeniable fact that as government banks share dividends with shareholders, they have responsibilities and duties to serve the public.
In fact, at the end of each fiscal year, the government collects profit and keeps them. But private banks divide the profit amongst stakeholders and use the money for their own purposes. When we compare private and government banks, the question which one of them is playing a major role in development activities is left open to question. But I am not saying private banks do not at all get themselves engaged in development activities of the country.
By the way there is a private bank in North Carolina which is known for channeling the profit for development purposes of the inhabitants of the area.
How do you see the role private banks play in terms of economic growth?
The number of private banks is on the rise at this point in time. To the best of my knowledge, in the absence of them I dare say government banks would not have opened many branches in a wide array of the country. Aside from serving as an engine and creating job opportunities, private banks have enabled bank services to be expanded across the country.
Commercial bank of Ethiopia earns billions in profit. More than 30% of the market has been controlled by this bank and 60% of the market is under the control of private sectors. The profit goes straight to the government and the general public apart from attaching significance to the development activities of the country. Honestly speaking, it is difficult to say private banks spend their profit fully on development activities. They give priority to fulfilling private interest. But this does not mean private banks do not play a role in the country’s development.
They get themselves engaged in development activities. They expand branches to various parts of the country making people get loan and deposit money. To my mind, Ethiopia will move to the pinnacle of success if quite a lot of commercial bank branches mushroom across the country. This must not be misconstrued the private sectors are not significant.
What is your take on the idea of merging all private banks?
As to me, the solution is growing the capital. To the best of my knowledge, opening private banks in groups of fifty and hundred is not the way out. If the different states of the country open banks in their respective areas, it is possible to emerge successful with no trouble. For instance, when they open banks, they as well open branches. This in turn helps them get themselves involved in various developments activities of the country without a shadow of a doubt.
The Ethiopian Herald July 7, 2019
BY ADDISALEM MULAT
