Addis Ababa,October,25,2021 (ENA) The banking services have to expand deep into the rural areas to reach the vast population for financial access and increase savings in Ethiopia, said Commercial Bank of Ethiopia’s Risk and Compliance Vice President Muluneh Aboye.
According to information obtained from the Commercial Bank of Ethiopia, the nation’s savings in banks has risen to 1.4 trillion Birr in August 2021 from 638 billion in 2018.
Though the country has been registering an encouraging achievement in terms of savings, it is still low as compared to the vast potential.
Commercial Bank of Ethiopia’s Risk and Compliance Vice President Muluneh Aboye told ENA that banking is profitable sector in Ethiopia, but the banks operations are mostly concentrated in and around urban areas.
He stressed the need to expanding enough branches, mobile banking and agency banking systems deep into the rural areas where 85 percent of the population lives.
The banking system needs physical infrastructure, use of technology and genuine competition to grow, he noted.
“Banking needs infrastructure and accessibility to grow. Accessibility is not only physical, but also the use of technology. Plus, there is lack of competition and inclusion,” Muluneh said stating that only about 36 percent of Ethiopia’s estimated more than 100 million population is included in the financial services mainly due to lack of branches, mobile banking and agency banking systems in the remote rural areas.
Ethiopia’s gross domestic savings is about 22 percent of the GDP, he noted, adding that commercial bank of Ethiopia covers 55 percent of the country’s total saving while the rest 45 percent is covered by the other private banks in the country.
The raise in savings is related to the improvement of personal capital and investment potential in the country.
Commercial Bank of Ethiopia President, Abie Sano in his part underscored the importance of saving for personal life and the development of the country.
Although the saving is notably growing since 2014 in Ethiopia, much work is needed as the gross domestic savings rate doesn’t usually surpass 22 percent of the GDP, he noted.
“Commercial Bank of Ethiopia has been working to diversify saving options with better interest rates, expanding branches, improve inclusion and banking services. But, when we look at the low savings of our country, we notice that much work is needed,” he said.
Noting that the country’s saving in banks has risen to 1.4 trillion Birr in August 2021 from 638 billion in 2018, the gross domestic savings are still low considering the income and the GDP.
According to the president, Commercial Bank of Ethiopia is implementing initiatives to increase public awareness and saving in bank.
Gross domestic savings (% of GDP) in Ethiopia was reported at 20.91 percent in 2020.