The Commercial Bank of Ethiopia (CBE) has been contemplating the idea to open overseas branches; including in Ethiopia’s sea gateway, Djibouti.
Efrem Mekuriya, communications manager of the bank, told The Reporter that four areas have been identified so far and a feasibility study was in progress by a project office established mainly to accomplish that task.
The bank has planned to open its overseas branches mainly to serve the Ethiopian diasporas abroad and to smoothen transactions with neighboring countries whose economies have started to integrate with Ethiopia’s. Accordingly, it identified the US and the Middle East countries to serve the huge number of Ethiopian communities stationed there and to benefit from their remittances, Efrem said.
The other countries are Djibouti and South Sudan, according to Efrem. The two countries are Ethiopia’s choice for deep economic integration. Djibouti is now Ethiopia’s main gateway to the international market where 90 percent of its import and export is transported through the Port of Djibouti. Though it is not stable politically, South Sudan is also one of the countries that Ethiopia needs to create economic integrations with. Currently CBE has four oversea branches in South Sudan serving the less-banked new state and Ethiopian business operating there.
CBE’s plan has perfectly reciprocated Djibouti’s plea which asked the former to re-institute its branch in Djibouti.
Ahmed Osman, governor of the Central Bank of Djibouti, has urged CBE to reopen its branch and serve the ever-growing business transaction the two countries conduit at present.
The governor said this last week to visiting Ethiopian journalists. According to the governor, Djiboutian will also get a chance to collect their dues in Djibouti’s frank while similarly Ethiopians will pay in birr, if CBE reopens its branch in Djibouti.
Djibouti was the first foreign country that hosted the first CBE oversees branch. However, it was closed in 2004 due to some misunderstandings.
It happened when the government of Djibouti ordered a financial reform in the year 2000 and the country’s central bank had begun updating data’s of financial institutions operating in the country among which CBE was one. The central bank found out CBE‘s bad loans as quite high, according to the governor.
Thus, to solve the bad loans, the central bank ordered CBE at the time to raise its capital but it was not acceptable and it was the reason that pushed CBE out in 2004, the governor told The Reporter.
CBE, established in 1942, has more than 876 branches across Ethiopia with a combined total asset of 242.72 billion birr as of June 2014.
[TheReporterEthiopia]