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The Djibouti branch of the state owned Commercial Bank of Ethiopia, (CBE) Djibouti Limited is working to dominate Ethiopia’s logistics business transactions between the two nations.
About two months ago, the bank reopened with a total capital of over USD 6.3 million and a plan to be one of the major financial institutions in Djibouti.
Leul Tsehaye, Managing Director of the Commercial Bank of Ethiopia Djibouti Limited, told Capital that before its closure in 2004 the bank was one of Djibouti’s major financial players. “It was a respected bank in the past and we can return it to that reputation,” Leul, the former acting head of the CBE Djibouti branch said.
“Even though the market will be highly competitive because big international banks exist in the country, we are not new to the market and the two countries have a good business relationship which will allow us to be a major player in the market,” he said.
“In addition to the Ports we are looking at the fruit, vegetable, and khat market all of which Djibouti mainly imports from Ethiopia,” he explained. The Ethiopian business community in the country is increasing which makes us hopeful about our business prospects, he added. According to Leul, they plan to be the major player in the port business because so much of it revolves around Ethiopia.
“As a beginner our primary targets are logistics and transport and with regards to transport we will focus on fruits, vegetables and the khat businesses,” he said.
About 77 freight forwarders, which is a major business in Djibouti, work under two associations. “I have encouraged them to partner with us since their major customer, the Ethiopian Shipping and Logistics Services Enterprise (ESLSE) is working with us,” the Managing Director said.
ESLSE registered as the first account holder at the Commercial Bank of Ethiopia Djibouti Limited when it opened its doors on April 8 in the heart of Djibouti. As of Tuesday the bank has registered 91 different types of account holders, according to the bank officers.
Unlike Ethiopia CBE Djibouti Limited has not targeted deposit mobilization.
“We are not focusing on deposit mobilization since in the short term we do not have a plan to commence loan services, but we are working strongly on other banking activities with major businesses in the country,” he said.
When the bank closed its door over a decade ago the major reason was a high non performing loan portfolio amounting to USD 16.7 million.
Djibouti is mostly import Khat from Ethiopia. According to the CBE Djibouti Limited head, before halting its operation in 2004 Khat importers were the major customers of CBE’s Djibouti branch.
The Ethiopian community another potential customer for the bank
Leul, 50, who worked in international banking, has served at CBE for more than three decades, including 5 years in Djibouti. The year before it closed he was head of the branch.
“At that time the economic activity was very slow and the bank activity mainly focused Khat,” he remembered.
“Before we left Djibouti we had several buildings that we sold,” he added.
“CBE’s operation in Djibouti will be good exposure for the bank as they plan to open in more countries with high populations of Diaspora,” Leul said. The bank expects to become profitable within two years.
Currently the bank has 23 staff including some people from Ethiopia. In Djibouti CBE began operation in 1962 as a liaison office and became a full-fledged bank in 1971