The World Bank has announced a substantial increase in its support for Ethiopia's financial sector through a newly approved $700 million credit from the International Development Association (IDA) for the Financial Sector Strengthening Project (FSSP). The project aims to enhance the stability of Ethiopia's financial sector.
Ethiopia faces several challenges within its financial sector, such as inadequate regulatory frameworks and weak public financial institutions. The FSSP is designed to address these issues by modernizing the regulatory and supervisory framework of the National Bank of Ethiopia (NBE), supporting governance reforms, balance sheet restructuring, and recapitalization of the Commercial Bank of Ethiopia (CBE), and transforming the Development Bank of Ethiopia (DBE) into a sustainable development finance institution. The project will also provide implementation support and capacity building for NBE, CBE, and DBE to ensure their resilience and sustainability. By strengthening these key financial institutions and modernizing the financial system, it aims to contribute to economic growth in Ethiopia.
Maryam Salim, World Bank Country Director for Eritrea, Ethiopia, South Sudan, and Sudan stated: "We are proud to support Ethiopia in its journey to transform and strengthen its financial sector. This project reflects our commitment to promoting economic stability and inclusive growth in the country. By boosting the capacity of key financial institutions, we aim to build a more resilient and accessible financial system that truly meets the needs of all Ethiopians."
The approval of this project marks a significant milestone in building a stronger financial system in Ethiopia. It seeks not only to address current challenges but also aims at creating a more resilient system capable of unlocking new opportunities for growth by focusing on critical areas needing improvement.
IDA was established in 1960 with an objective to assist low-income countries by providing grants and low- or zero-interest loans for projects that promote economic growth, reduce poverty, and improve living conditions. IDA stands as one of the largest sources of assistance for its 75 client countries globally.