Ethiopian Informer
ADDIS ABABA: In a significant move for the country’s financial landscape, the Ethiopian House of Peoples’ Representatives (HoPR) has approved a bill allowing foreign banks to enter Ethiopia’s banking sector.
During its regular session on Tuesday, the HoPR, which serves as the lower chamber of the Ethiopian parliament, reviewed and passed the Banking Business Proclamation, enabling foreign banks to establish operations in the East African nation, as reported by state-affiliated Fana Broadcasting Corporate.
The proclamation was approved by a majority vote from parliament members and is expected to facilitate foreign investment in the banking sector, aligning with policy decisions previously established by the Ethiopian government, according to the motion presented to the HoPR.
Mamo Mihretu, governor of the National Bank of Ethiopia (NBE), emphasized that the new legislation will contribute to the stability of the Ethiopian economy. He pointed out that the bill outlines the core objectives of the NBE, with a primary focus on maintaining price stability and ensuring a healthy financial system.
Addressing concerns from parliament members about the potential effects of opening the banking industry to foreign investment on local banks and small to medium enterprises, Mihretu reassured that the proclamation would allow the NBE to modernize and adapt to evolving financial sector dynamics while strengthening its regulatory framework.
The newly enacted law will permit foreign banks and investors to participate in Ethiopia’s banking industry, thereby contributing positively to the country’s economic growth.
Historically, Ethiopia’s banking sector has been closed off to foreign institutions, with both government and private domestic banks holding a monopoly over operations in this field.
Since assuming office in 2018, Prime Minister Abiy Ahmed has consistently indicated his intention to liberalize the tightly regulated Ethiopian financial sector, promoting competition and attracting foreign investment as part of broader economic reforms.
