This is desperate move .total desperate . As equity is coming with ideas of growing profits through advance technology like Equitel these guys are working on cost cutting through stationery. Honestly I call this foolish honesty.


Definately there is a problem with management way of thing. Once done with this what cost cutting will they do next . Remember last year cost cutting was reduce the number of staff,this year it's stationery ,next year it will be reducing the number of computers .

What this bank needs is ideas not events.

@RealTreaty we know how expenses eat into PL. Ericson wanted to know of these guys have another ideas for growing profits like come up with new technology "cooptel" that can rival equitel. I think I just gave them a hint for free .."cooptel "

This idea that Kenyan banks will walk into Ethiopia and magically start minting profits is one of the biggest fallacies. They'll have to consider all the following which don't bode well for profit:

1. Minimum paid up capital required of KES 2 Billion; while the KE banks don't have sufficient capital as it is they'll need atleast KES 15 Billion to ably compete with the biggest ET banks.

2. 18 other commercial banks already existing in the country with CBE, the government controlled bank controlling ~70% of the market.

3. The language barrier - setting up a greenfield retail banking operation will be almost impossible because Amharic is the working language.

4. The policy and regulatory environment is very different from that in KE e.g. requirement that banks buy zero coupon government infrastructure bonds, no floating forex, to reptriate profits you have to get approval of the NBE etc

5. The financial reporting, taxation reporting etc are much different in ET so the profits and ROE they currently see in ET banks maybe much lower in IFRS terms.

The bright side is that there is room on the technological side that can be exploited. ET banks are still in the age of brick and mortar mostly.

Do you know that saccos have been given licenses to operate like banks like lending each other ? This is a huge threat for coop bank core business structure-saccos

The Ethiopian Birr is tightly controlled thus the parallel rate is much higher like the South Sudanese Pound was but not as bad. We saw how the profits and investment of KCB and Equity was severely diminished when the SSP was floated.

So anyone investing in Ethiopia by taking money INTO Ethiopia needs to write-down part of the investment since you get a lousy low rate for the Birr. Repatriating profits is very difficult so one cannot assume there will be cashflow from the investment. It is locked in Ethiopia.