The Ethiopian Diaspora Service (EDS) reports that in the first nine months of the current fiscal year, Ethiopia received a record $5.1 billion in remittances. This milestone highlights the crucial role the Ethiopian diaspora continues to play in supporting the country’s economy despite ongoing reforms.
In an interview with Fana Digital on Monday, EDS’s head of planning, Wondwosen Terefe, made the announcement. He attributed the increase to concerted efforts by the government and the diaspora community to build trust and financial ties.
“This growth didn’t happen by chance,” Wondwosen stated. “It’s the result of deliberate policy decisions to improve how diaspora Ethiopians engage with the local economy.”
$5.1 billion remittances fuelled by government reforms
The government’s decision to permit diaspora Ethiopians to open foreign currency bank accounts is one of the policies causing the increase. With deposits totalling $25.2 million, 18,889 new accounts have been opened thus far, which is a considerable increase over the same time last year. The diaspora can save, invest, or contribute money with these accounts’ flexibility and trust, without worrying about conversion loss or inaccessibility.
Remittances have increased in tandem with Ethiopia’s larger macroeconomic reform agenda, which includes easing financial sector regulations, liberalising the currency, and improving exchange rate transparency. The goals of these reforms are to boost confidence in official financial channels, modernise the economy, and draw in foreign investment.
Additionally, in order to improve inflow tracking and foreign reserves, the National Bank of Ethiopia (NBE) has stepped up its crackdown on unofficial transfer networks and encouraged more remittances to pass through regulated institutions.
Ethiopia’s government has been broadening its approach to leverage the knowledge, capital, and influence of the diaspora in addition to remittances. A greater sense of national contribution and belonging is being fostered by recent forums, digital outreach initiatives, and rewards for diaspora-led projects. Interest in impact investing and structured philanthropy has also increased as a result of programs like the Ethiopian Diaspora Trust Fund (EDTF).
Main sources of Ethiopia’s foreign exchange
Along with coffee exports, humanitarian aid, and foreign direct investment, remittance inflows are currently one of Ethiopia’s main sources of foreign exchange. Millions of families are directly supported by these monies, which also aid in stabilising the Ethiopian Birr by paying for daily expenses like rent, healthcare, and education.
This surge in remittances provides much-needed relief as Ethiopia continues to deal with issues like inflation and a tight fiscal environment. It also demonstrates the ability of diaspora finance to create a resilient economy.