On July 5, 2024, in Addis Ababa, at NBE-Building-3 Meeting Hall, the Ethiopian Deposit Insurance Fund (EDIF) had a stakeholders’ consultation meeting for the 2023–2024 fiscal year. Attending the meeting are representatives from member financial institutions, such as commercial banks and microfinance. A representative from the National Bank of Ethiopia (NBE) was also present during the meeting.
CEO of the Fund, Dr. Desalegn Ambaw welcomed everyone to the meeting and explained the aim of the meeting which was to give a brief update on the last year performances of the Fund and next year plan to the participants and get their feedbacks. The CEO emphasized that the meeting’s main goal is to establish a solid working relationship and partnership between the Fund and member financial institutions. Additionally, he discussed the advantages and limitation of deposit insurance as it relates to safeguarding depositor interests and promoting the stability of the financial system. He also asked for input from the member financial institutions and made sure that stakeholders were involved in the Fund’s operations.
The Fund’s Director of Operation Directorate, Ato Merga Wakweya, then gave a brief overview of the organization’s major accomplishments for the year 2023–2024, explaining that during that year the Fund:
- Developed the organization’s structure, pay scale, and benefit plans;
- Fulfilled its required human, financial and material resources;
- Obtained Birr 50 million from the Ministry of Finance, which will serve as the Fund’s initial capital;
- Developed the directives, policies, and procedures needed to run the Fund;
- Collected Birr 480 million of initial premiums and Birr 6.03 billion of annual premiums, totaling Birr 6.51 billion from member financial institutions;
- Invested Birr 5.94 billion in Government Treasury Bills and Birr 540 million in the Commercial Bank of Ethiopia’s Muderabaha investment account;
- Signed the Memorandum of Understanding (MOU) with NBE to facilitate information sharing and cooperation between the two organizations;
- Worked with international development partners to obtain their technical support;
- Developed and finalized MOU to be signed with the Ministry of Finance for back-up funding, and with Commercial Bank of Ethiopian for deposit payout banking services; and
- Carried out various initiatives to raise public awareness on the importance of and function of the EDIF.
Ato Merga also gave the attendees an explanation of the various challenges the Fund has faced, such as inadequate expertise and understanding of deposit insurance, the absence of a deposit payout mechanism, and the lack of precise information regarding the insured and uninsured deposits of member financial institutions.
He also provided an overview of the Fund’s budget and plan for the upcoming year, which are primarily concerned with easing the Fund’s current challenges, raising at least Birr 6 billion of premiums and strengthening its financial standing, and automating the Fund’s internal operating systems and deposit payout system.
Building on the Fund’s explained accomplishments and upcoming year plans, the consultation meeting attendees also conveyed their gratitude for the Fund’s significance to the financial system stability and the progress made thus far in operationalizing the Fund and collecting premiums. Additionally, the participants offered suggestions and remarks that are crucial for ensuring the Fund’s effectiveness and for improving it. Some of the specific suggestions and comments raised by the attendees are:
- The Fund should make clear how interest-free premiums are collected and invested;
- There should be cooperation between banks and microfinance institution, accordingly establishing one fund for the two sector is very important; and
- The Fund should continue with its existing pace and strengthen premium collection.
The questions from the attendees have been addressed by the Fund’s CEO and Ato Merga.
Lastly, Dr. Desalegn, the Fund’s CEO, expressed gratitude to all of the attendees for coming to the consultation meeting, providing input, and offering suggestions for how to make the Fund better. The CEO also promised to take the attendees’ suggestions seriously and work to increase the Fund’s efficacy.
