Addis Abeba -Mamo Mihretu, Governor of the National Bank of Ethiopia (NBE), made a surprise announcement of his departure after seven years of service in various high-profile economic roles. Mamo announced his decision to leave government to pursue other professional opportunities.
Mamo, formerly World Bank staffer, first moved to Prime Minister Abiy's office as senior policy advisor who had also doubled as WTO chief trade negotiator for Ethiopia. He has been named by The Financial Times in 2019 as one of the young technocrats in PM Abiy's administration leading Ethiopia's ambitious reform drive.
He was appointed Governor of the National Bank of Ethiopia in January 2023, replacing Dr. Yinager Dessie, who had served in the position since June 2018 following his tenure as Commissioner of the National Planning Commission. Before taking up the governorship, Mamo was Chief Executive Officer of Ethiopian Investment Holdings (EIH), the state-owned investment firm established in 2022.
In a public statement today, Mamo reflected on his tenure, highlighting his contributions under the leadership of Prime Minister Abiy Ahmed. "It has been a great honor and source of satisfaction to serve our beloved nation," he said, noting his involvement in Ethiopia's macroeconomic policy design and the implementation of the Home-Grown Economic Reform Program.
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As the governor of NBE, Mamo oversaw what he described as the country's most significant economic reforms in over half a century including transitioning to a market-based exchange rate system, establishing the Bank's autonomy through new legislation, opening the financial sector to foreign banks, advancing digital financial inclusion, and securing $10.5 billion in external financing from partners such as the IMF and World Bank.
"These reforms contributed to a threefold increase in foreign currency holdings, the lowest inflation in seven years, a tenfold expansion in digital payments, and a strengthened financial sector with over 5 trillion birr in assets," Mamo said.
On 7 August, the National Bank issued a strong warning to the business community and members of the diaspora to cease using the informal foreign exchange market, as part of broader measures to curb illegal currency flows.
The outgoing Governor warned individuals and businesses operating outside the formal banking system will face serious consequences. "Measures, including confiscation, will be taken against those who do not use the regular banking system for foreign exchange," he said, emphasizing that the NBE will continue to conduct foreign currency auctions supported by a threefold increase in reserves over the past year.
NBE's latest auction saw 28 banks participate, with $150 million sold at an average rate of 138 birr per dollar. Mamo vowed that banks will provide "sufficient foreign currency" to their customers starting this week, estimating that the business community currently receives approximately $500 million in foreign currency monthly.
However, concerns over bank practices, such as requiring birr deposits exceeding the value of letters of credit, were lingering, although Governor Mamo said such requirements are now prohibited. "Banks are now expected to fulfill requests within a few days," he said.
The NBE had last month named four U.S.-based money transfer service providers - Shgey Money Transfer, Adulis Money Transfer, Ramada Pay (Kaah), and TAAJ Money Transfer - accused of laundering funds and financing illicit activities using remittances from the Ethiopian diaspora. TAAJ Money Transfer has pleaded guilty to violating the U.S. Bank Secrecy Act, according to a June 2024 statement from the U.S. Attorney's Office for the Southern District of California.
"These entities are actively working to undermine the integrity of Ethiopia's financial system and distort market prices," the NBE said, adding that authorities in the United States have been requested to cooperate in ongoing investigations. Governor Mamo also noted that action against illegal foreign-based money transmitters, particularly those operating from the United Arab Emirates, is ongoing and will intensify. "We are working to shut down operations that deliberately destabilize the currency market. The message is clear: only the formal system is safe and legal," he said.
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In its 15 July report following Ethiopia's Article IV Consultation and third program review, the International Monetary Fund (IMF) acknowledged steps toward foreign exchange reform, including the tripling of the country's hard currency reserves to $2.7 billion, while noting persistent challenges in the currency market. According to the IMF, a 2.5% central bank commission on FX sales, limited interbank liquidity, and high transaction costs have sustained a 15% parallel market premium, complicating macroeconomic stability and undermining investor confidence.
Other concers to measures tied to Ethiopia's IMF-supported reform program include higher electricity tariffs, revised tax laws, and increased service fees, addeding new pressures on household budgets. Although the government has sought to cushion the effects through inflation-control policies and adjustments to public sector salaries, experts caution that the reforms have placed a disproportionate burden on lower-income groups.
