Ethiopia's shortage of foreign exchange has become so critical that opening a letter of credit (L/C)can now take one year or in some cases longer.

Moreover, applicants for L/Cs are not guaranteed that the amount they apply for will be made available.

Priorities

Reports in Ethiopia say that even pharmaceutical importers,who are usually given priority in terms of the distribution of L/Cs, are finding their applications are not being approved by banks.

Manufacturers reliant on imports to produce goods meanwhile are facing the prospect of business closure.

NBE directive

The National Bank of Ethiopia (NBE) has drafted a directive that makes foreign exchange available on a first-come first-served basis, according to local media.

The Ethiopian central bank's directive also contemplates minimum and maximum thresholds of up to 15 per cent of a bank's overall capital that should be held in foreign exchange so that banks are able to meet L/C obligations.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.