Addis ababa: Foreign banks are making requests to operate in Ethiopia’s financial sector following the government’s opening up policy of banking sector for foreign investment, according to Mamo Mihretu, Governor of the National Bank of Ethiopia (NBE).
According to Ethiopian News Agency, the government has taken a policy initiative to liberalize the financial sector for foreign investment. To this effect, the House of People’s Representatives recently approved a legislation permitting foreign banks to enter and operate in Ethiopia, Mamo said stating granting NBE the power to translate the policy direction into action.
The governor further elaborated that the new legislation allows foreign banks to establish subsidiaries, purchase shares in local banks, and open branches or liaison offices. Furthermore, the NBE has released detailed directives allowing foreign banks to operate in Ethiopia. This includes establishing a comprehensive licensing and regulatory framework to facilitate their entry and operations within the country.
Governor Mamo emphasized that opening the financial sector to foreign institutions will bring significant benefits to the country. For example, it will help to increase capital within the financial sector, introduce new services, enhance financial inclusion, expand digital banking, and boost competitiveness. Mamo affirmed that numerous foreign banks are currently submitting applications to participate in Ethiopia’s financial sector, and the National Bank is receiving their requests for licensing.
He noted that banks from neighboring countries and the Middle East are showing particular interest. These banks will be permitted to operate if they add value to the Ethiopian economy and strengthen the financial sector. He elaborated that the primary objective of opening the sector to foreign investment is to transform credit into investment, strengthen inclusivity, and enable the economy to become more productive.