The National Bank of Ethiopia, the country's central bank reduced the reserve requirement of commercial banks to 5% from 10%. This is the second time the NBE has reduced the reserve requirement in two years, from the highest 15pc three years ago.

Banks have also been given a two-year grace period within which they are to restructure their loan portfolios, so that 40pc of loan advances comprise of short-term loans, which are due within one year.

The move by the central bank is believed to be in response to the liquidity crunch that is being experienced by banks that rely on medium (one to five year) and long-term loans.

Source: Fortune