The Role Of Commercial Bank Of Ethiopia In The Mobilization Of Foreign Currency To Support Fertilizer Imports

Foreign currency deposit mobilization strategy of CBE is part of the corporate strategyrnformulated on June 2015 to be in effect for the coming consecutive five years. The strategy aimsrnto maximize the foreign currency earning of the bank to meet the import needs of the countryrnespecially fertilizer. Several sources are identified by the bank’s corporate strategy as majorrnsources of foreign currency. Some of them are remittances, export and cash purchase (servicernreceipt). This paper assesses and examines the overall efforts of the CBE in mobilizing foreignrncurrency to finance major import items like fertilizer. The study was conducted in a descriptivernway of qualitative research approach. The unit of analysis for this study is the CBE’s foreignrncurrency deposit mobilization strategy to support fertilizer import in which the bankrnimplemented as part of corporate plan. Data were collected through questionnaire exporters ofrnthe bank and interview of key informants located on CBE, NBE and AISE and criticallyrnreviewing documents as well as reports. The sample for the interviews is purposive sampling asrnmost of the information can be found from few individuals that are nearer to this activity. Basedrnon the analysis of the study, the findings are that fertilizer is among the critical items of importrnby the bank on each budge year. Despite the challenges of mal-practices by some private banksrnon the collection of foreign currency, CBE manages to identify and collect foreign currency tornsupport the import of inorganic fertilizer. Credit, Fund management and Trade Servicerndepartments of the bank are involved on the fertilizer import process in coordination with sectionrnof the Ministry of agriculture AISE. The country wide low performance of the export sector isrnalso the other challenge the bank faces during mobilization of foreign currency. Furthermore,rnthe study also identified that the bank has priority sectors while allocating the collected foreignrncurrency similar to the GoE growth and developmental direction. Hence, the bank’s strategy tornmobilize foreign currency has positive country wide implication in alleviating the scarcity ofrnforeign currency especially supporting critical import items like chemical fertilizer. And the bankrnhas to make sure that across department process integration is mandatory for the efficient andrnsmooth mobilization of foreign currency. In addition for the successful execution the strategicrnplan, critical assessment of progress at the end of each quarter is also necessary by the toprnmanagement

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