Ethiopia’s NBE Urges Banks to Modernize Hawala for Increased Foreign Exchange
The National Bank of Ethiopia (NBE), under the leadership of Governor Mamo Mihretu, is strongly advocating for significant improvements in how Ethiopian banks facilitate foreign exchange inflows, particularly through remittances. This call to action comes in response to the current state of the Ethiopian financial landscape, where the existing digital remittance options are deemed insufficient to meet the needs of Ethiopians living abroad and their families at home. The NBE’s stance emphasizes the urgent need for banks to modernize their Hawala transfer systems and embrace secure, digital solutions. This initiative aims to redirect remittances from informal channels into the formal banking sector, thereby bolstering Ethiopia’s foreign exchange reserves and contributing to economic stability.
The Push for Digital Hawala and Its Significance
Governor Mihretu’s message highlights the underperformance of Ethiopian banks in attracting remittances, a critical source of foreign exchange for the country. Informal Hawala systems, which operate outside the regulated financial framework, currently dominate remittance flows, diverting significant funds away from the formal economy. The NBE believes that by implementing user-friendly and secure digital Hawala platforms, banks can successfully attract these funds. This transition would not only increase the supply of foreign exchange but also contribute to stabilizing currency flows. The launch of new money transfer services by Dashen Bank and Commercial Bank of Ethiopia serves as a model for the banking sector, demonstrating the potential of digital solutions to streamline and improve remittance processes. The ultimate goal is to leverage technology to facilitate legal remittances, ultimately benefiting both the Ethiopian economy and the families receiving funds.
Keywords
Related Keywords: National Bank of Ethiopia, Hawala modernization, Ethiopian banking, digital Hawala, money transfer, Hawala regulations, financial technology Ethiopia, NBE, Hawala reform, Ethiopian finance
