Role of capital markets in developing economies Capital markets are key drives of economic growth as they help facilitate the demand and supply of credit. Through the capital markets governments and the private sector can access funding for infrastructure financing or large capital expenditures in the case of large corporations. Capital markets can also be...
Financial sector liberalization committee & Council of Ministers Draft Policy In early 2022, the Ethiopian government set up a committee that would be responsible for replacing the current financial services code with a new one that allows more liberalization; specifically, one that allows for the entry of foreign banks. This was in response to banks...
The Ten-Year Growth Plan (Master Plan) Ethiopia developed the ten-year development plan (2020/21 – 2029/30) that aims to position the country as the ‘African Beacon of Prosperity’. This is a successor to the five-year growth and transformation plan-II (GTP II) and it focus on six strategic pillars that include: Private sector leadership in the economy....
The need for innovative and bold solutions to implement new technologies on a large scale is evident. Green Banks have been developed with this purpose in mind, raising and blending capital to finance local climate infrastructure while driving a surge in private investment. These institutions can play a significant role in mobilizing finance to support...
Countries must invest in and build clean and resilient infrastructure for the world to address the climate crisis and develop equitably. National goals to transform energy use and deploy low-carbon solutions across sectors require investment in projects at the local level. Governments are struggling to source and subsequently deploy sufficient levels of funding for high-priority,...
Risk free rates (RFRs) represent the cost of borrowing that a borrower would incur without the lender taking into consideration the counterparty risk level of the borrower. They indicate the return that investors should get on zero risk investments and are used by the financial markets as a benchmark upon with risk premiums are added....
The LIBOR rate was believed to be a true reflection of the markets’ cost of borrowing funds independent of government interference. However, investigations by regulators and journalists after the financial crisis revealed that LIBOR had been manipulated by the banks themselves and at times from influence of regulators. Banks had an interest in keeping the...
Reference rates are critical to the financial system. They are the benchmarks that lenders and borrowers refer to when setting the interest rates on credit. They also form the backbone of interest rate derivatives such as interest rate swaps and futures. The London Interbank Offer Rate (LIBOR) has been the reference rate for over 400...
Most of us have been either to a physical store or an online shop and at checkout, been provided with the option of acquiring the product without paying the full price at the point of sale (POS). Sounds familiar? Unbeknownst to many, the ability to own a product and slowly pay for it has been...
Welcome to Starbucks, a “bank” that sells coffee. The luxury coffee maker held about USD 1.5 billion of preloaded funds in the 4th quarter of 2021. And if you think USD 1.5 billion is not a huge amount; more than 85% of banks in the USA have less than USD 1 billion in assets. Starbucks...