‘OIB’s Contribution to Ethiopian Banking Sector is Gigantic’

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Abie Sano is President of Oromia International Bank. In this discussion with The African Economy,  he highlights the impact of the global, continental and domestic economic environment on the financial sector, competition in the Ethiopian banking industry, and other related issues.

oromia-bank-presidentOromia International Bank (OIB) was established with the vision to become a bank of choice for customers; to what extent would you say this has been achieved over the years?

Oromia International Bank has registered tremendous achievements over the last seven years. OIB has played an awakening role and inspired the banking industry, especially in branch network expansion since its establishment.

First, there were few bank branches relatively in Ethiopia and very few in the rural part of the country. Despite having a history of 100 years modern banking practices, available branches are very much concentrated in the capitals and big towns.  Oromia International Bank was able to open 26 branches in just eight months of commencing operation. Out of these, 80 per cent were in the rural towns which had never accessed banking services such as Gindeberet, Ghinnir, Mechara, Angergutin. As at when Oromia International Bank started operations, Ethiopia’s total bank branches were less than 600. Now, there are over 4,000 branches across the country and we believe we played a critical role in this banking transformation.

In two years, OIB would clock a decade. What would you point to as the bank’s contributions to the Ethiopian financial sector?

We recently drafted a second five-year strategic plan to position our bank where it ought to be in every aspect —number of branches, employees, new products and services, modern technologies and many more. As we open new branches, we will be reaching lots of customers at their doorsteps. We are not only positioning the bank through branches; we are employing various mechanisms such as electronic banking services which include card, mobile, agent and Internet banking.  In doing all these, we are making the financial services more accessible and easier than ever before.

Regarding empowering the missing middle, we are living up to our mission. We support small businesses. For example, our loan policy guides us to work with many small and medium-sized enterprises than with big enterprises which are flush with cash. It is no different with our deposit customers. I can confidently say OIB’s contribution to the Ethiopian banking sector is gigantic. I believe we are on the right track to realize our mission. OIB is doing its best on all fronts. We are investing in different small and medium enterprises to diversify the bank’s portfolios and create jobs. We are making significant progress in all fronts as our investment is empowering the emerging missing middle at national level.

What informed Oromia’s introduction of interest-free banking?

Oromia International Bank is a pioneer in interest-free banking or Islamic banking in Ethiopia. Interest free banking has spread to over 80 countries globally, with over 500 financial institutions offering this service. It is an up-and-coming banking business in Ethiopia today. We are strictly adhering to the requirements of the interest-free banking, which is Sharia- compliant, in all aspects.

What makes OIB unique compared to other banks in Ethiopia?

To satisfy our customers, we go the extra mile. That is why we are pressing ahead in branch expansion. Our rapid expansion and growth with superb banking products and services make us unique. In less than a decade, we are the third privately-owned bank with the largest number of branches and the first bank in rural towns. There are a handful of private banks that surpassed that in their two decades of operations.  However, Oromia International Bank is shoulder-to- shoulder with many of them in several ways. Such an achievement in such a short time makes us unique.

How would you describe the challenges facing the financial sector in Ethiopia and by extension, Africa?

Every financial sector has its challenges. They are common phenomena everywhere in the world. But there are some challenges that can be turned into advantages.  The global financial and economic downturn, increased unemployment rate in developed countries and emerging economies, which is affecting remittance or foreign exchange earnings, the recurrent fluctuation in the prices and the volume of our agricultural export commodities, highly volatile oil prices and political unrest are some of the major challenges facing the financial sector. These challenges are similar across the continent.  For Ethiopia, the major challenge of our banking industry is the shortage of foreign currency. generation and saving mobilization to meet the huge national financing needs.

 

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