Businesses in Mekelle are contending with an acute shortage of cash due to the daily withdrawal limit put on depositors, The Reporter has learnt.
While economic activities are at a standstill in Ethiopia’s second biggest city, the Interim Administration of Mekelle announced that a majority of businesses are still closed and are unable to undertake their regular business activities.
“Despite the opening of banks, the transaction limit is hindering traders from buying and selling items, while economic activities are yet to go back to normal,” Mayor of Mekelle , Ataklti Haileselassie told the Reporter.
“The currency in circulation is also very low compared to the demand for cash,” he added.
Commercial banks operating in Mekelle are also experiencing a liquidity shortage, while some are still closed due to the absence of electricity.
“At some sub-cities where there is no electricity, residents are unable to withdraw money, affecting their daily consumption,” Ataklti said.
Following the fighting in Tigray between the national army and forces of the Tigray People’s Liberation Front (TPLF), commercial banks have been closed for several weeks, impeding trade activities and the flow of cash.
Fearing theft and misallocation of financial resources, the National Bank of Ethiopia, just a week after the fighting broke-out, ordered commercial banks to stop providing services in Tigray, which led to a closure of businesses and shortage of Birr.
With government offices being looted and absence of office materials, public service is not yet fully available. Meanwhile, the interim administration said it is distributing basic health commodities.
Hundreds of thousands of people have been displaced in Tigray after the fighting broke out in early November 2020, according to OCHA. Some 50,000 people have crossed to Sudan as refugees, while many are staying in towns, remote areas or trapped between localized fighting, the same source reported last week.
The Tigray Emergency Coordination Center, on the other hand, estimated that more than 4.5 million people are in need of urgent assistance, including 2.2 million people who had been forced to flee their homes within Tigray.
OCHA said the federal government dispatched relief food and other humanitarian commodities to the Tigray region, including 44 truckloads of food assistance to Shire Town, 30 truckloads of food supplies and three truckloads of medical supplies to Mekelle. However, humanitarian access still remains constrained in some areas due to ongoing fighting.
“Though life is almost returning to normal in Mekelle, there are oceans of problems in other parts of Tigray. There is no light, water, transport services, while banks are still closed, a situation which requires urgent support from authorities in the federal government,” OCHA’s statement read.