The Surge in Customer Deposits and Its Implications for Ethiopia’s Capital Market
Deposits from customers have surged by 116 billion ETB in 2024 financial year across four medium-sized banks in Ethiopia: Awash (43B), Abyssinia (34B), Dashen (31B), and Hibret (8B).
While this is a clear sign of growing trust in the banking sector, there’s a critical concern: the interest rates offered by banks are still below inflation levels, leaving depositors with limited returns.
This mismatch could have significant consequences. With the lack of viable alternative investments, many are continuing to park their money in banks, despite the low returns. But as inflation erodes the real value of these deposits, what happens when customers seek better opportunities?
As Ethiopia's Capital market begins operations, could this trend shift as investors look for higher returns? Or will the deposit surge continue as the absence of attractive alternatives forces investors to stay in low-yield assets?
The gap between interest rates and inflation presents a unique challenge and opportunity—a chance for the capital market to provide an outlet for investors seeking better returns. The question is: Will this trend hold, or will we see a shift as the market matures?
What are your thoughts on the evolving investment landscape in Ethiopia?
Via #M_Tesfaye
#CapitalMarke #ESX
Deposits from customers have surged by 116 billion ETB in 2024 financial year across four medium-sized banks in Ethiopia: Awash (43B), Abyssinia (34B), Dashen (31B), and Hibret (8B).
While this is a clear sign of growing trust in the banking sector, there’s a critical concern: the interest rates offered by banks are still below inflation levels, leaving depositors with limited returns.
This mismatch could have significant consequences. With the lack of viable alternative investments, many are continuing to park their money in banks, despite the low returns. But as inflation erodes the real value of these deposits, what happens when customers seek better opportunities?
As Ethiopia's Capital market begins operations, could this trend shift as investors look for higher returns? Or will the deposit surge continue as the absence of attractive alternatives forces investors to stay in low-yield assets?
The gap between interest rates and inflation presents a unique challenge and opportunity—a chance for the capital market to provide an outlet for investors seeking better returns. The question is: Will this trend hold, or will we see a shift as the market matures?
What are your thoughts on the evolving investment landscape in Ethiopia?
Via #M_Tesfaye
#CapitalMarke #ESX
👍1
#Bitcoin
#Part_1
As Bitcoin is on the cusp of the landmark $100,000 ATH price in November and surpassing Silver & several other fiat currencies with its $2T market cap boosted by institutional funding and expectation of a pro-crypto administration in the US, it is high time to review the history and use-cases of Bitcoin in Africa, simply because, “Africa will define the future (especially the Bitcoin one)” as Jack Dorsey said it after his listening tour to the continent back in 2019.
While DeFi, which is exemplified by Bitcoin’s ecosystem, seemed a recent movement to many, Africa has naturally embraced decentralized finance for generations through informal savings groups, microloans, and community lending networks, whether these are termed Ajo, Hawala, Stokvels, Chama, Tontines, Esusu, Equb or something else. These communal practices have long provided financial solutions outside of the traditional formal banking system, creating a foundation for the rapid adoption of modern decentralized networks. Then arrived Africa’s innovative gift to the world – Mobile Money.
Spurred by rapidly expanding mobile phone access and fragmented banking, mobile money has brought a new digitally native generation to financial inclusion in the age of the internet, demanding internet currency for its global transactions. This created the foundation for Africa as an ideal landscape for crypto's growth, and in particular that of Bitcoin when it emerged in 2009. It was inevitable that the use and adoption of Bitcoin would deepen in Africa as Africa’s digitally savvy population converses with the global economy and is faced with a shallow reach of traditional money systems, especially on a last-mile basis. A continent with the world’s largest working-age population that is increasingly working remotely for global companies demanded rapid, cost-effective and interoperable remuneration and payroll payment systems from offshore employers & clients.
Here comes Bitcoin, a digital currency born in & for the internet economy and Africa deployed it to solve real-life pain points and create formidable use-cases. What has been the track record of Bitcoin in Africa?
Pioneering Roots of Decentralized Finance
Building blocks of Decentralized Finance Bitcoin’s introduction to Africa in 2009 went mostly unnoticed, but interest grew in the early 2010s. With traditional financial systems struggling under high fees and limited access, Bitcoin offered a low-cost solution, especially for remittances in Nigeria, South Africa, and Kenya.
Rising Momentum in Crypto Adoption
While initially mainly used for peer-to-peer value transfers, Bitcoin has been used in cross-border trade, remittances, payroll management for remote work, as a store of value and hedge against inflation across Africa, making it now leading the globe in crypto adoption, with countries like Nigeria, Ghana, and Kenya at the forefront. According to a Chainalysis report, Africa's cryptocurrency market grew by over 1,200% between July 2020 and June 2021, making it one of the fastest-growing regions globally. Fast forward to June 2024, Bitcoin accounted for 18.1% of all blockchain money transfers in sub-Saharan Africa, almost doubling from 9% a year before. And comparing the stat of 2023, as Chainalysis report puts it, “in no region is Bitcoin more dominant than Sub-Saharan Africa, as the world’s first cryptocurrency makes up a bigger share of transaction volume there than in any other region,”.
#Part_1
As Bitcoin is on the cusp of the landmark $100,000 ATH price in November and surpassing Silver & several other fiat currencies with its $2T market cap boosted by institutional funding and expectation of a pro-crypto administration in the US, it is high time to review the history and use-cases of Bitcoin in Africa, simply because, “Africa will define the future (especially the Bitcoin one)” as Jack Dorsey said it after his listening tour to the continent back in 2019.
While DeFi, which is exemplified by Bitcoin’s ecosystem, seemed a recent movement to many, Africa has naturally embraced decentralized finance for generations through informal savings groups, microloans, and community lending networks, whether these are termed Ajo, Hawala, Stokvels, Chama, Tontines, Esusu, Equb or something else. These communal practices have long provided financial solutions outside of the traditional formal banking system, creating a foundation for the rapid adoption of modern decentralized networks. Then arrived Africa’s innovative gift to the world – Mobile Money.
Spurred by rapidly expanding mobile phone access and fragmented banking, mobile money has brought a new digitally native generation to financial inclusion in the age of the internet, demanding internet currency for its global transactions. This created the foundation for Africa as an ideal landscape for crypto's growth, and in particular that of Bitcoin when it emerged in 2009. It was inevitable that the use and adoption of Bitcoin would deepen in Africa as Africa’s digitally savvy population converses with the global economy and is faced with a shallow reach of traditional money systems, especially on a last-mile basis. A continent with the world’s largest working-age population that is increasingly working remotely for global companies demanded rapid, cost-effective and interoperable remuneration and payroll payment systems from offshore employers & clients.
Here comes Bitcoin, a digital currency born in & for the internet economy and Africa deployed it to solve real-life pain points and create formidable use-cases. What has been the track record of Bitcoin in Africa?
Pioneering Roots of Decentralized Finance
Building blocks of Decentralized Finance Bitcoin’s introduction to Africa in 2009 went mostly unnoticed, but interest grew in the early 2010s. With traditional financial systems struggling under high fees and limited access, Bitcoin offered a low-cost solution, especially for remittances in Nigeria, South Africa, and Kenya.
Rising Momentum in Crypto Adoption
While initially mainly used for peer-to-peer value transfers, Bitcoin has been used in cross-border trade, remittances, payroll management for remote work, as a store of value and hedge against inflation across Africa, making it now leading the globe in crypto adoption, with countries like Nigeria, Ghana, and Kenya at the forefront. According to a Chainalysis report, Africa's cryptocurrency market grew by over 1,200% between July 2020 and June 2021, making it one of the fastest-growing regions globally. Fast forward to June 2024, Bitcoin accounted for 18.1% of all blockchain money transfers in sub-Saharan Africa, almost doubling from 9% a year before. And comparing the stat of 2023, as Chainalysis report puts it, “in no region is Bitcoin more dominant than Sub-Saharan Africa, as the world’s first cryptocurrency makes up a bigger share of transaction volume there than in any other region,”.
#Bitcoin
(#Part 2)
Key partnerships have also fueled the growth, including Jack Dorsey & Jay Z’s 500 BTC donation to create Btrust to fuel the next wave of software engineers and developers in the Bitcoin ecosystem, Square/Block’s investment in Yellow Card, TBD’s partnership to deploy bitcoin for cross border payment with Yellow Card, major exchanges including Paxful and Binance’s early expansion in Africa. Peer-to-peer (P2P) platforms also surged, enabling people to trade Bitcoin in areas with limited or non-existent traditional financial & banking access. And this week, Nigeria-based Recursive Capital, an early-stage Bitcoin VC Fund investing in Bitcoin companies in Africa, announced the first close of its Fund I with Jack Dorsey and other anchor investors. The fund close is set to be deployed to lay the foundations for a thriving Bitcoin ecosystem in Africa. The fire-side chat Africa Fintech Summit had with Jack Dorsey in 2020 around Bitcoin & Africa below provides more insight.
…And Bitcoin in the Humanitarian Assistance Space, Rural Electrification, etc
Bitcoin found a new use case in Africa in charity, education, disaster & emergency situations and even rural electrification. As an example, the global peer-to-peer Bitcoin marketplace Paxful has been building schools that are fully equipped with a state-of-the-art water well system across rural Africa with its program named #BuiltWithBitcoin, all fully funded by Bitcoin. Binance’s philanthropic wing has been operating a program called Lunch for Children, using donated cryptocurrencies to buy lunch for children. In Mombasa, Kenya, the Bancor Foundation has been providing bankrupt communities living in slums with a surprising way out of poverty with crypto.
Governments & infrastructure developers have been citing the demand-supply mismatch of renewable energy mini-grid projects across rural Africa, holding up investment justification for mass rural electrification. Bitcoin mining has come as a solution too many times in this scenario in being a ‘buyer of last resort’ for mini-grid renewable energy in rural Africa, guaranteeing demand and hence encouraging rural electrification. As an example, Gridless, an African green bitcoin mining firm, is expanding energy access to several countries in Africa by using bitcoin mining to make renewable mini-grids financially sustainable in rural communities, sharing bitcoin mining revenue with power companies & local community – doing so creating global income for local power production and cutting renewable energy cost to the rural community.
The Challenges and Opportunities
Despite all these use-cases, success stories and impacts, adoption of Bitcoin in Africa has not been without its own concerns, challenges & controversies. Let us see some of the challenges and potential opportunities presented to Africa with Bitcoin.
(#Part 2)
Key partnerships have also fueled the growth, including Jack Dorsey & Jay Z’s 500 BTC donation to create Btrust to fuel the next wave of software engineers and developers in the Bitcoin ecosystem, Square/Block’s investment in Yellow Card, TBD’s partnership to deploy bitcoin for cross border payment with Yellow Card, major exchanges including Paxful and Binance’s early expansion in Africa. Peer-to-peer (P2P) platforms also surged, enabling people to trade Bitcoin in areas with limited or non-existent traditional financial & banking access. And this week, Nigeria-based Recursive Capital, an early-stage Bitcoin VC Fund investing in Bitcoin companies in Africa, announced the first close of its Fund I with Jack Dorsey and other anchor investors. The fund close is set to be deployed to lay the foundations for a thriving Bitcoin ecosystem in Africa. The fire-side chat Africa Fintech Summit had with Jack Dorsey in 2020 around Bitcoin & Africa below provides more insight.
…And Bitcoin in the Humanitarian Assistance Space, Rural Electrification, etc
Bitcoin found a new use case in Africa in charity, education, disaster & emergency situations and even rural electrification. As an example, the global peer-to-peer Bitcoin marketplace Paxful has been building schools that are fully equipped with a state-of-the-art water well system across rural Africa with its program named #BuiltWithBitcoin, all fully funded by Bitcoin. Binance’s philanthropic wing has been operating a program called Lunch for Children, using donated cryptocurrencies to buy lunch for children. In Mombasa, Kenya, the Bancor Foundation has been providing bankrupt communities living in slums with a surprising way out of poverty with crypto.
Governments & infrastructure developers have been citing the demand-supply mismatch of renewable energy mini-grid projects across rural Africa, holding up investment justification for mass rural electrification. Bitcoin mining has come as a solution too many times in this scenario in being a ‘buyer of last resort’ for mini-grid renewable energy in rural Africa, guaranteeing demand and hence encouraging rural electrification. As an example, Gridless, an African green bitcoin mining firm, is expanding energy access to several countries in Africa by using bitcoin mining to make renewable mini-grids financially sustainable in rural communities, sharing bitcoin mining revenue with power companies & local community – doing so creating global income for local power production and cutting renewable energy cost to the rural community.
The Challenges and Opportunities
Despite all these use-cases, success stories and impacts, adoption of Bitcoin in Africa has not been without its own concerns, challenges & controversies. Let us see some of the challenges and potential opportunities presented to Africa with Bitcoin.
👍1
#Bitcoin
#Part 3 (Final Part)
Looking Over the Horizon
The short-term & medium-term outlook of Bitcoin’s future in Africa will depend on its competition and interoperability with Mobile Money and Stablecoins – for comparison, read AFTS’ editorial Stablecoin is the future of Africa's Remittance & Trade with Rest of The World.
Airtime-crypto-fiat currency on/off-ramp orchestration innovations like fonbnk's offering has potential on creating seamless Mobile Money-Crypto interoperability. The real litmus test for Bitcoin’s use in Africa will be the outcome of its battle – or collaboration - with mobile money & stablecoins for dominance and utility as the visual below shows.
Will Bitcoin’s utility, transaction cost, design and infrastructure compete or collaborate seamlessly with stablecoins and mobile money with effective on/off ramp orchestrations? Time will tell.
Despite the aforementioned and other problems and challenges, Bitcoin adoption in Africa will surely be growing, driven by its potential to improve remittances, hedge against inflation, and offer inclusive and last-mile financial services to the unbanked. Addressing these challenges will require clearer regulations, improved education & fraud prevention mechanisms, infrastructure development including access to connectivity and reliable electricity, collaboration between regulators and the crypto industry, on/off ramp interoperability and empirical evidence of use cases tailored to African needs with local software engineering talent.
Our Verdict
Bitcoin’s milestone celebrates Africa’s journey with cryptocurrency, rooted in resilience, ingenuity, speed of creativeness and innovation. Africa is poised to shape the future of crypto, drive financial inclusion, and redefine global finance with a unique version of decentralized finance. The Africa Fintech Summit team will continue to provide thought leadership around blockchain use cases in Africa, including Bitcoin, through its research publications and flagship summits, including the upcoming 2025 editions in Washington DC & Accra, Ghana. Join the Africa Fintech Summit - in person and virtually - to meet the players in this growing and rapidly innovating space and connect with innovators, entrepreneurs, and key stakeholders driving the future of crypto and fintech across the continent.
In conclusion, we agree both with Jack’s sentiment of “Africa will define the future (especially the Bitcoin one)” and AFTS’ 2022 editorial that stated, “cryptocurrency's future is being defined in Africa”. If in any doubt about this, as we say in Swahili, "Kuwa tayari kwa mshangao mwingine wa Afrika", that is "be prepared for another African surprise!"
Thanks for reading!
Link: https://www.linkedin.com/pulse/history-future-bitcoin-africa-afts-editorial-quc8f/
#Part 3 (Final Part)
Looking Over the Horizon
The short-term & medium-term outlook of Bitcoin’s future in Africa will depend on its competition and interoperability with Mobile Money and Stablecoins – for comparison, read AFTS’ editorial Stablecoin is the future of Africa's Remittance & Trade with Rest of The World.
Airtime-crypto-fiat currency on/off-ramp orchestration innovations like fonbnk's offering has potential on creating seamless Mobile Money-Crypto interoperability. The real litmus test for Bitcoin’s use in Africa will be the outcome of its battle – or collaboration - with mobile money & stablecoins for dominance and utility as the visual below shows.
Will Bitcoin’s utility, transaction cost, design and infrastructure compete or collaborate seamlessly with stablecoins and mobile money with effective on/off ramp orchestrations? Time will tell.
Despite the aforementioned and other problems and challenges, Bitcoin adoption in Africa will surely be growing, driven by its potential to improve remittances, hedge against inflation, and offer inclusive and last-mile financial services to the unbanked. Addressing these challenges will require clearer regulations, improved education & fraud prevention mechanisms, infrastructure development including access to connectivity and reliable electricity, collaboration between regulators and the crypto industry, on/off ramp interoperability and empirical evidence of use cases tailored to African needs with local software engineering talent.
Our Verdict
Bitcoin’s milestone celebrates Africa’s journey with cryptocurrency, rooted in resilience, ingenuity, speed of creativeness and innovation. Africa is poised to shape the future of crypto, drive financial inclusion, and redefine global finance with a unique version of decentralized finance. The Africa Fintech Summit team will continue to provide thought leadership around blockchain use cases in Africa, including Bitcoin, through its research publications and flagship summits, including the upcoming 2025 editions in Washington DC & Accra, Ghana. Join the Africa Fintech Summit - in person and virtually - to meet the players in this growing and rapidly innovating space and connect with innovators, entrepreneurs, and key stakeholders driving the future of crypto and fintech across the continent.
In conclusion, we agree both with Jack’s sentiment of “Africa will define the future (especially the Bitcoin one)” and AFTS’ 2022 editorial that stated, “cryptocurrency's future is being defined in Africa”. If in any doubt about this, as we say in Swahili, "Kuwa tayari kwa mshangao mwingine wa Afrika", that is "be prepared for another African surprise!"
Thanks for reading!
Link: https://www.linkedin.com/pulse/history-future-bitcoin-africa-afts-editorial-quc8f/
Linkedin
The History & Future of Bitcoin in Africa (An AFTS Editorial), Access Bank Acquires Standard Chartered's Subsidiaries in Angola…
In this special issue, the Africa Fintech Summit has penned an editorial focused on The History & Future of Bitcoin in Africa, including its wider cascaded multiplier effect on Africa's economy including Renewable Energy, BPO, Data Centre & Artificial Intelligence…
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Banking sector set to open to foreign competition in few weeks
For the first time in its history, Ethiopia is poised to open its banking sector to foreign competition, with new legislation currently under parliamentary review and expected to be enacted next month. This landmark decision represents a significant shift in the country’s economic landscape, aimed at enhancing competition, improving service delivery, and attracting foreign investment.
#Capital news
@patternfin
For the first time in its history, Ethiopia is poised to open its banking sector to foreign competition, with new legislation currently under parliamentary review and expected to be enacted next month. This landmark decision represents a significant shift in the country’s economic landscape, aimed at enhancing competition, improving service delivery, and attracting foreign investment.
#Capital news
@patternfin
👍3
A great piece by Aman & Partners on their Legal Update Issue 15
Title: End of Ethiopia's Banking Sector Protectionism in Sight
I highly recommend you to read this two pages but resourceful document prepared by Aman & Partners LLP.
What other points do you suggest to be included which could have an impact on domestic and foreign investors?
Enjoy reading!
Title: End of Ethiopia's Banking Sector Protectionism in Sight
I highly recommend you to read this two pages but resourceful document prepared by Aman & Partners LLP.
What other points do you suggest to be included which could have an impact on domestic and foreign investors?
Enjoy reading!
Weekly updates ⬇️⬇️⬇️
🏗 Real Estate Proclamation: New Buyer Safeguards
Parliament mandates developers to complete 80% of construction before handovers, unless otherwise agreed, and bans misleading ads. (FBC)
What it means for you: Strengthened buyer protections boost trust and transparency in Ethiopia's real estate sector.
🏗 Real Estate Proclamation: New Buyer Safeguards
Parliament mandates developers to complete 80% of construction before handovers, unless otherwise agreed, and bans misleading ads. (FBC)
What it means for you: Strengthened buyer protections boost trust and transparency in Ethiopia's real estate sector.
Weekly updates ⬇️⬇️⬇️
📈 EIH Takes Charge of Key State Enterprises
Ethiopian Investment Holdings now manages 10 additional entities, including Ethiopian Electric Power and Development Bank of Ethiopia. (Shega)
What it means for you: Streamlined administration unlocks investment potential in energy, transport, and industrial parks.
📈 EIH Takes Charge of Key State Enterprises
Ethiopian Investment Holdings now manages 10 additional entities, including Ethiopian Electric Power and Development Bank of Ethiopia. (Shega)
What it means for you: Streamlined administration unlocks investment potential in energy, transport, and industrial parks.
Weekly updates ⬇️⬇️⬇️
💼 Banking Fraud Hits 1.3 Billion Birr
The Central Bank reports major fraud losses last year, mainly due to third-party risks. (Birr Metrics)
What it means for you: Urgent need for fraud prevention technologies and robust risk management in the banking sector.
💼 Banking Fraud Hits 1.3 Billion Birr
The Central Bank reports major fraud losses last year, mainly due to third-party risks. (Birr Metrics)
What it means for you: Urgent need for fraud prevention technologies and robust risk management in the banking sector.
Weekly updates ⬇️⬇️⬇️
💼 i-Capital Africa Earns Advisory License
The Ethiopian Capital Markets Authority licenses i-Capital as the first local investment advisor. (Capital)
What it means for you: A milestone for capital market reforms, creating opportunities for local investors.
💼 i-Capital Africa Earns Advisory License
The Ethiopian Capital Markets Authority licenses i-Capital as the first local investment advisor. (Capital)
What it means for you: A milestone for capital market reforms, creating opportunities for local investors.
Weekly updates ⬇️⬇️⬇️
🏦 $700m World Bank Loan for CBE
Funds will recapitalize CBE and support a 900 billion birr bond issuance for state debt recovery. (The East African)
What it means for you: Improved credit availability and potential state enterprise privatizations.
🛫 Ethiopian Airlines and Air Congo Partnership
Air Congo, a joint venture with a 49% Ethiopian Airlines stake, begins operations. (Birr Metrics)
What it means for you: Enhanced regional connectivity fosters trade and travel opportunities with the DRC.
Don’t forget to follow for more weekly updates!
#Kazana
🏦 $700m World Bank Loan for CBE
Funds will recapitalize CBE and support a 900 billion birr bond issuance for state debt recovery. (The East African)
What it means for you: Improved credit availability and potential state enterprise privatizations.
🛫 Ethiopian Airlines and Air Congo Partnership
Air Congo, a joint venture with a 49% Ethiopian Airlines stake, begins operations. (Birr Metrics)
What it means for you: Enhanced regional connectivity fosters trade and travel opportunities with the DRC.
Don’t forget to follow for more weekly updates!
#Kazana
👍1
የኢትዮጵያ ሰነደ ሙዓለ ንዋዮች ገበያ አ.ማ በኢትዮጵያ የመጀመሪያ የሆነውን የተደራጀ የሰነደ ሙዓለ ንዋዮች ገበያ ለማስጀመር የሚያስችለውን ፈቃድ አገኘ። የኢትዮጵያ ሰነደ ሙዓለ ንዋዮች ገበያ አ.ማ. ይፋዊ የስራ ፈቃድ ከኢትዮጵያ የካፒታል ገበያ ባለስልጣን ማግኘቱን በደስታ ያበስራል።
@patternfin
@patternfin
👍1
Forwarded from CHANNEL 29
በመላው ሀገሪቱ የኃይል መቋረጥ አጋጥሟል ሲል የኢትዮጵያ ኤሌክትሪክ ኃይል አስታወቀ
ዛሬ ማምሻውን በሲስተም አለመረጋጋት በተፈጠረ ችግር የተነሳ በመላው ሀገሪቱ የኃይል መቋረጥ አጋጥሟል ሲል የኢትዮጵያ ኤሌክትሪክ ኃይል አስታውቋል።
ችግሩን በመፍታት የተቋረጠውን ኃይል ወደነበረበት ለመመለስ በኃይል ማመንጫዎች እና በማከፋፈያ ጣቢያዎች ከፍተኛ ርብርብ እየተደረገ ነው ብሏል።
የተፈጠረው ችግር እስኪፈታ ድረስ ደንበኞች በትዕግስት እንዲጠባበቁ ጠይቆ፤ ያሉትን መረጃዎች በፍጥነት የሚያሳውቅ መሆኑንም ገልጿል።
ዛሬ ማምሻውን በሲስተም አለመረጋጋት በተፈጠረ ችግር የተነሳ በመላው ሀገሪቱ የኃይል መቋረጥ አጋጥሟል ሲል የኢትዮጵያ ኤሌክትሪክ ኃይል አስታውቋል።
ችግሩን በመፍታት የተቋረጠውን ኃይል ወደነበረበት ለመመለስ በኃይል ማመንጫዎች እና በማከፋፈያ ጣቢያዎች ከፍተኛ ርብርብ እየተደረገ ነው ብሏል።
የተፈጠረው ችግር እስኪፈታ ድረስ ደንበኞች በትዕግስት እንዲጠባበቁ ጠይቆ፤ ያሉትን መረጃዎች በፍጥነት የሚያሳውቅ መሆኑንም ገልጿል።
👍3⚡1