Council Endorse Bill allowing foreign banks into Ethiopia

The council of Ministers has endorsed the draft banking business law that allows granting foreign banks with licenses to operate in Ethiopia.

The bill was approved by the Council today together with a revised National Bank of Ethiopia (NBE) establishment draft proclamation and other resolutions.

The decision comes nearly two years after the Prime Minister Abiy Ahmed’s cabinet adopted a policy to open the banking sector to foreign investors.

Ethiopia’s banking industry is dominated by state-owned Commercial Bank of Ethiopia, and the sector has 32 players in total, all of them locally owned.

The Central Bank has been making legislative changes necessary to implement the new policy and its plan to issue up to five banking licenses to foreign investors in the next five years.

This includes amending the Banking Business law which was a subject of the ministerial council discussions on Friday.

In a statement, the PM Office said the draft law was prepared in response to the recent economic and technological development of the global financial industry, in addition to the policy change.

It allows establishing legal framework and control mechanisms to issue banking licenses to foreign investors and administer its process, the PM Office added.

The council eventually voted unanimously to endorse the draft law and send it to the parliament for ratification.

In the same meeting, the council also deliberated on the draft law establishing the National Bank of Ethiopia (NBE).

The proclamation is being amended for the first time in sixteen years, the PM Office said, to address several gaps it has in the area of fiscal policy efficiency, and ensuring NBE’s financial self-sufficiency, among others.

Recent national and global economic, financial, technological and geopolitical developments have been taken into account to revise the law that ensures the financial sector’s soundness and stability, the Office added.

This draft proclamation has also been sent to the parliament for further discussions and ratification and ratification.

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