Fri. Jan 27th, 2023
Central Bank Governor Yinager Desie

ETHIOPIANS TODAY, ADDIS ABABA (FINFINNEE), ETHIOPIA:

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NBE to Allow Loan Access with Movable Assets Collateral

Central Bank Governor Yinager Desie

The National Bank of Ethiopia (NBE) says it is preparing to implement the proclamation that enables individuals and entities to get credit access using their movable assets as collateral.

This comes two years after lawmakers enacted the Movable Property Security Right proclamation which aims to enable businesses and individuals to use their movable property as securities to access finance and effectively govern the system.

Central Bank Governor Yinager Desie said preliminary preparations have been carried out to put the implementation of the proclamation in motion.

Yinager made the remarks during a meeting involving officials in charge of finance, planning and development, revenues at the federal level, and regional level in Arba Minch City.

According to the national bank of Ethiopia, access to financial services has shown a major leap in the last four years, fueled by the growth in the number of commercial banks and Microfinance institutions (MFIs).

The number of banks has increased from 18 to 30, and their branches reached 8,944, as of June 30, 2022, from 5,564 four years ago. Forty microfinance institutions are also operating across the country.

However, Yinager said financial accessibility in rural areas and for the working age group remains “very low”, as compared with other east African countries such as Kenya and Tanzania.

The financial institutions offer loan access based on fixed property and businesses, limiting their inability to serve only 6.6 million borrowing customers.

Banks have managed to provide loans to more than 330,000 persons while Microfinance institutions reach six million borrowers across the country.

The Central bank expects implementing the Movable Property Security Right law would bridge the legal gap for financial institutions to serve more borrowers with their credit line services.

It will allow pastoralists and farmers to get credit services by using their animals, and land rights as security, the Central Bank governor said.

Banks and microfinance institutions are also undertaking preparations for the implementation of the proclamation. The National Bank of Ethiopia plans to officially launch the service in Jigjiga soon.

Ethiopian Monitor

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By Chala Dandessa

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