Forex Crunch in Ethiopia

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By Michael Gichuki/Victor Muyakane

The world’s most populous land locked country has become a victim of its own successful growth- at least in regard to foreign exchange reserves.

Ethiopia’s rapid economic expansion has a caused serious foreign currency shortage as the country transforms from an agrarian to an industrial driven economy.

Ethiopia’s Minister for Finance and Economic Development Abraham Tekeste says the foreign currency shortage was directly associated with the soaring number of government and private owned projects in the country. Ethiopia has been experiencing foreign currency shortage for close to a decade now.

But with the economy expanding, the problem is getting worse, negatively impacting the manufacturing and import export sectors regardless of the size of the players.

Tekeste asserts the need to have export-based businesses prioritize dealing in foreign currency warning of dire consequences to the country’s development if the shortage isn’t addressed.

Orbis International Ethiopia Chief Executive Alemayehu Sisay attributes the lack of foreign currency to the low performance of the export sector in addition to certain administration handicaps which ought to be improved.

The Ethiopian government is keen to increase the number of export-based businesses to boost the forex situation.

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