The Council of Ministers in Ethiopia has approved two draft proclamations integral to the National Bank of Ethiopia’s (NBE) economic reform agenda.
The Banking Business Proclamation allows foreign banks to invest in Ethiopia’s banking sector by opening subsidiaries, branches, or investing in shares of existing domestic banks. The new proclamation also aims to integrate regulation with prompt corrective measures for troubled banks by the NBE. Consequently, the NBE will have the authority to manage failed banks, mitigating risks to customers through a regulatory sandbox framework designed 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 the NBE in a statement released on Friday, June 14th.
The NBE’s proclamation includes the establishment of a Monetary Policy Committee and the National Financial Stability Committee to ensure quality and effective monetary policies and maintain the soundness of the financial sector. The proclamation also provides for consumer protection and the introduction of a Central Bank Digital Currency (CBDC).
In the past two years, Ethiopia has opened its telecommunications sector to foreign investors and companies, with Safaricom setting up operations. By opening up core industries, Ethiopia aims to create employment, stimulate economic growth, and boost competitiveness in the country, which has a population of over 129 million.
The draft proclamations will now be referred to the House of Peoples’ Representatives for review, comment, and final ratification.
