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Access Bank SC, the latest private bank to have
joined the sector, is set to launch its headquarters
in the 10-storey Abebech Metaferia Building, erected
on a 436sqm plot where the old milk house villa
rested, in Kazanchis. The Bank, together with its
two sister companies, Access Capital and Access Real
Estate, will pay 350,000 Br rental per month for the
total structure; the former pays 71.4pc while the
latter will pay the balance.
Though the Bank was about to rent a building lying
on a 986sqm plot located off Africa Avenue (Bole
Road), beside Kal Kitfo, the terms of payment
which was initially set to be 150,000 Br did not
impress the owner of the structure, Getachew Ayenew.
In its first general shareholder’s meeting held at
the Hilton Addis Abeba on August 25, 2007, Access
Bank elected nine directors of board with vast
professional experience; Asrat Betru, Ermias Eshetu,
Ermyas Amelga, Habtemariam Shumgizaw, Tamru
Wondimagegnehu, Tecle Alemneh, Tsegaye Habte, Yemiru
Chanyalew and Wubetu Workineh.
Begun, in April 2007 by the main promoter, Ermyas
Amelga, Access Bank, claims to serve its customers
and make exceptional returns focusing on adding
value. In its five months of promotion, the Bank
managed to garner a paid up capital of 75 million
Br, a threshold value that should be kept in a
blocked account at the National Bank of Ethiopia (NBE),
to launch a Bank and subscribed capital of 128
million Br.
Of the total 2,400 shareholders, 80 are
organisations and 87 are from outside Addis Abeba.
Sixty-seven per cent purchased the minimum 25
shares, while 426 purchased 50 shares, 99 purchased
in the range of 26 to 47 shares each and 161 snagged
103 to 400 shares each. The rest bought in the range
of 500 to 5,000 shares each.
The edifice where the Bank is to be headquartered,
is expected be finalised in 10 to 12 months costing
17 million Br, according to the owner, Kedir Ibrahim.
It is after the finishing works are undertaken that
the Bank would officially launch operations in its
headquarters.
Though new banks are continuously coming into the
scene to tap the growing demand of financial
services, most banks chose to expand their branches
almost only in towns, making the distribution
uneven. Access is no different, which created room
for some pundits to argue that such trends would
saturate the market.
Ermyas, however, told Fortune that there is
still untapped potential in towns, including Addis
Abeba, citing a feasibility study conducted by the
Bank.
Of the 491 branches of the 10 private and
state-owned banks in Ethiopia, 188 (38.2pc) are
found in Addis Abeba. On average, one bank in
Ethiopia serves 156,000 people while a single branch
in Addis Abeba serves 22,300 people.
Upholding Ermyas’ argument, Eyesuswork Zafu, board
chairman of United Bank SC, also contended that it
does not make banks unproductive to open a branch in
Addis Abeba as 65pc to 70pc of businessmen in
Ethiopia work in Addis Abeba.
“It is a small drop in the ocean to have one more
bank in Addis Abeba,” said Eyesuswork.
In situations like Ethiopia’s, the currently set
interest rate on deposits (four per cent) may
cripple the deposit mobilisation as there is no
incentive for a rational individual to save while
the consumer price index (CPI) has picked up to
almost 20pc. The theory also states that individuals
would like to spend as soon as they can in such
circumstances where the real interest rate is
negative.
However, according to an economic expert, despite
all these factors, the insufficiency in the number
of banks in the country, has given the existing
banks room to enjoy a substantially high profit
margin.
“Although the internationally acceptable standard of
profit is in the range of two to four percent, the
average for an Ethiopian private commercial bank is
well above eight percent,” argues the expert.
The profit the banks obtain, according to some,
means that the banking sector is not yet exploited
in Ethiopia.
The net income after tax and provisions by the major
banks is: Dashen Bank SC (133 million Br), Awash
Bank (95 million Br), Bank of Abyssinia (87 million
Br), Wegagen Bank SC (71 million Br), Nib Bank SC
(57 million Br), United Bank SC (44 million Br).
Access is also on the verge of entering the banking
industry, if granted the license from the
supervisory authority, NBE.
Ermyas Amelga, told Fortune that his Bank
would introduce new forms of banking to Ethiopia; to
advance loans without demanding collateral and to
replace usurers that disburse credit with high
interest rates.
He claims that usurers charge a huge interest for
their loans but still manage to get customers, which
shows that there is a demand for instant money among
the society.
“Our target is to get there first for these
customers with modern technologies,” Ermyas told
Fortune.
The other form of banking the Bank set to implement
is to grant loans without collateral.
“Having thoroughly studied the background of the
borrower and cash flows of companies, we grant
credit without collateral but with a higher interest
as it involves a risk,” Ermyas disclosed.
The Bank also has planned to launch a collateral
management system, where it involves in the
management of the borrower company so that the
latter becomes a beneficiary of an extra credit
injection whenever it fails to service its debts.
Following the financial liberalisation of the
mid-1990s, Ethiopia’s banking system is portrayed as
one of the sources of economic strength. A glance at
the annual reports released every year by banks
reveals the endless gloomy non-performing loans (NPL)
have given way to a roaring growth and skyrocketing
profits.
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