Ethiopia: Lawmakers Greenlight Foreign Banks' Presence in Ethiopia

18 December 2024
The Ethiopian Herald (Addis Ababa)

The House of Peoples' Representatives (HoPR) has approved the proclamation of the National Bank of Ethiopia (NBE), enabling foreign banks to operate within the country's financial sector.

During its 11th regular session yesterday, the HoPR unanimously passed the NBE proclamation, which is expected to drive growth in Ethiopia's financial sector. The proclamation aims to modernize the banking and financial systems, thereby stabilizing and strengthening the country's economy.

NBE Governor Mamo Mihretu informed members of parliament that the proclamation will contribute to stabilizing the Ethiopian economy and ensuring a healthy financial system. He highlighted that the proclamation clearly outlines the central bank's primary tasks: maintaining price stability and a sound financial system.

According to Mamo, this groundbreaking move marks a significant milestone by allowing foreign banks to enter Ethiopia. In addition to opening the door for foreign banks to operate in the country's financial sector, it is a pivotal step toward liberalizing Ethiopia's banking industry and attracting international investors.

He further emphasized that as Ethiopia embarks on steady economic growth, supporting and contributing to this development remains a core objective of the National Bank. The country's digital banking sector has seen remarkable growth, with an increasing number of citizens engaging in mobile banking and other digital transactions.

"The proclamation will gradually establish a robust banking sector, laying the foundation for strong domestic financial institutions. It sets the stage for the development of powerful banks that will further strengthen the nation's economy," Mamo stated.

The financial transaction landscape is progressing as Ethiopia shifts toward digital banking. The widespread adoption of mobile banking underscores the nation's considerable advancement in this area. Regarding Ethiopian banks, the governor assured lawmakers that they are stable and making significant contributions to the national economy, affirming, "Ethiopian banks are safe."

Furthermore, the proclamation opens Ethiopia's banking sector to foreign investment as part of the broader economic reform agenda. "We have been discussing this proclamation for the past three years, drawing from the experiences of other countries," Mamo said. "The ultimate goal is to drive the nation's economic growth."

Additionally, the proclamation will enable the NBE to modernize, align with financial sector reforms, and enhance its regulatory capacity over commercial banks. It comprehensively addresses the organization of banks, the purpose and functions of the NBE, its administration, and its relationship with the government and other financial institutions, it was learned.

BY HAILE DEMEKE

THE ETHIOPIAN HERALD WEDNESDAY 18 DECEMBER 2024

Read the original article on Ethiopian Herald.

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