Selam Bank is set to be launched in Ethiopia as the nation welcomes the diaspora community and inches closer to allowing international players to play a role in the local banking sector.
The bank is to become the second mortgage bank in Ethiopia that will be in direct competition to Goh Betoch Bank Share Company, which was founded by former private bank executives, last year.
“Ethiopia, the time for Selam is here and now,” said Bethelhem Alemu, one of the nine founding members, local entrepreneur and founder of soleRebels shoes, announced on Twitter.
Among the co-founders of Selam Bank in addition to Bethlehem are, Aman Feshetsion, the founder of EBS TV, Zemedeneh Negatu, head Fairfax Africa Fund Ethiopia, Yared Alemayehu of Walia Tannery and Ermais Eshetu, who has had successive unsuccessful stints with ARTS TV and the Ethiopian Commodity Exchange.
According to Bethlehem, the new bank is part of a “healthy thriving homegrown financial sector, of which banks form a key pillar,” and a “pre-requisite to building local homegrown wealth plus prosperity.”
She also announced that the group will soon start selling founding shares.
“The Diaspora has two options currently; to either invest in USD to buy shares which is automatically covered into birr through the National Bank of Ethiopia (NBE) daily rate or can open a diaspora account to use as collateral to build any sort of assets, i.e. property or vehicles,” Amaha Bekele, Partner, Deloitte consulting, told The Reporter.
“It is very difficult to sell to the diaspora today, to buy shares in the banking sector as it is covered at the current exchange rate for the purchase of the shares. But dividends will be in birr,” he said, alluding that it would be interesting to see how this initiative moves forward.
Nine of the founders have met with President Sahle-work Zewde on Tuesday this week, and Bethlehem described it as a “phenomenal meeting” and publicly thanked the President for her “vision and support.”
It was not clear what was discussed.
“As the birr is depreciating 15-20 percent year on year, the bank will need to generate dividends of 50-60 percent to cover exchange rates and inflation. That would be a tall order for any startup bank as the existing banks are struggling to deliver that position. It looks like the government has devised this structure to bring in USD to the country but has not thought about what the value propositions is for the diaspora investors,” Amaha said.