The longest serving financial sector watchdog at the central bank has now moved on to a development bank, a subject of his scrutiny for over a decade.
Getahun Nana, vice governor of the National Bank of Ethiopia (NBE) for the past seven years has replaced Esayas Bahre as president of the state owned Development Bank of Ethiopia (DBE), after he was appointed by Prime Minister Hailemariam Desalegn on November 30, 2016.
The appointment comes in the wake of the suspension of the former President by the Public Financial Institutions Supervision Agency. Getahun has worked for almost 20 years in the areas of compliance and supervisions at the central bank.
He was appointed to the position in 2009, alongside Yemane Yoseph, who became vice governor for Corporate Services, and Yohannes Ayalew, the vice governor for Monetary Stability & Chief Economist.
“We received the letter of his appointment today [November 29, 2016],” Behailu Kassaye (PhD), DBE communications director told Fortune.
Observers of the Ethiopian financial sector seem divided over Getahun’s appointment.
“It is very strange,” said a banking expert. “Someone from a commercial bank would have been better. The post requires business banking experience. Regulation and working as a banker are very different things”
The Development Bank of Ethiopia was established in 1909 and has over 30 branches through out the country. Although it was initially established as an agricultural bank, it now provides loans for development projects throughout Ethiopia.
” The post needs more practical experience to understand the nitty gritty of how the Development Bank operates,” commented a senior manager at a private Bank. “Getahun’s experience is in matters concerning supervision, compliance and due diligence.”
However, some people consider Getahun a good choice.
Eyob Tesfaye (PhD), a senior official at UN Capital Fund, has a two decade working relationship with Getahun. Getahun’s background makes him a good fit for his new position, according to Eyob.
“As a regulator he knows the challenges of all the banks including DBE,” Eyob told Fortune. “I have no doubt of his capacity. He played a major role in shaping the regulatory and supervisory framework of Ethiopia’s financial sector and has strong academic credentials.”
Eyob has worked at the Central Bank alongside Getahun, and then became the director of the Public Financial Institutions Supervision Agency.
Eyob suggested three things that the new president should concentrate on: strengthening the project analysis capacity of the bank; weeding out bad loans, and removing bad “apples”.
Last year, DBE reported a decline in its net profit after tax by 39pc to 413.9 million Br, while non performing loans increased to 5.6 billion Br from 3.4 billion the previous year. Non performing loans accounted for over 50pc of loans issued by the bank.
The figure is significantly higher than the minimum five percent threshold set by the central bank.
A senior official who is very close to the Bank’s activity welcomed the appointment.
“Even if it seems strange, it is good to sometimes switch people from regulatory areas to more operational jobs. The government needs to and must empower the new president. The responsibility given to the president of DBE and the power they have is incomparable. Even with such immense responsibilities, their power to make decisions is limited,” said the official.
Currently, the bank is being overseen by a Board of Directors headed by Minister of Industry Ahmed Abitew.
Getahun will be the fourth president for the Bank following Esayas and Wondowesen Teshome, and Moges Chemere in the last 25 years. Wondowesen, who is now the president of Enat Bank, was removed from his position eight years ago.
Getahun Nana was unavailable for comment despite repeated efforts.
Getahun, the new president Development Bank of Ethiopia (DBE).
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