New Development: Foreign Investors to Engage in the Financial Sector
The Decree Allowing Foreign Investors to Engage in the Financial Sector to be Submitted to the Ethiopian Council of Ministers
In a bold stride towards economic liberalization, the Ethiopian government is poised to submit a groundbreaking decree to the Council of Ministers. This decree will permit foreign investors to engage in the financial sector, signaling a pivotal shift in Ethiopia’s economic policy. This development promises to revolutionize the financial landscape and attract substantial foreign capital, setting the stage for unprecedented growth and development.
Announcement by the National Bank of Ethiopia
During a recent investment forum in Addis Ababa, Governor Mamo Mehretu of the National Bank of Ethiopia (NBE) announced the forthcoming submission of the decree. He highlighted that this policy decision will pave the way for foreign banks to enter the Ethiopian market, marking a historic milestone for the nation’s financial sector.
Options for Foreign Investors
The Governor detailed three primary pathways for Saudi financial institutions and other foreign investors interested in the Ethiopian market:
- Opening a Branch: Establish branches in Ethiopia to directly offer financial services.
- Becoming a Subsidiary: Form subsidiary companies to operate within the Ethiopian financial system.
- Direct Investment: Engage in direct investments in local financial institutions.
Special Incentives for Strategic Investors
To further entice foreign investment, particularly from Saudi Arabia, The Governor underscored special support and guarantees for strategic investors. These incentives include:
- Foreign Currency Exchange and Repatriation: Investors can exchange their wealth in foreign currency and repatriate profits.
- Offshore Accounts: Collaboration with the Ministry of Finance to facilitate offshore accounts for strategic investors.
- Convertibility Guarantee: Assurance of asset convertibility in Ethiopia for strategic investors, particularly from Saudi Arabia.
Economic Reforms and Assurances
Addressing concerns about foreign currency reserves, the governor assured investors of extensive reforms aimed at bolstering Ethiopia’s foreign currency reserves. He emphasized the government’s commitment to ensuring that a lack of foreign currency will not impede investment activities.
Ethiopia’s Economic Potential
He highlighted Ethiopia’s position as the largest economy in Sub-Saharan Africa, undergoing fundamental reforms in investment banking, financial policies, and administrative laws. These reforms are designed to create a more favorable environment for both local and foreign investors.
Future Outlook
The Ethiopian government opening of Ethiopia’s financial sector to foreign investors is expected to inject new capital into the economy, fostering growth and development.
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