Awash International Bank (AIB) has big plans amid Ethiopia's persistent inflation, the unavailability of trained manpower in the market and a lack of dependable infrastructure. In this interview, President of AIB, Tsehay Shiferaw reveals the bank's expansion plans.
The Africa Report: Could you please give us an overview of Awash International Bank (AIB)?
Tsehay Shiferaw: AIB is a pioneer private bank established in Ethiopia following the downfall of the military regime and the declaration of market-oriented economic policies, which happened in 1991. The bank was founded by 486 founding shareholders in 1994. It started banking operations on 13 February 1995.
We'll prioritise lending to the manufacturing sector, which is the engine of growth
By the end of June 2013, the number of shareholders had risen to 3,122 and its paid-up capital to 1.1bn birr ($58m). Our total number of branches reached 115 by the end of June 2013, indicating the fact that the bank continues to hold its leading position among private banks in terms of branch network.
And your market share?
The deposit and loan market share of AIB has consistently been increasing and it was over 15 and 16% respectively of the private banks over the last three years. It has risen to over 20% for both deposit and loans in the financial year ending June 2013 in spite of the mushrooming and challenges of the business of private banks in Ethiopia.
Can you tell us the major challenge the banking industry is facing?
The major challenges facing the banking industry in Ethiopia are persistent inflation, the unavailability of trained manpower in the market, a lack of dependable infrastructure such as telecommunications and power, and the introduction and implementation of new banking technology owing to the lack of skilled manpower.
What can you tell us about government's role in setting lending priorities?
The government has not issued directives that set lending priorities by sector. Nevertheless, it has clearly indicated in its Growth and Transformation Plan that the export and manufacturing sectors will deserve special attention.
Can you tell us about your bank's role in financing manufacturing projects?
Our bank has financed and continues to finance the manufacturing sector. As for future plans, we envisage expanding the share of our credit to the manufacturing sector and will give it lending priority in the coming years, as the manufacturing sector is the engine of growth for our country.
What would you say if Ethiopia decided to open its financial market to foreign investors tomorrow as part of its journey towards accession to the World Trade Organisation (WTO)?
We expect that accession to the WTO and thereby the entry of foreign investors does not merely imply competition, but it also opens a door for cooperation as well.
Can you tell us the effect of bond purchases for the Great Ethiopian Renaissance Dam's (GERD) construction on your bank's performance?
The likely impact of the bond purchases for the GERD on the performance of our bank will be the drawdown of deposits. However, in practice, we have witnessed a continuous and tremendous improvement in the magnitude of deposits mobilised by our bank as we are strongly working in resource mobilisation endeavours.