ACP-EU Migration Action Peer-to-Peer Exchange on Remittances TECHNICAL ASSISTANCE FEDERAL GOVERNMENT OF THE REPUBLIC OF ETHIOPIA MINISTRY OF FOREIGN AFFAIRS Demeke Atnafu Director General for Diaspora Engagement Affairs Directorate General

Ethiopia – country profile East African nation: neighboring Djibouti, Eritrea, Kenya, Somalia, Sudan and South Sudan. Population (2014): 97 million Population growth (avg. annual, 2005-14): 2.6%

Ethiopia – country profile GNI per capita (2015): USD 690.00 GDP growth (avg-annual, 2011-2014): 10.2% Mobile cellular subscriptions (per 100, 2014): 31.6 Internet users (per 100, 2014): 2.9

Diaspora – key data Ethiopians and person of Ethiopian Origin abroad (est.): 2.5 – 3 million Top destination countries (2013): the United States, Saudi Arabia, UAE, Kuwait, Qatar, Israel, Italy, South Africa, Canada, the United Kingdom, Sweden, Germany, Australia Profile of diaspora: Professional, semi-skilled, unskilled.

Remittances Remittance inflows have increased dramatically from USD 1.9 billion (2010) to USD 3 billion (2014) (Source: National Bank of Ethiopia) Diaspora remittances represented 5.3% of the country’s GDP between 2010 and 2014. Ethiopia is ranked as 1 of the top 10 remittance receiving countries in Sub-Saharan Africa (2015)

Government of Ethiopia (GoE) - policies Positive measures have been taken by the GoE to improve the flow of formal remittances as well as to reduce transfer costs. These include a number of directives: Non-exclusivity agreements between banks & remittance service providers Charge zero or minimum tariff on remittance transfer services Reveal terms & tariffs to clients. Establishment & operation of foreign currency account for non-resident Ethiopians and Ethiopian origin foreign nationals – aimed at encouraging savings and maximizing the economic & social benefits of remittances.

Challenge with formal remittance flows Cost of sending money to Ethiopia remains high at about 7.1% of USD 200 transferred. Limited coverage of financial institutions , especially in rural areas. Limited incentives to encourage formal remittance flows/ informal channels perceived to be cheaper and faster.

Technical Assistance (TA) request Research study to: Identify barriers adversely affecting the Ethiopian diaspora from using formal remittance transfer channels. Put forward possible solutions to enhance formal remittance flows to Ethiopia to support sustainable economic development.

TA request Activities to date: The expert has carried out meetings and interviews with: the Ministry of Foreign Affairs, National Bank of Ethiopia, Commercial Bank of Ethiopia, RSPs, Academics, International Organizations (ILO, IFAD, World Bank), African Union Commission, Ethiopians abroad and diaspora associations. Desktop research.

TA request Next steps: Drafting of study and development of recommendations Presentation of the study to the Ministry of Foreign Affairs.

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