Ethiopia’s Banking Industry Finally Opens Up To Adopt Electronic Payment
Ethiopia has a population of about 90 million people, and you would be surprised to know that very few local Ethiopians have a bank account. This is because the Ethiopian banking services are very limited, and the government does not allow foreign banks to operate locally. The Ethiopian government does this in a bid to protect the domestic lenders. With such limited banking services, all local retail transactions are done primarily in cash; retailers complain that the scarcity of debit cards greatly limits the growth of their businesses. Foreign chains are also restricted from the domestic retail industry.
But despite this, the Ethiopian economy has been steadfast and is one of fastest growing economies. It however goes without saying that they are still crippled with a lot of inefficiencies when it comes to money transfers and payments. Ethiopia’s economy stands to benefit greatly if the government backs down the strict regulation it has imposed on the country’s banking sector.
Thanks to Visa Inc. it would appear the time for such a change has finally come. Visa has been able to introduce the first debit cards in Ethiopia. After an aggressive campaign to try and convince the government on the potential benefits, the Ethiopia’s economy would enjoy by adopting electronic payments. Visa Inc. citing examples of how electronic banking has improved other African countries economies; it increases international trade, thereby placing the country in a more favourable balance of trade with its foreign trade partners among other benefits.
According to Visa’s Manager for Southern and East Africa, Jabu Basopo, Visa’s aggressive campaign in Ethiopia has yielded fruits and Ethiopia is now ready to adopt electronic payments. Currently, the Ethiopian government is running a pilot program for electronic payments; government officials have been issued pre-loaded cards that will enable them transact via electronic payment, but still their spending will be checked. So far the government has been impressed with the trial program, and this is a good indication of further adoption of electronic payment in other sectors of the economy.
Basopo has also raised concerns on the lack of muscles by the Ethiopia’s local banks to push the Central Bank into effecting the necessary changes in the country financial sector. The state has too much power and influence on the local banking industry; the leading commercial lender is owned by the government and holds about two-third of all of Ethiopia’s deposits.
