Ethiopian Shipping and Logistics (ESL), one of the nation’s leading foreign exchange earners, has issued a final ultimatum to local banks, demanding a reduction in service charges for foreign currency transactions.
In a letter dated February 14, ESL raised significant concerns about the excessive fees imposed by domestic banks for transfers to its account at Citi Bank, warning that these high charges are undermining its operations and competitiveness.
The letter, authored by Wondimu Denbu, Deputy CEO for Corporate Services at ESL, stressed that the exorbitant fees are negatively impacting the operations of the state-owned logistics powerhouse.
Additionally, banks are withholding extra amounts as Value-Added Tax (VAT), a new requirement from the government.
“The steep service charges will force the company to pass these expenses onto its clients, potentially compromising its competitive edge in the market,” the letter, addressed to one of the private banks, asserted.
ESL requested that banks limit service fees to a maximum of 1% for dollar accounts and 2.5% for birr accounts when transferring funds earned from maritime and Djibouti port clearance services.
The letter warned that if banks do not comply with ESL’s proposed fee structure, the company will terminate its dealings with those institutions.
Wondimu confirmed to Capital that the letter was sent to 24 banks, with half having already responded. “Of those who replied, roughly six have agreed to the proposed rates,” he noted.
“Today, we have decided to issue a final notice to the remaining banks to determine their willingness to align with ESL’s rates,” Wondimu stated to Capital on Friday, March 21.
“If they reject our proposed rates, we will exclusively work with those who have accepted our terms,” he added firmly.
Wondimu pointed out that the service fees currently charged by banks vary widely, sometimes reaching as high as 11%.
A senior banking expert, who wished to remain anonymous, commented that the service fees deducted by banks are taken from the company’s own resources. “The service charge, particularly for the birr account, is completely unreasonable,” he remarked.
He explained that for fund transfers to other bank accounts, known as Real-Time Gross Settlement (RTGS), banks should apply standard protocols as they do for other clients. “If banks impose unique charges for RTGS at ESL, it would be unfair,” he added.
The expert further emphasized that banks apply dual charges—first when servicing ESL’s customers and again when engaging with ESL directly. “Such practices result in increased costs for end-users or consumers,” he told Capital.
He supported ESL’s initiative, stating, “It is ESL’s right to collaborate with banks that offer reasonable rates.”
The expert criticized the current service fees imposed by banks, labeling them excessive.
ESL, which operates a fleet of ten vessels, is Ethiopia’s largest logistics firm, providing multimodal transport services, dry port operations, and other logistics-related activities. It is also one of the country’s top foreign currency earners in the service sector.
In the first half of the current budget year, ESL reported total revenue of 46.8 billion birr, exceeding its target of 44 billion birr by 106%.
During the same period, its cross-trade operations generated USD 271 million, surpassing the goal of USD 234 million by 16%.
