Improved relations and growing business across the Somaliland border have spurred the provision of new banking services in the border town of Togoch'ale.
Nib International Bank (NIB)and Awash International Bank (AIB)are opening sub-branches in Togoch'ale, a town in the Somali regional state, near Somaliland.
A bank expert told Fortune that the business relations between Somaliland and Ethiopia have improved after the Berbera Port became an alternative for smaller goods transported into and out of Ethiopia. The major share of the business in the area is khat and livestock.
Improved business relations have enticed Ethiopian banks to open foreign exchange transaction sub-branch offices in the border town of Togoch'ale, a town with a population of 5,000.
According to banking experts, the daily transactions in the border town are estimated to be around 20,000 dollars. The National Bank of Ethiopia gave private banks permission to operate foreign currency transactions in 1998.
Wegagen Bank was the pioneer in the area, opening a sub-branch five months ago. NIB and AIB are setting up their offices and the sub-branches will be open in the coming two months.
An Awash Bank official told Fortune that the business situation in the area is not yet ready for a full fledged branch, but he has high hopes that the situation will improve and that Togoch'ale will soon be a big business center next to Dire Dawa in the eastern part of the country.
NIB is planning to operate foreign exchange transactions as well as handle money transfer services for transporters and truck drivers, whereas Awash will concentrate only on the foreign exchange transactions, for the time being.
This is the first time either bank opened a sub-branch. For both banks, the new sub-branches will fall under the administration of their respective branches in JiJiga.
NIB was established on May 26, 1999 with an initial paid-up capital of 29 million Br, which has now grown to 200 million Br. It commenced operation in October, 1999. It has over 800 employees and 23 branches, of which four are outside of the capital.
AIB was established as the first private bank in Ethiopia on November 10, 1994. AIB had 486 founding shareholders with a paid-up capital of 24.2 million Br and started banking operations on February 13, 2005.