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Ethiopia: Central Bank Directives Send Forex Inflows to the Roof
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Addis Fortune (Addis Ababa)
5 May 2008
Posted to the web 5 May 2008
Yohannes Anberbir
Authorities at the Ministry of Foreign Affairs (MoFA) are pleased with the ascending remittances flowing into Ethiopia of late. Within four months beginning January 2008, the country amassed 200 million dollars from monetary transfers that Ethiopians and foreign nationals of Ethiopian origin living abroad made to the country.
This was disclosed at a press conference by Demeke Atnafu, acting director general of Ethiopian Diaspora Affairs Directorate at the MoFA, which was held in his office on Friday May 2, 2008.
The stunning increase is primarily attributed to directives issued by the National Bank of Ethiopia (NBE), a federal agency responsible for managing foreign exchange in the country.
The NBE issued a directive in August 2006 that enables Ethiopians in the Diaspora to open a foreign exchange account in local banks. The directive was issued to initiate investment in their home land by Ethiopian nationals living abroad, and to eventually augment the foreign exchange inflow. According to the directive coined 'Operation of Foreign Currency Account for Non-Resident Ethiopians and Non-Resident Foreign Nationals of Ethiopian Origin', the minimum amount required for an initial deposit to open a current account is 100 dollars, or its equivalent in any of the eligible currencies, and for a fixed deposit foreign currency account it is 5,000 dollars or its equivalent. This was complemented by another directive, issued in the same year, which aimed at improving the operations of the formal remittance transfer system in Ethiopia by reducing remittance costs and increasing access to cost effective, reliable, fast and safe services to benefit migrants.
Before the issuance of the directives, the country's remittance from Diasporas did not exceed 400 dollars a year. However, following the issuance, the country secured 632.6 million dollars in remittances in 2007. This year, it is expected to significantly rise over and above that of last year.
Not only is the increase attributed to the directives.
"The latest measure taken by authorities on the black market, a.k.a parallel market, has also contributed to the increase in formal remittance," Demeke told Fortune.
A joint task force, drawn from the city police commission and the federal police had, on March 13, raided small kiosks that illegally trade in currencies. This has supposedly made the Diaspora resort to the formal channel.
Ethiopian embassies abroad and authorities of the federal government have also played a significant role in persuading Ethiopian nationals abroad to invest more in their country.
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According to Demeke, 671 Ethiopian Diasporas, who have a combined capital of seven billion Birr, have obtained investment licenses within the last 9 months to invest in five regional states.
The investments are expected to create employment opportunities for over 62,000 Ethiopians locally.
"Seven thousand Ethiopian Diasporas have secured residential land in five different regions," added Demeke.
Ethiopia: A model of African food aid is now in trouble By Nicholas Benequista Tue May 6, 4:00 AM ET
Farmers in Ethiopia are better off now than they were four years ago, in part due to better-than-average rains and rising grain prices globally. But there's another reason: Africa's largest beneficiary of foreign aid has shifted from food aid to cash assistance.
Ethiopia is seen by aid organizations as a model of how to best help hungry nations. But in an effort to prevent food riots in cities, the government here is again relying on foreign food aid and now... [Read Full Text]
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