HARAMAYA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

PRACTICAL ATTACHMENT REPORT ON ROLE OF COMMERCIAL

BANK OF ETHIOPIA TO ECONOMIC GROWTH IN AGARO TOWN

PARTICULARLY NOOR BRANCH

BY: -

BIRHANU KARU HORDOFA

ID. NO: 3892/13

COMPANY MANAGER: BEDILU GEMEDA (MSC)

SUBMITTED TO: DEPARTMENT OF ECONOMICS

OCTOBER 2023

HARAMAYA UNIVERSITY, ETHIOPIA

 AKNOWLEDGEMENT

First of all, I would like to thank Allah for everything that is given to me through this
task. Next to Allah, a number of people have contributed to the completion of this
practical attachment without which its completion wouldn't be possible. And also, I would
like to give my great thanks to Noor Branch of Commercial Bank Office workers
particularly Bedilu, Mujib, Mohammed, Rida and Ayisha who give me information and
advice during this practical attachment. Besides, my appreciation goes to all the
Haramaya University Department of Economics Staff members.

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 TABLE OF CONTENTS

Content page

AKNOWLEDGEMENT ........................................................................................................... i

TABLE OF CONTENTS......................................................................................................... ii

Executive summary ................................................................................................................. vi

1. INTRODUCTION ............................................................................................................... 1

1.1. Background of the Attachment ......................................................................................... 1

1.1. 1.History of Organization ................................................................................................. 1

1.1.2. Main Functions of Organization .................................................................................... 2

1.1.4. Vision, Mission statement and Core values of organization ......................................... 3

1.1.5. Organizational Structure of Commercial Bank of Ethiopia........................................... 4

1.1.6. Objectives of Practical Attachment ............................................................................... 7

2. WORK ASSIGNMENT DESCRIPTION ........................................................................... 7

2.1. Duties and Responsibilities of Mine ................................................................................. 8

2.2. Major Activities I Performed ............................................................................................ 8

2.3. Observation ....................................................................................................................... 9

2.4.3. International Trade Service .......................................................................................... 11

2.4.4. Money Transfer ............................................................................................................ 11

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2.4.5. Interest Free Banking (IFB) ......................................................................................... 11

2.4.6. Electronic Payment Services (EPS) ............................................................................. 12

2.5. Strength and weakness of the organization..................................................................... 13

2.5.1. Strength ........................................................................................................................ 13

2.5.2. Weakness ..................................................................................................................... 13

3. Evaluation of Practical Attachment Period ........................................................................ 14

3.1. Success and Failure of Practical Attachment .................................................................. 14

3.1.1. Success of attachment .................................................................................................. 14

3.1.2. Failure of attachment ................................................................................................... 14

3.2. Major Benefits I Derived from Practical Attachment ..................................................... 15

3.3. Major problem that I faced during the attachment.......................................................... 15

3.4. Suggested solutions during the practice .......................................................................... 15

4. CONCLUSION AND RECOMMENDATION ................................................................. 16

4.1. Conclusions ..................................................................................................................... 16

4.2. Recommendation ............................................................................................................ 16

REFFRENCES....................................................................................................................... 18

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 List of figures

Figure 1 Organizational structure of CBE ............................................................................... 5

Figure 2 Organizational structure of CBEs of Noor branch .................................................... 6

Figure 3 Activities of CBE in Noor branch ........................................................................... 10

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 LIST OF ABBREVIATIONS AND ACCRONYMES

ATM Automated Teller Machine

CATS Customer Account Transaction Process

CBE Commercial Bank of Ethiopia

EPS Electronic Payment Services

EUR Euro

FCY Foreign Currency

GBP Great Britain Pound

ID Identification Card

IFB Interest Free Banking

IMT International Money Transfer

LMT Local Money Transfer

NGO Non-Government Organization

POS Point-of-Sale Terminal

SME Small to Medium-Sized Enterprise

SWIFT Society for Worldwide Interbank Financial Telecommunications

USD United States Dollar

VP Vice President

WFP World Food Program

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 Executive summary

The purpose of this practical attachment report was to examine a real-world working
environment related to the subject area. This report's goals are to describe the organization
where the attachment took place, all the activities that were done during that time, the
lessons that were learned from them, and any difficulties that were encountered. This
practical attachment report focused on role of commercial banks of Ethiopia for economic
growth. Improving the ability to accumulate physical and human capital is essential for
sustainable economic growth since it will enable more efficient use of the economy's
resources. A strong and stable financial system is a pillar of economic growth and
development in today's economy. The Commercial Bank of Ethiopia introduced modern
banking to Ethiopia. This report is prepared on the basis of my 35 days practical
experience at Commercial Bank of Ethiopia in Noor branch which is one of the public
banks in the Agaro town. It was one of Government organization and nowadays the
organization gives Strong services for the economy based on the sharia rules. I have tried
to list the main points of my practical attachment experience. Upon the completion of my
practical attachment, I found that working in a professional environment is very
interesting yet very challenging. Problems do arrive but it can be solved by the joint effort
of the intern and the guidance of the supervisors. In this matter, I am able to learn more
about the way an organization works and the way that one can apply professionalism in
my life, which is very important for future career development and profession.

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 1. INTRODUCTION

1.1. Background of the Attachment

1.1. 1.History of Organization

This paper is prepared to accomplish the course professional in economics that enables
as to show the applicability of theoretical course of economics in the real world.
Commercial Bank of Ethiopia (CBE) is one of the oldest public banks. The services of
commercial bank of Ethiopia started in our country Ethiopia before many years ago. The
history of Commercial Bank of Ethiopia dates back to the establishment of the State Bank
of Ethiopia in 1942. CBE was incorporated as a share company in 1963. CBE joined with
the privately held Addis Ababa Bank in 1974. Since then, it has played a significant role
in the country's development. A strong and stable financial system is a pillar of economic
growth and development in today's economy. The Commercial Bank of Ethiopia
introduced modern banking to Ethiopia. It was the first bank in Ethiopia to partner with
Western Union, build ATMs, and add mobile banking to its broad services. Today,
Ethiopians in the Diaspora can send money home through the CBE’s 20+ international
money transfer partners, which include Western Union, Money Gram, and World Remit.
In addition to its partnerships with international money transfer providers, the CBE has a
strong SWIFT link with over 700 foreign banks globally. Currently, CBE has more than
37.9 million account holders in its more than 1842 branches and the number of Mobile
and Internet Banking users also reached more than 6.6 million and 37,000. Active ATM
cardholders reached more than 8.3 million and 17 million CBE Birr users (2023). In the
following pages I will discuss the well-known branch of commercial bank of Ethiopia
called by Noor Branch which is actually interest free bank. The attachment also includes
the detail description of assignments that I was handling, vision, mission, objective and
strength and weakness of the organization. As well as, problems and suggested solutions,
finally conclusion and recommendations. Since, the CBEs of Noor branch is one of the
Islamic banking, its historical background is looks like the following: -

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The pioneering effort, led by Ahmad Elnaggar (Ahmed Al Nejjar), took the form of a
savings bank based on profit-sharing in the Egyptian town of Mit Ghamr in 1963. 1975
Islamic Development Bank (IDB) based in Jeddah. 1983 Iran introduces 100% Islamic
banking system, Malaysia passes comprehensive legislations on Islamic finance.
1991(AAOFI) Accounting and Auditing Organization for Islamic Financial Institutions is
implemented. 2002 (IFSB) Islamic Financial Services Board established in Malaysia,
enhancing stability of the industry issuing standards. In 2005 IFSB introduces standards
on Basel II compliance for Islamic Institutions. Today (World)

Several other IFIs were established to create, regulate and support the emerging IFIs.

i.e.- International Islamic Rating Agency (IIRA), etc.

Accordingly Commercial bank of Ethiopia in Noor branch of Agaro town was established
in November 2005 E.C. It located in western region of Ethiopia and have the distance of
390km from Addis Ababa. It was one of Government organization and nowadays the
organization gives Strong services for the economy. Currently Noor branch of CBE has
more than 15,000 account holders and the number of Mobile and Internet Banking users
also reached more than 6,500 and 3,100. Active ATM cardholders reached more than
8,700 and 4,300 CBE Birr users.

1.1.2. Main Functions of Organization

Commercial banks have to give a variety of functions for the economy which are
common to both developed and developing countries. These are what commercial banks
refer to as "general banking" activities. The modern banks perform a variety of
functions. There are two categories these are (a) primary functions and (b) secondary
functions.

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 Primary functions

✓ Accepting deposits: The bank accepts savings, current, and fixed deposits as deposits.
The individual and corporate surplus balances are lent cash to meet the short-term needs
of business transactions.
✓ Providing loan and advances: another critical function of this bank is to offer loans and
advances to the entrepreneurs and business people, and collect interest. It is the primary
source of income for every bank.in this process, a bank retains a small number of deposits
as a reserve and offers (lends) the remaining amount to the borrowers in demand loans,
overdraft, cash credit, short-run loans, and more such banks etc.

Secondary functions

✓ Purchasing and selling of the securities; the bank offers you with the facility of
buying and selling the securities.
✓ Paying and gathering the credit: it uses different instruments like a promissory note,
cheques and bill of exchange etc.

• Make sure that the name of the newly opened account holders is not on the list of
accounts closed for mal-operation.
• Follow up the customer ID card licensees are authenticated within one month.

1.1.3. Vision, Mission statement and Core values of organization

Vision:

➢ To become a world-class commercial bank by the year 2025.

Mission:

➢ Our commitment is to use the best personnel and technology to increase financial
intermediation in order to fulfill the values of stakeholders.

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 Core Values:

The core values detailed below are the operating principles that guide our internal
conduct as well as our relationship with our customers, partners, and shareholders.

➢ Integrity
➢ Service Excellence
➢ Professionalism
➢ Empowerment
➢ Innovative Organization
➢ Teamwork
➢ Respect for Diversity
➢ Corporate Citizenship

1.1.4. Organizational Structure of Commercial Bank of Ethiopia

Organizational structure means the chain of the authority from higher level to lower level.
The importance of organizational structure is to accomplish the activity planned in
efficient and effective manner at it is the crucial part for the organization to achieve the
objective.

➢ The Board of Directors governs the CBE, and the President managed the day today
functions of the bank.
➢ The Bank has a process oriented corporate structures each process headed by a process
owner.
➢ CBE performs its operations through its core and support processes.
➢ The Bank management of the reports to the President

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Figure 1 Organizational structure of CBE

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The organizational structure of Noor Branch of CBE in Agaro Town was summarizing
as the following diagrams.

Figure 2 Organizational structure of CBEs of Noor branch

CBE Noor branch is a grade one branch, the personnel include branch manager, senior
operation officer, customer service manager, senior quality management, control officer
and quality management and other staff like digital banking officers, junior officers and
trainees.

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 1.1.5. Objectives of Practical Attachment

➢ To provide learners with an opportunity to test their interest in a certain profession

before permanent commitments made.
➢ To build up skills in the application of theory to practical work situations.
➢ To increase skills and techniques directly applicable to their careers.
➢ To build up the strength, teamwork and self-confidence in students’ life.
➢ To improve students' ability to share ideas and develop their creativity.
➢ To build a good communication skill with group of workers and learn to learn proper
behavior of corporate life in banking sector.
➢ To give students working experience in an actual workplace and to teach them how to
write reports for technical works and projects.

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 2.WORK ASSIGNMENT DESCRIPTION

This section, explains in greater detail about the activities, experiences, lessons, and skills
that were learned during the Practical Attachment time as a part of the practical report. It
is primarily planned to check how the theoretically learned courses and gained knowledge
and skills are applied in real world environment. It is also aimed of evaluating how
relevant and applicable theoretically courses learned are in real world it also looks into
challenge and opportunities’ prevailing in the real world and; to suggest some possible
solution in the real world.

2.1. Duties and Responsibilities of Mine

My Duties and responsibilities in the Bank are train of work to understand banking
operations and procedures by performing assigned projects and responsibilities. I had
done what a bank manager and other banker ordered.

2.2. Major Activities I Performed

I performed different key activities in the organization among these I have listed here
below.

✓ Involved in digital banking service and opened mobile banking and CBE birr for
customers and making active.
✓ Opening new account in the system by using the customer ID created in the branch or
other CBE branches with a little supervision.
✓ Helping customers having limitation with understanding formats and writing on the
application forms
✓ Giving information’s to customers which related to Cash withdrawal and deposits and
others.
✓ Dealing with customer Complaints
✓ Registering Customers for an ATM card
✓ Calling customer to receive an ATM
✓ Giving awareness to customers about digital banking services
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2.3. Observation

I observed many activities at Commercial Bank of Ethiopia in Noor branch like cash
deposits and withdrawals, transferring money, opening account for new customers,
opening mobile banking and CBE birr for the customers, exchange foreign currency,
provides credit for working capital, facilitation of local and international trading
activities, bill paying services and so many related issues and some of them below I
observe was supported by photo.

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Figure 3 Activities of CBE in Noor branch

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 2.4. International Trade Service

Commercial Bank of Ethiopia gives different types of trade service products and services
that facilitate import and export activities.

➢ Documentary Credit
➢ Documentary Collection
➢ Advance Payment
➢ Consignment Basis Payment
➢ Guarantee

2.5. Money Transfer

✓ Local Money Transfer (LMT)

✓ International Money Transfer (IMT)
✓ SWIFT
✓ FCY Purchase

2.6. Interest Free Banking (IFB)

IFB refers to ‘a banking business in which mobilization or advancing funds is undertaken

in a manner consistent with Islamic law or Sharia principles.

A financial institution whose statutes, rules, and procedures expressly state its
commitment to the principle of Sharia and to the banning/prohibiting of the receipt and
payment of interest on any of its operations.

IFB is an alternative banking service that operates based on the principles of Sharia which
prohibits at the core the receipt and payment of interest as well as working in areas
forbidden by the religion of Islam. CBE Noor branch is the well-known Interest free
banking.

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 In the CBEs Noor branch, there are applicable partnership contracts which is actually
different from interest bearing banks.

The followings are the types of contracts in CBEs Noor branch: -

➢ Mudaraba (Silent Partnership)- for any ‘permissible’ including deposits;

✓ It is a special kind of partnership where one partner “rabb-ul-mal” (customer), gives

money to another “mudarib” (Bank) for investing it in a commercial enterprise.
Mudaraba refers to an investment that one provides the fund and the other provides the
expertise, labor and Time.
✓ The investment or fund comes from the rab-ul-mal while the management and work is an
exclusive responsibility of the mudarib.
✓ The generated profit will be shared in a predetermined profit-sharing ratio (PSR) among
both parties

➢ Musharaka (Joint Venture) -for any ‘permissible’ business.

Musharaka means a joint enterprise in which all the partners share the Asset, profit or loss
of the joint venture.

CBE Noor Branch can offer the following IFB:

➢ Deposit and Investment;

➢ Financing;
➢ Guarantee;
➢ Trade Service;
➢ Money Transfer (Haw Allah); and
➢ foreign currency exchange.

2.7. Electronic Payment Services (EPS)

CBE Noor branch gives the following special banking services via electronic channels.
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✓ CBE Birr
✓ ATM
✓ Mobile Banking
✓ Internet Banking

2.8. Strength and weakness of the organization

Strength and weakness of the organization is a framework used to evaluate a company's

competitive position and to develop strategic planning. Strength and weakness of CBE
Noor branch is listed below.

2.8.1. Strength

✓ Large customer base

✓ Large market share
✓ Large outreach
✓ Expanded digital channels
✓ Huge investment in technology
✓ Highest proportion of young and trainable employees
✓ Growing trend of stable deposit
✓ Modern studio for public education and promotion

2.8.2. Weakness

✓ Relatively poor service quality from the industry and diminishing customers’ satisfaction
✓ Skill gap among the key personal in areas of sales and customer service
✓ Underutilization of the E-payment channels (ATM, POS, Mobile, Internet, CBE Birr)
✓ Relatively high percentage of inactive accounts
✓ Low deposit share from cooperatives
✓ Often interruption and down time in digital channels
✓ Inadequate inter departmental integration

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 3. Evaluation of Practical Attachment Period

The practical attachment which lasted for 35 days are started on July 10th and ended on
August 25th. I could go to work place usually five days in a week depending on the order
of the manager.

3.1. Success and Failure of Practical Attachment

3.1.1. Success of attachment

This attachment gave great importance to me. It is primarily planned to check how the
theoretically learned courses and gained knowledge and skills are applied in real world
environment.

✓ I acquired knowledge and insight into ways in which our knowledge and analytical skills
can be applied in practice.
✓ I acquired positive professional ethics.
✓ I gained an awareness of our capabilities.
✓ I learned how to learn from experience; and
✓ I was increased my practical knowledge and skills.

3.1.2. Failure of attachment

The following points are the failure my attachment: -

✓ Getting confused because of I didn’t get enough guidelines or directions.

✓ Fear to ask questions, I am not even sure which of my colleagues will help me or will
they feel disturbed.
✓ The hierarchy in the organization was difficult to understand during the first few days.

Since I need to be not clear about whom I am reporting and who is reporting to whom.

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 3.2. Major Benefits I Derived from Practical Attachment

In my attachment period I also took different knowledge’s on how to work in government

office, what are the major activities done by in CBE of Noor branch, how to work with
different peoples, team work, experience sharing with experts and bankers.

Some benefits I gained was: -

✓ I developed understanding of work ethics, employment demands, responsibilities and

opportunities.
✓ I learnt ethical business practices.
✓ I determined knowledge about deposits, withdrawals, transferring money and so many
related issues.
✓ I gain personal and social skills, as well as managerial and entrepreneurial attitudes and
abilities, such as the capacity for teamwork.
✓ I Learned and gained experience about cash withdrawal and deposits.

3.3. Major problem that I faced during the attachment

Some problems were faced me during the practical attachment period these were:

➢ There was less communication between the University and hosting Company CBE Noor
branch and this lack of communication left me to deal with challenges on my own, as
there was no one from the department to intervene.
➢ The obtained data will differ from one employee to other.
➢ Uncooperative attitude of some employee.
➢ The members are busy so that do not give me enough information in the first somedays.

3.4. Suggested solutions during the practice

✓ The University should ensure that practice attachment is done in a professional and
systematic manner in which hosting institutions are genuine collaborating partners.

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 4. CONCLUSION AND RECOMMENDATION

4.1. Conclusions

On the whole, during my stay at CBE Noor Branch I have learned a lot of things about
professional field like culture of the organization and the behavior of employee like how
to study with customer to become a loyal customer of the Company. Employees have
very good relationship among themselves and also with their customers. Employees
treated me very well during my attachment duration and helped me to understand the way
of doing work. The practical attachment helped me to improve my confidence level and
I learned the way how to deal the organization level colleagues. It also increases my
interaction with different people from different background and helped me to learn and
understand their values and how to deal them ineffective manner. Generally, the
attachment period exposed me to various working relationships with my seniors and peer
workers and in the process, I get to learn about the type of work that I will involve in and
I have attempted to enrich my knowledge as much as possible that would be beneficial to
develop my carrier positively.

4.2. Recommendation

Up on my stay at CBEs of Noor branch I have realized that the bank has developed a wide
range of consumer products in order to enhance its business capabilities and cater to the
different segments of the modern society.

The following are some positive suggestion & recommendations for the CBE Noor
branch.

✓ In my thought the transaction process should be short so that the time is saved for both
the customers and the bank.
✓ Strength of the staff should be optimized and professional qualified persons should be
hired on the basis of merit

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✓ It is recommended that proper training should be provided to the company members
which will ultimately increase the performance of Bank over all
✓ To sustain the job satisfaction, CBE Noor branch needs to offer promotions and incentives
from time to time.

✓ The bank should spend more on renovation of the branches and interior design to improve
environment and atmosphere to attract the customers.
✓ CBE Noor branch has to ensure the working process faster with better computers and
operating systems
✓ More ATM booth in merchant location
✓ In our branch there was no separate counter for Utility bills, there should be a separate
counter for all sorts of utility bills.
✓ All of the above results provide satisfaction to the customers.

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 REFFRENCES

➢ The revised procedure of CBE Noor branch

➢ The daily and weekly activities

➢ Company profile of the branch

➢ Birara, F., 2014. Role of Commercial Bank of Ethiopia in Fostering Ethiopian

Economy.

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