ASSESSMENT OF TRADE SERVICE OPERATION IN COMMERCIAL BANK OF ETHIOPIA

Abstract

Trade service operation is one of the main processes of commercial banks in Ethiopia. However, there is almost no previous research has been conducted on this big issue. This study assesses the trade service operation in Commercial Bank of Ethiopia and pointed out the challenges that are affecting the process. To achieve the objectives of the study, systematical assessment and measurement of trade service operation is crucial. The study employed both quantitative and qualitative approaches. The respondents were drawn from different organs of TS process. Ts customers are also included in the study. Data was collected through questionnaire from a sample of 86 TS customers and 92 TS employees. Data collected from the questionnaire were analyzed using SPSS version 20 statistical tools such as mean, standard deviation quantitatively, and followed by interpretation and qualitative analysis has made. The result of the study indicates that trade service operation is a major source of revenue for CBE. In addition, the study identifies bottlenecks that are affecting TS process at CBE. One of the obstacles is the absence of efficient TS personnel against international standard. Moreover, the directives of NBE and the country infant economical and infrastructure status are identified as the main obstacles to undertake this operation successfully. The shortage of foreign currency, informal flow of information in the process has also been identified as an obstacle. Therefore, in order to tackle the challenges, CBE required upgrading the efficiency of TS personnel. TS policy and procedure are also required to be updated with the change of external environment in consistent with the NBE’s directive. Furthermore, there is a need of encouraging credit policy and procedure that support exporters and those engaged in agricultural and manufacturing sector. Besides, NBE has to revise its directive with the change of dynamic global trade. Moreover, benchmarking first class foreign banks and instituting experience and knowledge sharing with them will have significant role for the improvement of the service. In order to avoid ambiguity and to keep consistency, the flow of information under the operation has to be formal. Finally and most importantly the bank has to install technologically advanced system that could not interrupt easily.