Here’s Why Ethiopian Banks Have Been Ordered to Suspend Lending

Following a recent discovery of shady activities, the National Bank of Ethiopia (NBE) has ordered a temporary ban on loans in the country. This includes loans that require collateral such as land and building.

The apex bank cites the use of loans in the black market. State Minister of Finance Eyob Tekalign told Shefer FM that the temporary suspension of loans follows findings that such funds were being injected into a shadow economy. These kinds of transactions are the basis for an underground economy that is non-compliant with institutional rules.

This stringent measure finds root in a struggling economy like Ethiopia’s. The World Bank states that the Horn of Africa is one of the continent’s poorest nations with a per capita income of $850. However, it is considered one of the fastest-growing economies in the region. Ethiopia follows Nigeria as the second-most populous nation on the continent and aims to attain lower-middle-income status by 2025.

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