The National Bank of Ethiopia—Everything you need to know

Since its creation in 1966, the National Bank of Ethiopia has overseen and regulated 18 commercial banks, 17 insurance companies, and 31 microfinance institutions in Ethiopia.

The National Bank of Ethiopia—Everything you need to know

The National Bank of Ethiopia (NBE) is Ethiopia’s central bank.

Located in Ethiopia’s capital, Addis Ababa, the NBE is in charge of regulating all the financial institutions in Ethiopia.

The NBE is also in charge of enacting monetary policies that benefit Ethiopia’s economy.

Since its creation in 1966, it has overseen and regulated 18 commercial banks, 17 insurance companies, and 31 microfinance institutions in Ethiopia.

As part of its goal to properly regulate Ethiopia’s financial institutions, the NBE created The Ethiopian Institute of Financial Studies (EIFS) to train financial institutions in Ethiopia.

This article covers the history and functions of The National Bank of Ethiopia.

History and importance of The National Bank of Ethiopia

The history of The National Bank of Ethiopia is tied to the history of modern banking in Ethiopia.

Modern banking in Ethiopia started in 1905, after Emperor Minilik II (1844-1913), who is regarded as one of Ethiopia’s greatest leaders, created the first bank in Ethiopia.

The bank was named the Bank of Abyssinia (BoA) and it was created with the help of the British-owned National Bank of Egypt.

BoA was a state bank that performed both commercial and central bank duties.

It was used by the Ethiopian government to print and issue coins and banknotes on their behalf.

During its run, BoA expanded and opened branches in different parts of Ethiopia.

But the BoA faced many challenges and it was officially renamed The Bank of Ethiopia (BoE) in 1931 by Emperor Haile Selassie.

The BoE did not start operating until 1943 because of the political turmoil and invasions Ethiopia went through between 1932-1942.

The Bank of Ethiopia (BoE) started operations on the 15th of April, 1943.

The Bank of Ethiopia performed the same duties as the BoA, but the Ethiopian government had more control of the bank.

It was the only institution granted the power to print currency and deal in foreign currency.

The BoE also acted as a commercial bank, establishing 21 branches in different parts of Ethiopia and other countries like Sudan.

Proclamation 206 from the Ethiopian Monetary and Banking law in 1963 switched things up by separating the functions of commercial and central banks in Ethiopia.

This led to the split of the Bank of Ethiopia (BoE) into 2 branches: The National Bank of Ethiopia (NBE) and The Commercial Bank of Ethiopia (CBE).

The National Bank of Ethiopia became the official central bank of Ethiopia and its power increased after the Ethiopian government enacted socialist policies in Ethiopia in 1974.

In 1991, after the EPRDF ended socialist policies in Ethiopia and enacted a liberal economic system, the monetary and banking proclamation of 1994 established the National Bank of Ethiopia as a judicial entity separate from the government.

The monetary and banking proclamation of 1994 also outlined the roles, functions, and expected duties of the National Bank of Ethiopia.

What is the difference between The Commercial Bank of Ethiopia and The National Bank of Ethiopia

Proclamation 206 from the Ethiopian Monetary and Banking law In 1963 split the Bank of Ethiopia into 2 branches: The National Bank of Ethiopia and The Commercial Bank of Ethiopia.

Before proclamation 206, the Bank of Ethiopia acted like a central bank and commercial bank at the same.

After the split, The National Bank of Ethiopia was made Ethiopia’s central bank and The Commercial Bank of Ethiopia was made a commercial bank.

As a central bank, The National Bank of Ethiopia prints currency, enacts monetary policies, regulates commercial banks, and performs other roles expected from a central bank.

The commercial Bank of Ethiopia on the other hand is a commercial bank, which means it caters primarily to individuals and businesses.

Here is a table outlining the 3 main differences between the NBE and CBE


The National Bank of Ethiopia

The Commercial Bank of Ethiopia

Loans 

The NBE grants loans to the government and other banks 

The CBE grants loans to businesses and individuals

Purpose 

The NBE primarily serves the government and other financial institutions in Ethiopia 

The CBE primarily serves individuals and businesses. 

Function 

The NBE is the only central bank in Ethiopia

The CBE is one of the 18 commercial banks in Ethiopia

What is the power of The National Bank of Ethiopia

In 1963, The Ethiopian Monetary and Banking law outlined the functions of The National Bank of Ethiopia. Its functions included:

  • Controlling the supply, availability, and cost of money and credit.
  • Managing the country's international reserves.
  • Licensing and supervising commercial banks.
  • Holding commercial bank reserves.
  • Supervising the loans granted by commercial banks to individuals and businesses. The NBE was also given the power to grant loans to commercial banks
  • Printing and issuing currency. The bank was also in charge of controlling the foreign exchange rates.

The proclamation also separated the NBE from government rule and raised the NBE’s capital to $192,328.90.

During the country’s socialism Regine, the power of the NBE expanded.

In addition to the functions listed above, the NBE participated in Ethiopia’s national planning.

The NBE was also granted regulatory power over other financial institutions I.e insurance institutions, credit cooperatives, and investment-oriented banks in Ethiopia.

During this period, the NBE replaced the Ethiopian dollar with the “Birr” (ETB) and raised the legal limits of outstanding government domestic borrowing to 25%.

After liberal economic policies were enacted in 1991, the government revised the role of the NBE.

In 1994, proclamation 83 outlined the functions of the NBE. The NBE was tasked with:

  • Printing currency and controlling the country's money supply.
  • Managing the international reserve of the country
  • Creating and managing the country's exchange rate policy.
  • Licensing, supervising, and regulating commercial banks, insurance companies and other financial institutions.
  • Providing short and long-term refinancing facilities to banks and other financial institutions.
  • Promoting financial inclusion in Ethiopia
  • Acting as a banker, fiscal agent, and financial advisor to the Government.

You can learn more about the functions of The National Bank of Ethiopia on the NBE’s website here.

The Ethiopian Institute of Financial Studies (EIFS)

The Ethiopian Institute of Financial Studies was created by the NBE in1966 to train the Ethiopian banking sector.

The institute was born out of the need to properly train, direct, coordinate and control the activities of Ethiopia’s financial sector.

The EIFS was first named the Ethiopian Institute of Banking and Insurance (EIBI).

During the first 31 years of the EIBI, it acted as a central training institute for the employees of the financial sector industry.

It also conducted educational diploma programs in Banking and Insurance.

The EIBI was renamed the Ethiopian Academy of Financial Studies (EAFS) in 2007.

The EAFS's main function was to render short-term educational training programs in the areas of banking and finance, insurance, and microfinancing to Ethiopian financial institutions.

In 2009, the EAFS was renamed the Ethiopian Institute of Financial Studies (EIFS).

Since 2019, the EIFS has provided short-term training courses in four main categories: Banking, Microfinance, Insurance, and Management Development.

The EIFS offers a total of 48 different training courses.

The courses are developed and supported by the National Bank and they are open to private banks, insurance companies, and microfinance organizations.

You can find the EIFS course catalogue and other relevant information on the NBE website here.

Frequently asked questions

Who owns The National bank of Ethiopia

The National Bank of Ethiopia is owned by the Ethiopian government.

What is the contact address of The National Bank of Ethiopia

P.O.Box: 5550

Tel: +251 115 517 430

E-mail: nbeinfo@nbe.gov.et

Fax: +251 115 514 588

Avenue: Sudan Street

Can I get loans from The National Bank of Ethiopia

No, you can not.

The National Bank of Ethiopia only grants loans to the government and banks I.e commercial banks and microfinance banks.

Who is the governor of The National Bank of Ethiopia

The current governor of The National Bank of Ethiopia is H.E. DR. Yinager Dessie. He has been the NBE governor since 2018.

You can find the names of the governing body of the NBE here.

What is The National Bank of Ethiopia’s website

You can visit the national bank of Ethiopia’s website here.

What is the role of the National Bank of Ethiopia

The national bank of Ethiopia is the central bank of Ethiopia.

This means it performs the functions of a central bank which include regulating financial institutions, printing money, regulating forex, etc.

Conclusion

The National Bank of Ethiopia plays a huge role in Ethiopia.

Some of its duties include enacting the country’s monetary policies, regulating financial institutions, and monitoring the flow of forex in the country.

Although the NBE is currently trying to control Ethiopia’s inflation rate, it has played a huge part in successfully guiding banks and other financial institutions through its EITFS program and other policies.

Source

https://en.wikipedia.org/wiki/National_Bank_of_Ethiopia

https://www.privacyshield.gov/article?id=Ethiopia-Banking-Systems#:~:text=The%20Ethiopian%20banking%20sector%20is,bank%20and%20sixteen%20private%20banks.

https://fbj.springeropen.com/articles/10.1186/s43093-021-00082-9#:~:text=In%20Ethiopia%2C%20microfinance%20was%20introduced,throughout%20the%20country%20%5B17%5D.

https://allaboutethio.com/best-insurance-companies-in-ethiopia.html#:~:text=By%202016%2C%20in%20Ethiopia%20there,deal%20with%20general%20insurance%20only.

https://cfi.co/menu/corporate/2021/06/yinager-dessie-nbe-governor-takes-bank-to-the-forefront/