ESAT News (February 10, 2017)
Private banks in Ethiopia are in deep capital crises as Ethiopian born citizens of other countries withdraw their shares as per the directive by the National Bank of Ethiopia (NBE) that prohibits non-citizens from holding shares in the banking industry.
The new directive instructs non-citizens, who hold shares in banks, to withdraw their money till the end of June forcing banks to scramble to find buyers of the abandoned shares.
Experts say the majority of shareholders of some of the banks are non-citizens of Ethiopian origin and the decision by NBE will empty their coffers.
Ethiopia’s law does not allow foreigners to invest in the banking sector but a directive in 2010 permitted non-citizens of Ethiopian origin to invest in the sector, contradicting the original law.
NBE requires banks to have a minimum capital of 91 million dollars while at the same time forcing the banks to return shares of non-citizens, sending them to disarray, according to experts who spoke to ESAT.
Sixteen of the eighteen banks in Ethiopia are private, with the government banks scoring a profit of over 90 million dollars while the private banks earned 287,000 dollars last year.