The National Bank of Ethiopia modifies freight payments rules for the Ethiopian Shipping and Logistic Services Enterprise to receive half of the freight fees in ETB at the end of each month. Currently, commercial banks cannot pay the 7.8 billion ETB (150 million USD) they owe to the shipping company. In addition, the shipping enterprise has its rental and other fees in debt, adding up to about 100 million USD.
Ethiopia’s foreign exchange reserve has dropped to less than 2 billion USD, which can only cover less than two-month imports. Due to the COVID-19 pandemic, the shipping enterprise quadrupled its freight charges in the past year. This has increased the cost of shipping a 40 feet container from China’s port, Ethiopia’s largest trading partner, to almost 13,000 dollars.
The new rule eases banks’ struggle with forex mobilization following NBE’s retention rules of forgoing 70% of foreign earnings from exports, remittances, and transfers to NGOs. The adjustment aims to increase Ethiopia’s foreign currency reserves, which are currently unable to pay import & external debt fees. This reduces the stress on banks and importers and gives them more time to pay off their debt. This modification applies to all imports except wheat, sugar, coal, and fertilizer, the government’s main imports.
