Ethiopia’s Largest Commercial Bank Loses $40 Million to “systems glitch”

Ethiopia’s most significant financial institution, the Commercial Bank of Ethiopia (CBE), is in the middle of a major crisis after a “systems glitch,” which caused an approximately $40 million loss.

The whole thing, which unfolded over the weekend, has completely paralyzed the Ethiopian financial sector and raised some serious questions about the bank’s internal controls.

Weekend Meltdown: Glitch Exploited on Ethiopian Campuses

The details of how the event happened are not yet clear but according to reports, during a regular maintenance procedure, there was a glitch.

It was reported that the malfunction resulted in an account balance mismatch, allowing customers to withdraw or transfer funds more than they actually had.

News of the error quickly spread among Ethiopian campuses, mostly through messaging applications and phone calls.

Students noticing this prospect rushed to ATMs and made large withdrawals before the bank could fix the problem.

“We lined up at the ATMs, and at first, we were a bit skeptical,” recounted a student at Jimma University to the BBC. “But then people kept withdrawing, and no alarms went off. We just kept going until the police eventually showed up and shut everything down.”

A Trusted Institution Stumbles: The Central Bank of Ethiopia’s Image Problem

The bank, with a history spanning over 80 years and more than 38 million account holders, has always been seen as a pillar of strength and reliability.

This perception, however, was seriously undermined by this particular incident.

Even though the CBE maintains that the problem arose from a technical error and that all accounts are safe, the sheer size of the financial loss leaves questions about the bank’s internal control system.

Central Bank’s Response: Low Transparency during Crisis

The Commercial Bank of Ethiopia, the country’s central bank, has admitted to this fact but provided little detail on it.

They have acknowledged that there was a “glitch” during maintenance but have not commented on the missing funds.

Read More: MTN Nigeria Recovers ₦12.5 billion Lost to Mobile Money Service Glitch

President Sano’s Explanation: Minimizing the Incident and Playing the Blame Game

The President of CBE, Abie Sano, tried to play down the incident by claiming that it was not a cyberattack.

He also made the point that students at the Ethiopian campuses were mainly responsible for exploiting the glitch.

Nevertheless, this explanation has done nothing to pacify critics who wonder how such a big error could be overlooked for so long.

Fallout and Consequences: Cybersecurity Issues and Public Trust at Stake

The incident led to a debate about Ethiopia’s financial system security.

Experts have raised the issue of stronger cybersecurity measures as well as tighter internal controls in banks.

The likelihood of copycat incidents and erosion of public trust in banking systems is another significant concern.

The Road to Recovery: Reclaiming Funds and Restoring Confidence

CBE is in the process of recovering the lost funds. There has been no indication from the bank whether or not they will take legal action against those who exploited the glitch.

It is still unknown how long it will take for the bank to completely recover from this financial setback and trust its customers again.

The coming days and weeks are going to be pivotal for CBE.

The ability of the bank to effectively manage this crisis, recover lost funds, and put in place effective preventive measures will determine its reputation and the stability of Ethiopia’s financial sector in the long run.