By Muluken Yewondwossen | Capital Ethiopia

The global financial crisis, originating from economically empowered countries, is hammering the economy of developing countries like Ethiopia due to a drop in exports and remittances.

According to a Ministry of Trade and Industry Report, the country has taken home around 1.4 billion US dollars from export, which has dropped from last year’s revenue of 1.5 billion US dollars. The Ethiopian government was hoping to collect 2.5 billion US dollars from the past fiscal year’s exports.
Making matters worse is that international remittances, transfers from Ethiopian and foreign nationals to Ethiopia, has declined by 9.6 per cent from last year, according to a National Bank of Ethiopia (NBE) report.

In the previous budget year (2007/08) the Central Bank reported that the country earned around 800 million dollar from remittances. A figure that falls 200 million US dollars short of the number reported by Ethiopia’s ruling party, the Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF) who stated that it was around one billion US dollars.

According to Capital’s source, in the past budget year (2008/09) that ended in July, the country earned about 723 million US dollars from international remittances transferred by the Diaspora and foreigners.

Since the financial crisis hit Europe and the US, giant companies and organizations have been shedding jobs. Many of those falling victim to the job cuts are low paid, low skill workers, many of whom are immigrants to these countries, working to support families in their country of origin.
“The number of remittance service providers has increased in the past year but the transfer rate has not been like the previous year because of the crisis,” a source said.

In the fiscal year spanning 2006-07 remittances were only 633 million US dollars. Still a year before the crisis, Ethiopia generated 2.5 billion US dollars in foreign exchange. Sector experts say this increase was the result of an NBE’s directive issued in 2006, allowing various mode of money transfers. The 2006 Remittance Service Providers (RSPs) directive stated that users of this system can obtain information from access points such as bank branches, post offices and related organizations.

The directive aimed to improve the operations of the formal remittance service in Ethiopia, to reduce the costs of remittance transfers and to increase access to international remittance service for nationals all to make the service quick and reliable.

Most types of remittances are from personal funds, investments, international cash donations, deposit and service payments and temporary and permanent migrant transfers.