The nation’s central bank, National Bank of Ethiopia (NBE), has ordered that all bank processes concerning items being exported to China shall be undertaken and overseen by the Commercial Bank of Ethiopia (CBE) only.
 

NBE, which has the authority to regulate all financial institutions in the country, held a meeting with state and private-owned banks and issued the new order, which stated that the process of all exports going to China shall be handled by CBE alone and that no other bank can take part in these transactions.
 

“The decision was made so as to implement an agreement reached between both country governments,” an official from NBE told Fortune, explaining that the Bank does not know why the government made the decision.
 

Other sources from the Bank nevertheless told Fortune that in fact, the reason for the decision was simply based on the fact that after some time spent with Ethiopia and China negotiating on a possible loan; the Chinese agreed to grant the amount if Ethiopia would in turn make the payments in exports. The process can only take place through state banks selected by both governments.
 

Sources from CBE told Fortune that the Director of International Banking, Birtukan GebreEzgi, went to China two weeks ago to sign the necessary agreement with the selected Chinese bank there.
 

But one of the members of the CBE Board of. Management told Fortune that there has not been a time that this issue was raised during one of their meetings. He was surprised to hear that it actually existed without their knowledge.
 

“Although it might be setting the export route in one sector and might seem like a monopoly now, this is the type of system that the Chinese government has been using with other African states,’ said an NBE official. “Capital equipment coming from China will be processed through the one selected bank there as well.”
 

Attempts made at receiving a confirmation from the Embassy of the Republic of China in Ethiopia were not successful.
 

“Private Banks make more from the Letter of Credit (LC) commissions they open for exporters than they do from the general banking processes,” said a banking expert. “With this new regulation set in place, I think the sector will suffer.”
 

In 2005, Ethiopia exported items worth 714.2 million Br to China, whereas imports from China during the same year were at a high 4.4 billion Br. The major export item to China is sesame seeds.
 

In accordance to its order, NBE gave banks until November 14, 2006, to finance LC accounts for exports to China. After this date, the National Bank expected all banks to no longer handle China export procedures.
 

“The government’s decision is not really clear to me,” Awash International Bank S.C President, Leikun Birhanu told Fortune. “I would rather not comment seeing as it would be difficult for me to explain something I do not quite comprehend.”
 

Other private bankers refrained from commenting for the same reason.
 

According to NBE statements last year, China is the fourth largest trader in the world, with its exports gaining market share while at the same time, supporting the strong performance of other countries and being an important importer as well.