National Bank of Ethiopia: Innovative and Inclusive Payments

Posted on Nov 25, 2021 by Solomon Damtew, Principal, Payment Systems Oversight & Development, National Bank of Ethiopia


In July 2021, the National Bank of Ethiopia launched its first ever National Digital Payments Strategy, an ambitious initiative that aims to build an innovative payments ecosystem in support of a cash-lite and inclusive economy. Central Bank Payments News spoke to the National Bank’s Solomon Damtew about the objectives of the Strategy, the challenges of implementation, and the progress achieved thus far.

CBPN: Let’s begin with a bit of context. Cash is the predominant means of payment in Ethiopia. What are the challenges, then, of moving forward and implementing the National Digital Payments Strategy (NDPS) considering the centrality of cash in the Ethiopian economy?

SD: Ethiopia is nearly a 100 percent cash-based society. Cash is the predominant player in the economy, and most of the GDP is moved through cash. The role of digital means of payment in the economy is currently very, very limited. But in the past year or two, many initiatives have been implemented by both the government and the National Bank that have served to increase the role of electronic payments. For this reason, the National Bank has launched its first ever National Digital Payments Strategy (NDPS) in July 2021, which aims to reduce the role of cash in the economy, particularly for retail payments. During the preparation of this Strategy, we identified many problems and challenges, primarily those challenges revolving around infrastructure and digital awareness.

CBPN: In recent years, there has been an increase in the adoption of digital payments within Ethiopia, but those levels are still much lower than elsewhere in sub-Saharan Africa and the rest of the world. What is the National Bank and its partners doing to promote awareness of the Strategy and to foster digital literacy?

SD: For Ethiopia, which has more than 115 million people, financial inclusion is still very limited, and there are many problems within the financial sector. Among the factors that have prevented greater financial inclusion is the low level of literacy or digital awareness within Ethiopia. Separate from the NDPS, we have a National Financial Inclusion Strategy in which financial literacy and awareness are widely addressed. The National Bank is planning to collaborate with the Ministry of Education and the Ministry of Women, Children, and Youth Affairs to provide a means to create digital payments awareness and financial inclusion awareness. So that is one way the National Bank is addressing issues of inclusion.

As you mentioned, there are big changes taking place in Ethiopia towards digital finance. The reason for this is ... 

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