The State owned giant, Commercial Bank of Ethiopia (CBE), is set to launch agent banking, CBE Birr, next month. It has already gotten approval from the National Bank of Ethiopia (NBE) to pilot the system.
The move comes four years after the Bank started a feasibility study to provide the service. It enables users to process the transaction using mobile phones and reduces transportation costs and time for users.
"We will fully launch the service after securing a license from NBE," said Belihu Takele, acting communications manager of CBE.
The main actors of the CBE Birr system are CBE as a service provider, individual customers, agents and Ethio Telecom, the only mobile network provider in the country.
The CBE Birr system, according to Belihu, will help customers get a 24-hour service.
Also, CBE Birr will reduce the conventional way of processing money. To begin the service, going to the bank is unnecessary; instead, customers can withdraw or deposit money in the nearby agent without getting a bank account.
Regulation of Mobile & Agent Banking Services directive was issued in 2012. Eight banks have launched the agent banking system so far.
Dashen Bank S.C pioneered the service in December 2014. Abay Bank, Cooperative Bank of Oromia (CBO), Lion International Bank, United Bank, Nib Int'l Bank, Wegagen Bank and Oromia International Bank (OIB) then followed.
"The market is not yet tapped. Still, there is a significant unbanked demography," said Belihu.
The move by CBE, whose market share is around 40pc, to start agent banking is wise for Abdulmenan Mohammed, a financial and audit expert with 15 years of experience.
"CBE has the reputation and resources to penetrate the market," he said. "It can leverage its reputation to get a considerable market share."
Agents, according to NBE's directive, could be businesses such as supermarkets, shops and fuel stations.
In screening the agents, CBE set criteria such as having an Ethiopian nationality, a valid and lawful business or commercial activity, at least one-year of business experience, possess renewed trade license and a Taxpayer Identification Number (TIN) as well as a valid and renewed identification card.
The bank has acquired the field tested technology and deploys all security requirement as per the requirement of the directive, according to Belihu.
CBE set the minimum limits to 10,000 Br, but the agent can manage the liquidity to the extent of the transaction performance and requirement of working capital at its premises.
Established, seven decades ago, CBE has mobilised deposits of 76.4 billion Br during the recently ended fiscal year, raising the aggregate deposits to 365 million Br from the 288.4 billion Br of the previous fiscal year. During the same period, CBE disbursed fresh loans of 94.5 billion Br and collected 64.6 billion Br of disbursed loans. It also grossed a profit of CBE 14.6 billion Br in profit in the past fiscal year.
As of now, CBE has more than 16 million account holders.