Goh Betoch, Ethiopia’s first privately owned mortgage bank, has announced that its profits have increased due to the recent floating of the foreign exchange market. Within a few weeks of the National Bank of Ethiopia’s (NBE) change in foreign exchange management, the premium between the parallel market and the banks’ foreign exchange market has decreased rapidly.

According to NBE, the rate difference between the two markets, which was 100% before the change, dropped to just 4% between July 29 and September 4, 2024. The narrowing of the gap not only boosted foreign exchange earnings for banks like Goh Betoch, but also increased the likelihood that money going into the parallel market would be injected into the legal system.

Goh Betoch provides home loans to two main groups: Ethiopians who have saved 30% in birr and 60% in various packages, and the diaspora. Million Masresha, an International Banking Business Manager at Goh Betoch, explained that before the floating, the diaspora would often send money through proxies to bypass the system and apply for home loans. However, now the diaspora is taking advantage of the reforms by opening foreign currency accounts for home loans, making the process more transparent.

“Previously, the diaspora thought it would be better to pay in birr instead of sending money directly to the black market, because the gap in the parallel market was double,” Million said. He emphasized the significance of the unite.et application recently introduced by NBE, which allows Ethiopians abroad to send remittances digitally and open accounts anywhere.

NBE has developed these digital methods and banking solutions to enable millions of Ethiopians living abroad to spend their foreign currency wealth for the growth and prosperity of the country. To further attract foreign currency remittances, NBE launched a high-value online application called unite.et specifically for remittance senders.

The reforms implemented by NBE have had a positive impact on Goh Betoch’s operations and profitability. By narrowing the gap between the official and parallel foreign exchange markets, the bank is able to generate more revenue from home loans to both domestic and diaspora customers. This, in turn, contributes to the overall growth and development of Ethiopia’s housing sector.