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Africa News Thu, 21 May 2020

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Why Ethiopia is limiting cash withdrawals

Ethiopia’s central bank has issued a directive limiting cash withdrawals for individuals and businesses.

It said the move is aimed at tackling tax evasion and encouraging a more efficient use of cash.

Under the directive, individual Ethiopians cannot withdraw more than 200,000 birr ($5,800; £ 4,700) a day.

The ceiling for total withdrawals in a month has also been set at 1m birr ($29,000; £23,000) per person.

Business-related withdrawals amounts are higher - around $8,000 per day and close to $74,000 per month.

The bank’s governor Yinager Dessie said the move would help manage liquidity for financial institutions, and that banks and credit companies that breach these limits would be penalised.

Ethiopia is a cash-heavy economy and the move may impact transactions for small businesses as they adapt to the new measures.

Some experts also believe that the timing of the announcement is unhelpful as the country’s is grappling with the economic impacts of the coronavirus epidemic.

Source: bbc.com

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