According to Wazema Radio, certain commercial banks in Ethiopia are charging additional fees beyond the legally mandated costs for foreign currency sales. Several import traders reported to Wazema Radio that when they request foreign currency from commercial banks, they are often told, “We don’t have it.” Instead, banks direct them to customers who already have foreign currency in their accounts, facilitating private exchanges at an added cost. Wazema Radio has verified that at least two banks have engaged in this practice, as evidenced by payment transactions provided by traders.
One trader highlighted that these extra charges have driven up the exchange rate of the U.S. dollar from 155 to 160 birr. According to him, he had to pay 780,000 birr—equivalent to 156 birr per dollar—to obtain 5,000 U.S. dollars.
Under the current system, when banks sell foreign currency, they apply a 12 percent service fee, followed by a 15 percent value-added tax (VAT) on the service charge. In addition to the officially posted exchange rate—advertised on their social media pages or displayed in their offices—banks also impose an extra 6 to 10 birr per dollar. This fee is justified by claims that “we do not have foreign currency, so we connect you with bank customers who do.”
Another trader involved in product imports, who requested anonymity, stated, “We have no alternative. The government has banned franco-valuta, which means we cannot source foreign currency through other means. The justification for the ban was that banks would provide sufficient foreign exchange, but in practice, the banks refuse to do so.”
He further argued that the contradiction in the banks’ responses suggests either a genuine shortage of foreign currency or an artificially induced scarcity designed to extract higher payments from traders.
Meanwhile, in a recent interview with state media, National Bank of Ethiopia (NBE) Governor Mamo Mehrut claimed that the country’s foreign exchange reserves have more than doubled as a result of the government’s “comprehensive macroeconomic reform.” He also noted that commercial banks’ reserves had increased significantly.
Following the transition to a market-determined exchange rate, Ethiopia reportedly generated an unprecedented $1 billion in foreign exchange from gold and coffee exports within a few months. Additionally, since July 22, 2023, the country has secured $1.6 billion in loans from institutions such as the International Monetary Fund (IMF) and the World Bank.
Despite these developments, however, foreign exchange shortages remain widespread, raising concerns about the effectiveness of the government’s reforms and the practices of commercial banks in the country.
(Source: Wazema Radio)
