Nearly fifty years after the last batch of foreign banks in Ethiopia terminated operations after the rise of the Socialist regime, Parliament has ratified a bill opening the sector back to foreign investors. The House of People’s Representatives ratified a pair of consequential bills Tuesday morning aimed at evolving the financial sector into a state at par with international best practices.
The opening up of the banking sector has been marked by significant anticipation. Prime Minister Abiy Ahmed (PhD) has noted the pending entry of foreign banks since the first iteration of the Home-Grown Economic Agenda was unveiled nearly four years ago.
Parliament’s Standing Committee for Planning, Budget & Finance received the draft bill at the end of the last fiscal year and has conducted a series of stakeholder sessions to sift through contentious.
Ethiopia’s banking sector which manages assets of nearly 3.3 trillion birr has been largely limited in expanding financial inclusivity reaching just around 50%, according to an index by the World Bank. Banks have also lagged in expanding credit access compared to sub-Saharan countries with foreign participants, with around half a million Ethiopians having access to bank loans.
Aiming to correct these and the other handicaps hindering financial sector growth and deepening, the banking law amendment was voted into law with three objections.
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