National Bank of Ethiopia Governor Mamo Mihretu says foreign banks will commence operations in the Ethiopian financial sector before the year is out.
Speaking at the Ethiopian Finance Forum held mid week, the governor highlighted the government’s decision to open up the financial sector to foreign banks as one of its key recent policy shifts.
Mamo then announced that the necessary groundwork has already been laid for the expected entrance into the Ethiopian financial sector of the foreign banks.
Stopping short of naming the banks on their ways to Ethiopian financial turf, Mamo emphasized that integrating foreign financial institutions remains one of the NBE’s top priorities.
Discussions at the forum also touched on the potential impact of foreign banks on the local market and the broader economy, including anticipated benefits in terms of competition, efficiency, and
access to finance.
During his presentation Mamo has disclosed that certain guidelines previously considered “obstacles” to the entry of foreign banks will be revised sooner than the timeline initially indicated for their entry.
Among the policies cited as restrictive are the mandatory bond purchases required of banks and the 18 percent credit cap. The NBE Governor indicated that these policies will be repealed and that a clear deadline has been set for their removal.
Delivering an opening speech at the event, Ethiopia’s President Taye Atske Selassie, has remarked that although Ethiopia’s financial sector is over a century old, it has not matured into a strong and resilient system due to numerous challenges.
One key reason, he noted, was the prolonged dominance of government-led economic policies.
He added that in the past, the government relied heavily on large loans to finance investments, which burdened the country with debt and weakened the financial system.
He noted that Ethiopia’s macroeconomic reform has already produced promising results within a short period.
According to him, the reform, is built on three main pillars and has been implemented through clear planning, effective coordination, and well-defined goals.
Mamo on his part emphasized that Ethiopia was undergoing major reforms in its monetary, exchange rate, and financial sector policies.
”The overarching aim is to create a more competitive, market-based financial system,” he stressed.
Mamo also stated that the reform agenda places strong emphasis on the private sector and is guided by digital transformation and efforts to expand access to financial services.
