RE: ….17 Dec 2024 09:41
Parliament approves banking proclamation, allowing foreign banks to enter #Ethiopia’s financial sector
Ethiopia's Parliament has approved the long-awaited banking business proclamation, enabling foreign banks to enter the country’s financial sector. The law permits foreign banks to establish subsidiaries, open branches or representative offices, or acquire stakes in local banks, capping foreign strategic investors’ ownership at 40% and allowing an additional 7% to 10% for non-strategic foreign national investors. It also limits the combined shareholding of foreign nationals and foreign-owned Ethiopian organizations to 49%, ensuring the majority ownership remains Ethiopian.
Despite the liberalization, some MPs voiced concerns over the impact on local banks. Desalegn Chane of the National Movement of Amhara (#NaMA) remarked, “I don’t think the government is providing enough support for private banks to make them competitive in the market.” In response, Mamo Mihretu, governor of the National Bank of Ethiopia, assured lawmakers that while some banks face challenges, “these problems are under the control of the central bank.” Currently, 32 banks operate in Ethiopia, with the state-owned Commercial Bank of Ethiopia holding 21.5% of the total banking capital.