NBE Launches Credit Bureau, Upgraded Credit Info System

National Bank of Ethiopia (NBE) launched Credit Bureau and Credit Information System in a half day ceremony organized at Hilton Addis, Ethiopia, in August 2011. The new system is an upgrading of what NBE had introduced in 2004 in which 12 banks operating then were involved. This Credit Information System marks an important milestone in financial infrastructure development in Ethiopia, as it introduces a state-of-the-art platform to facilitate sophisticated credit information sharing in the country.

The launch heralds the beginning of a new approach in credit processing, extension and management. It is the beginning of the end of collateral based lending, which dominated our entire banking history, H.E. Getahun Nana, Vice Governor of Financial Institutions Supervision at NBE, said in his opening remark at the ceremony.

The government has launched an ambitious but achievable five year Growth and Transformation Plan. The plans financing need is huge and domestic sources are expected to finance a significant part of it. And this launch would increase access to finance, he added.
Existence of credit bureau and credit reporting system enables financial institutions to make informed decisions. This in turn has benefits both to the customer and the provider of the services. Making informed decision is a fundamental issue creditors have to address as part of their routine loan provision. In the absence of information the risk is high.

However, provision of loans is still traditional in that many financial institutions are more comfortable lending to large corporate bodies. At the moment access to finance in developing countries is less than 25 percent as opposed to more than 90 percent in the developed countries, Mr. Uli Zeisluft, Principal Financial Specialist with International Finance Corporation said in his presentation. The new system facilitates inclusion of the informal sector of the economy in the formal economy, he added.

Creating an enabling environment for sustained private sector growth requires a strong and well developed financial sector that can meet their financing needs. Up to now a major obstacle in responding to this challenge has been the very great reliance on collateral as the primary determinant in deciding whether to approve a loan request, Mr. Greg Tolumin, World Bank Acting Country Director underlined at the launching ceremony.

The World Bank financed the project; International Finance Corporation provided technical support; and Compus can Direct (CSD) did installation of the infrastructure and implementation of the system.

However, the new system would only be a technology platform improvement and more need to be done to further improve credit market in Ethiopia, Mr. Adamou Labara, Resident Representative of IFC Ethiopia said on the occasion. I urge all banks and micro-finance institutions to actively participate in the credit information system, Ato Getahun underlined.

NBE support to HIV victims of former bank staff families

Families of eleven former National Bank of Ethiopia (NBE) employees were given between birr 1,000 to 1,700 in a ceremony organized at the Bank on October 27, 2011. Ato Yemane Yosseph, Vice Governor of Corporate Services, handed over the checks to the 11 HIV affected families on behalf of NBE staff. A total of birr 14,700 was provided on the day. The 11 HIV affected families were identified for support based on the size of each family, their health condition, and the income they earn.

On the occasion, the Vice Governor said NBE staff do not believe the financial support provided on the day would solve all their problems. It is rather a gesture to express the staffs concern and affection towards fellow staff members.

W/ro Hiwot Bahiru, NBE Womens Affairs Officer, on her part said visits have been made to the families to provide support as well as look into their situations with a view to decide on the kind of support that could be provided. Through such visits the committee was able to assess their needs:

  • Children and elderly people unable to access medical attention,
  • Children dropping out of school for lack of support
  • Unemployed youth living as dependents on their families
  • Children facing problems related to stationary materials, uniforms, school fee, transportation, and food Destitute .

There is also a need for auditing the finances because NBE staff who make the monthly contributions for the families would need to know whether it has reached the desired target properly, the Vice Governor said. The account reconciller is not around due to circumstances beyond control and its finances have not been reconciled for seven years. But now an account reconciller has been assigned and information is being gathered for the work to start.

NBE work place Anti-AIDS committee was established in August 1995 (Eth. C.) and had been carrying out prevention, and care and support activities since then, w/ro Hiwot said, and went on to add, it drew lessons from Commercial Bank of Ethiopia and Business Bank and drew up regulation. It identified former employees who died of AIDS in the years 1985 to 1995 (Eth. C.) and further identified those in bad need of support. And it provided eight rounds of support from 1996 to 1999(Eth. C.). Three bank employees i.e. People Living with HIV/AIDS and with very low monthly incomes, have been given support to enable them cater for their better food requirements.

It had been hoped to do better than the one delivered on the day and in the future efforts would be made to raise more funds to meet the need on the ground, Ato Yemane said.

Finally the Vice Governor expressed his appreciation of the support Change Management and Communication Directorate provided for the endeavour as well as the Committee and W/ro Hiwot, NBE Women’s Affairs Officer.

NBE to Set up Online Credit History

The financial sector regulating arm of the Ethiopian government, National Bank of Ethiopia (NBE), is set to commence an online client credit history at a cost of four million dollars in one month. The real time approach of sharing information with the central data system is expected to significantly reduce the information gap between lender and borrower. It also enables the regulator to assess and prevent systemic risks in the financial sector.
The system provides information about a borrowers behavior. Does the borrower have a positive credit history or a negative one? Such information helps one to make a decision of whether or not to lend much more easier, explained Uli Zeisluft, Principal Financial Specialist at International Financial Corporation Advisory Services.

The system includes in its database borrowers addresses, the partners information, previous credit performance, current levels of indebtedness, the amount of time credit has been in use, collateral information and court related issues.

Since there are no unique identifiers such as an address on a national level, the regulator is forced to make use of the Tax Payers Identification Number (TIN) provided by the Ethiopian Revenue and Custom Authority, said Mathiwos Shamo, Financial Sector Capacity Building Project Coordinator at NBE. The technology upgrading project will totally transform and expand the capacity of the former Credit Center under the Bank Supervision Department of NBE. It will replace manual correspondence between banks and NBE about both commercial and consumer loans borrowed once a month enabling a real time information exchange.

At present the database is set to link borrowers information from banks and microfinance institutions. In the near future it will also include insurance, added Mathiwos.

Experts in the financial sector argue that the creation of such an information mechanism will broaden and ensure fair access to credit by reducing the level of asymmetrical information on the part of tender about the borrower. This in itself facilitates access to credit and lowers credit costs thereby enhancing profitability for all parties involved in the lending and borrowing process. Above all, it ensures better financial resource allocation.

Non performing loans (NPL) will significantly fall following the implementation of the project because every lender will have full information about their clients credit history. This reduces risks of default. If the rate of default goes down, profitability will subsequently increase, contributing not only to the reduction of NPL but also to the stabilization of the financial sector in general, the project coordinator explained.

The program was financed by the World Bank and technically consulted by the International Financial Corporation (IFC); a World Bank Group financial advisory entity.

As we did yesterday and as we are today. IFC would be pleased tomorrow to provide its technical support to NBE with the overall objective of developing the private sector,said Adamou Labara, Country Director of IFC at Ethiopia.

NBE Increases Interest Rate

NBE Governor, Teklewold Atnafu, told journalists on December 06,2010 that the lowest interest rate for savings has been increased from 4 percent to 5 percent effective December 2, 2010.

He said the measure was taken to guarantee continued financing, thereby contributing share for the efficient realization of the five-year Growth and Transformation Plan (GTP) and sustainability of ongoing speedy economic growth.
Teklewold added that the bank has also begun a new bid bond saving to encourage savings by low-income communities. The list price of a bond is 500 Birr.
Bid bond holders can use bonds as a collateral to get loans from banks.
The saving scheme for housing to be implemented at a pilot level at the Commercial Bank of Ethiopia (CBE) will make citizens owners of residential units within a short period.
The saving scheme for housing will be executed through a housing project to be established by the government. After the pilot test at CBE, the scheme will also be introduced at other banks.

Ethiopia`s broad-based economic

Ethiopia broad-based economic growth continued for the sixth time in a row in 2008/09 putting the country in a higher growth trajectory. The economy grew at 9.9 percent in 2008/09 making Ethiopia area of the fastest growing economies in the world despite world economic melt down and global finical crisis. With a 42.6 percent share in GDP, agriculture and allied activities rose 6.4 percent contributing 27.2 percent to the overall economic growth recorded in the fisicalyear.

NBE Awards

This publication holds a ceremony that took place on September 9/2008. In the stated date, the NBE awarded a long time service merit certificate and various of grams of gold having its logo to the employees who are serving the Bank for more than 10 years. An employee who has been serving the Bank for more than 40 years was among the awards.

Honorable guest H.E. Ato Neway Kiristos Gebre ab, Economic Advisor to the P.M, with the rank of a Minster and Chairman of the NBE’s Board of Directors said on the occasion while handed over the certificates that, the employees’ longtime service at NBE shows their honesty, integrity and belongingness to the Bank. H.E. Ato Teklewold Atnafu, Governor of the Bank, said on his part that the Bank, in its long time journey came across through achievements and challenges and it is through the immense contribution of the government, the previous and the current employees that the Bank enabled to overcome the challenges and become successful in its venture. He further said that, of those committed and dedicated employees, the day’s awardees should feel proud for their commendable result achieved in the Bank. The full text of their speech contemplated in the news and information column.

The National Bank of Ethiopia was established in 1963 by proclamation 206 of 1963 and began operation in January 1964. Prior to this proclamation, the Bank used to carry out dual activities, i.e. commercial banking and central banking.

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