The National Bank of Ethiopia (NBE), a supervisory body for financial institutions, said that the activity of YeGojo Equb is different from the way traditional social funds accumulate money and is illegal.
In its statement the central bank stated that YeGojo is totally a monetary business run by financial institutions that have a permit from NBE.
“We have intensely assessed the business of Gojo and we have asked detailed clarification from Nadew Getahun, founder of Gojo,” NBE stated.
The system that was introduced a few weeks ago stated that YeGojo planned to collect money from interested individuals and provide various commodities including residential houses for individuals who contribute to the saving scheme.
The plan was for members to contribute 350 birr a month for seven and half years through selected banks and every month 40 to 1,500 members would be selected via lottery to purchase things that they had indicated they wanted when they signed up for the arrangement.
NBE stated it identified that scheme is very different from the traditional Equb system. “It is directly related with the financial activity,” the statement claimed.
According to NBE, the business YeGojo is engaged in is directly related with capital goods financing, which is given to financial institutions in the country.
“Due to that, YeGojo is undertaking a business without a legal identity and license,” NBE claimed. It added that YeGojo planned to run a business without its own initial capital.
“The business is very risky because YeGojo established it without any trained employees or an organized institutional process,” it said.
“As per its legal responsibility NBE has cautioned the founders of the system to stop their activity,” the statement concluded.
The controversy between Gojo and stakeholders occurred after the concept was introduced in the media. For example, recently, the Commercial Bank of Ethiopia (CBE) stated it did not have any business relationship with the so called YeGojo Equb, while three individuals, members and founders of the equb, have a bank account at the bank.
CBE announced that without the consent of the bank, YeGojo was using its name to advertise its service.
Two weeks ago the founders of YeGojo reported that they suspended their business for an unspecified period.
When it first began, YeGojo advertised that interested individuals could deposit money for the service at Abyssinia, NIB, Awash, Bunna, and Commercial Bank of Ethiopia.
But within two weeks it announced that it temporarily stopped registration because they needed a guarantee to collect monthly membership fees.