The National Bank of Ethiopia has began tweaking the country’s banking regulations in a move aimed at allowing foreign banks and Fintechs to start operations in the country.
Some of the changes in the Banking Business Proclamation include setting the capital requirements for foreign banks seeking to expand into Ethiopia through joint ventures.
“One of the legal revisions we are doing currently is revising the Banking Business Proclamation. The existing proclamation does not allow foreign banks to come and operate in Ethiopia,” the country’s Central Bank Governor Yinager Dessie was quoted by the The Ethiopian Reporter on May 19, 2022, at an event in Addis.
The current regulations under the Banking Business Proclamation were last amended 2019 and they prohibit foreigners from fully or partially owning or opening banks in the country.
According to a consultant working on the project, the opening up could only be limited to regional banks who will enter into joint venture agreements with local banks.
“That will be easily manageable for the central bank. The first target is to boost the foreign currency inflow. There are many legal framework revisions underway and many are in a draft stage,” the consultant was quoted by the publication.
Additionally, the deputy governor of the Central Bank is also quoted saying that Ethiopia’s new Digital Payment Proclamation will for the first time enable the Regulator to license foreign Fintech companies seeking to operate in Ethiopia.
“The government is currently changing the law to allow us to operate mobile money and we are going to have conversations in the next couple of weeks.” Safaricom CEO Peter Ndegwa said in a recent interview with The Kenyan Wall Street.
With a population of around 120 million people, Ethiopia’s telecoms and financial services sector was closed to foreign investors for decades, but its government has recently began a number of initiatives aimed at opening up the sectors.
