It is with great pleasure that I present this Strategy Plan document as the National Bank of Ethiopia celebrates the 60th Anniversary of its founding as the nation’s central bank. Over the course of past six decades—which have seen several changes in government, ten central bank Governors, and multiple forms of currency notes and coins—the NBE has been entrusted with carrying out a significant set of responsibilities: administering the nation’s monetary policy, providing its bank notes and coins, acting as a banker for the government, supervising the financial sector, managing the exchange rate as well as foreign exchange reserves, and undertaking economic research. In having performed these functions without interruption and over such an extended period, NBE stands out as one of Ethiopia’s most distinctive and historically important national institutions.

It is with this sense of history and continuity that the National Bank of Ethiopia is now launching a forward-looking Strategy Plan that carries with it many elements of the past but that also seeks to significantly re-orient and re-focus the core activities of the central bank. The world of central banking has seen significant advances in recent years—including in monetary policy management, in dealings with the financial sector, in currency management, in the use of payment technologies, and in economic research—and despite some strong efforts and notable improvements at NBE, it has not always been possible to keep up with and implement such advances in the Ethiopian context.

The need for revisiting our core functions and activities is also important now, more than ever, given the unprecedented global and domestic developments of the past few years. The external environment has presented a ‘cocktail of challenges’ in recent years (a global pandemic, commodity price shocks, sharp drops in worldwide trade, and reduced external financing) that require careful policy responses and re-calibrations on the part of central banks such as NBE. In addition, countries are facing an unprecedented level of uncertainty from structural shifts, new technological advances (such as generative AI), climate change, demographic shifts and geopolitical upheavals. Our domestic circumstances also pose a number of complex challenges and call for careful and adept macroeconomic management in the period ahead—to establish monetary and fiscal stability after several years of persistent macro imbalances, to support a recovery from the recent period of internal conflict, to restore the country’s high-investment and high-growth trajectory, to ensure rapid expansion and modernization in our productive sectors (across agriculture, exports, manufacturing, mining, tourism, and more) and, more generally, to re-invigorate all our efforts aimed at ensuring widespread and equitable national development.

NBE’s Strategic Plan for the period 2023-26 is thus prepared and drafted to be responsive to the above set of circumstances, namely to align NBE’s future work in line with global best practices while also addressing the very unique and specific conditions of Ethiopia’s current economic situation and future ambitions.

I am also pleased to note that the preparation of the Strategy Plan has benefited from the deep institutional culture and knowledge-base present within NBE, and accordingly reflects the extensive internal comments, consultations, and valuable insights received from across NBE’s Directorates.

With respect to its core contents, the Strategy Plan is framed around five key strategic objectives that NBE will work to ensure over the next three years: (1) price and external stability; (2) financial stability; (3) financial inclusion, deepening, and digitization; (4) operational excellence; and (5) strong governance systems and practices. Each of these strategic objectives has been linked to well-defined action plans, which are in turn linked to Key Performance Indicators (KPIs) and finally to numerical targets for each of the coming three years.

To highlight some of the most substantive and path-breaking initiatives planned in the coming years, the NBE will:

• Re-orient its work priorities to focus on the key task of maintaining low and stable inflation;
• Transition from the current monetary policy regime based on targeting monetary aggregates to a price-based system using interest rates and open market operations;
• Fundamentally transform the size, shape, and scope of Ethiopia’s financial sector via measures that deepen access, foster digitization, allow foreign investors, and introduce capital markets;
• Modernize our internal operations to ensure greater transparency, strengthened research capabilities, and an internal culture conducive to learning and knowledge-generation.

Taken together, the above priority initiatives—as well as the many other reforms laid out in the Strategic Plan—will put in place a strong foundation for delivering on our stability goals. The active monitoring, evaluation, and refinement (as needed) of the strategic objectives set out in this document will also be given high priority over the coming years.

In concluding, and on behalf of all NBE staff, I would like to express our utmost dedication to the execution of these strategic objectives—which we sincerely believe will help build a better Ethiopia for us all.