The Council of Ministers in Ethiopia has approved two draft proclamations as an integral part of the National Bank of Ethiopia’s (NBE) economic reform agenda.
- •Under the Banking Business Proclamation, foreign banks can invest in the Ethiopian banking business through opening foreign bank subsidiaries, branches or investing in shares of existing domestic banks.
- •Additionally, the new proclamation seeks to integrate regulation coupled with prompt corrective measures on troubled banks by NBE.
- •Consequently, NBE has the resolution power to handle failed banks in a bid to mitigate risks to customers with a regulatory sandbox framework seeking to incorporate new and innovative financial services in Ethiopia.
“These legislations represent a significant step in laying a strong foundation for growth and enhancing the credibility, accountability, transparency, and governance of the National Bank of Ethiopia.” noted NBE in the Friday 14th statement.
Under the NBE’s proclamation, a Monetary Policy Committee and the National Financial Stability Committee are to be established for quality and effective monetary policies and to ensure the soundness of the financial sector. The proclamation also provides for consumer protection and introduction of Central Bank Digital Currency (CBDC).
Ethiopia has in the last 2 years, opened up its telecommunications sector to foreign investors and companies with Safaricom setting up operations there. By opening up core industries, Ethiopia seeks to create employment, stimulate economic growth while boosting competitiveness in the country with over 129 million people.
The draft proclamations will shortly be referred to the House of Peoples Representatives for review, comment and final ratification.
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