By Staff Reporter
ADDIS ABABA – (BORKENA) – People who deposit money in any financial institution in Ethiopia, will have their money guaranteed by a newly established Insurance Fund from today, sources said.
Sheger FM 102.1 Radio disclosed that the majority or 95 percent of the people who deposit money in banks in Ethiopia have (put aside) less than 100,000 birr.
The radio reported that this was disclosed when the establishment of the Ethiopian Deposit Insurance Fund was officially announced.
Accordingly, a financial insurance fund that guarantees deposits in various financial institutions has been established and officially launched today, Sheger FM said. This newly established Insurance Fund is said to be accountable to the National Bank of Ethiopia.
People who have deposited money in any financial institution are reportedly guaranteed by this Insurance Fund as of today. Chief Executive Officer of the National Bank of Ethiopia, Merga Wakoya said that the fund protection applies only to deposits amounting 100,000 Birr and above.
This is said to be one of the changes made in the financial sector. The Deputy Governor of the National Bank of Ethiopia, Solomon Desta, explained what the structure of the Fund looks like. The duties and responsibilities of the Fund are reportedly limited to the treasury.
Sheger FM reported that the Insurance Fund would be managed by the government. The deputy governor said that if a financial institution fails, the Insurance Fund will work to exit smoothly, without disturbing the people and the economy, according to Sheger FM Radio.
The Deputy Governor, Solomon further explained that in such an incident, the insured money will be returned to the depositor within 90 days.
Sources indicate that 147 countries have their Deposit Insurance Fund Institutions and Ethiopia is the 148th country to establish its own.
BORKENA reported in its September 11, 2023 issue that as lack of cash in private commercial banks “is getting worse to the point where they (private banks) are unable to pay their customers, investors and businessmen are forced to use other options instead of depositing their cash in the banks”.
BORKENA quoted Wazema as reporting that traders and investors had decided to withdraw their money gradually from the bank and keep it in private coffers and safe places at home. “The concern of the investors is reportedly that when they are in need of finance, it is difficult for them to draw their own money as quickly as possible for various restrictions.”
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