Halting Progress?🚧

Welcome to the latest edition of ፍራንክ Digest!

Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.

Here’s what’s coming your way:

• ⛔ Access Denied: CBE Blocks Tellers

• 🎻 SRTs: New Financial Instrument Unlocked!

• 🗝️ The Key Takeaways

Thanks for reading!

⚠️ Error 404: Thou Shall Not See Thy Account Balance

Investing

Financial Crimes!

‘Huh…excuse you?’ 

We mean, ‘oh no, Financial Crimes!’  (Better?)

Following news that tellers at the largest bank in Ethiopia won’t be allowed to access customers' account balances, it seems as though this a very warranted reaction.

It looks like the Ethiopian financial system has finally graduated to a stage complex enough where ‘Financial Crimes’ are being discussed in the media. 

Progress? Maybe. A mess? Definitely.

An NBE report claims that fraud has cost banks ETB 1.3B in the 2023/24 fiscal year. With 60% of bank deposits sitting in the coffers of a state-owned financial juggernaut by the name of CBE, it is unsurprisingly feeling the brunt of the impact.

But is shielding the eyes of the poor old tellers that sit uncomfortably on a beat up swivel chair across the other side of the mirror a solution to combat fraud? (Not a rhetorical question btw, clearly, the answer is NO)

So what’s the logic here?

Frankly, we’re still scratching our heads a little bit.

Experts are already commenting that limiting access to customer balances to Branch and Business Managers will merely slow down the not-so-lightning fast service delivery that we are all accustomed to…

Customer service has always been an Achilles heel for the sector, and CBE has been on the receiving end for most of the bad rep.

Reports indicate that fraud has been prevalent in the banking sector, especially with the rise of digital banking (Ex: showing screenshots of past payment confirmation). Though it’s not very clear how this measure will prevent any future fraudulent incidents.

Let’s put on our investor hats 🎩

Time for some quick thoughts through the eye of an investor 👁️.

If you were to invest in a company, you would certainly pay attention to how the organization is conducting business: ‘knee-jerk’ reactions don’t tend to do well amongst investors, especially when the entity is listed on the Stock Exchange and publicly traded (Which is on the way, አልቆረጥንም ተስፋ እንግዴ…)

This is simply due to human nature when there is uncertainty: people tend to sell stocks when they feel as though there may be a negative outcome from conditions outside of their control (Like the COVID pandemic stalled the Cruise Ship industry) or when it’s a self inflicted incident like the Volkswagen emission scandal which made the stock price tumble 30% just days after the news broke out - Bad news travels fast!

And if CBE were trading on the Stock Exchange, reports of their insecurity, whether cyber related or otherwise, wouldn’t go down well at all.

Of course, the opposite is also true—stocks can skyrocket when a company posts better-than-expected revenues, acquires another company, discovers a new drug or appoints a rockstar CEO for instance. But these don’t fall under the ‘knee-jerk reaction’ category now do they?

What does this mean for CBE?

Time will tell what CBE’s decision on shielding customer account balance from tellers will do to the company’s operations but it will certainly hinder the customer experience. Perhaps tt could push the less tech savvy to get on the mobile app bandwagon 🤷‍♂️.

Regardless, a positive outcome on the business will yield positive reactions from the market. While the Ethiopian Stock Exchange (ESX) isn’t making the expected headways just yet, companies will have to think twice before coming out with business altering decisions.

Key Takeaways

1. Access Denied: CBE becomes the first bank to limit teller access to customer account balances

2. Combating Fraud: The bank insists that it’s a step forward to mitigate fraud especially with the rise of digital banking

3. Investment View: Decisions like this affect investor sentiment, when stocks are publicly traded, the reaction is almost immediate and it could be make or break for the company.

ፍራንክ Picks 

🚶🏽Interesting event: Odoo Business Show - Addis Ababa [Tue Mar 18, 2025]

🗞️ In the news: Ethiopian Electric Utility introduces digital complaint portal

♟️ Innovation: ADMAS Chatbot wants to give you business support

AfDB Set To Replace Donor Funding Models

Financing

The African Development Bank (AfDB) is stepping up to solve Africa’s financing conundrum in a way that’s got Wall Street’s attention. With traditional funding routes, like USAID and foreign aid, drying up faster than ዉሃ ልማት  💦, AfDB is rolling up its sleeves and taking a fresh approach.

Enter Synthetic Risk Transfers (SRT) – the hot finance trend that’s giving investors a chance to make some serious returns, while hopefully doing some good in the process.