Ebs journalist Mekdes Debesay son birthday


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Foreign banks and the Ethiopian market


#Ethiopia Various ideas of support and opposition are being reflected regarding foreign banks joining the Ethiopian market. Since it is appropriate to wait for the implementation guidelines to be issued to either criticize or support policies in detail, I will only provide an overview of the ideas and points of interest for today's package.


One of the requirements for joining the World Market Organization (WTO) is to open institutions such as banks and telecommunications to foreign investors. Because of this, it is known that the issue of foreign banks joining our country's banking industry was only a matter of time.


The issue that can be discussed now is whether the time when the banks were allowed to join the market was appropriate. What is the capacity and arrangement of the government, national bank and indigenous banks? How legal is our market structure and not vulnerable to crime and criminals?


Tax payment, information collection and how secure our information technology is and are not vulnerable to hacking will be issues like that.


It is known that foreign banks come to our country in search of market, existing and new customers and profit, so they are particularly concerned about the development of the country and they do not have the ideals of development.


It should be considered that since the country they are joining is not their country, they will not stop profiting in any way as long as they make a profit, and it is not a legal obligation, but a moral question that rarely prevents them.


On the contrary, indigenous banks are partners of their country, government, and development beyond profit, and they have many voluntary obligations and moral challenges beyond the law, so the competition may put a different pressure on them.


The idea that foreign banks bring in a lot of foreign currency is exaggerated and mostly wrong information. Foreign banks will not be willing to bring in foreign currency in large numbers and exchange it for silver. It is assumed that they will not focus on the existing market and foreign exchange.


Since there is little opportunity to take their profits out of the country in foreign currency and unless they are forced to take risks, responsibility and obligations (Risk) for the money they collect to build their headquarters, banking is a sector that works with little investment by renting a branch, supplying materials and collecting money.


Another is that indigenous banks open branches wherever they can, whether they are profitable or not, in terms of accessibility and serving the people.


 Foreign banks, however, may not focus only on areas where wealth and economic potential are widespread, so the rest of the area and society may not get banking services due to the weakening of the capacity created by competition.


Another is that since there are only a few hundreds of high depositors and borrowers in our country, focusing only on these customers and markets (Niche Market) or by attracting the supply of foreign currency which is in short supply.


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