Ethiopia’s parliament has ratified a historic law allowing foreign banks to operate within its borders, marking a significant step in the country’s economic reforms. The legislation permits foreign banks to establish subsidiaries in the country, open branches, and acquire up to 40% ownership in local banks. It is part of the government’s efforts to attract more foreign investment to the Horn of Africa nation. Since Prime Minister Abiy Ahmed came to power in 2018, Addis Ababa has gradually liberalized Ethiopia’s tightly controlled economy. However, challenges such as a two-year civil war and a foreign exchange crunch discouraged investors. While the banking law was overwhelmingly backed by parliament, some opposition lawmakers expressed concern over the competitiveness of local banks. However, the central bank governor, Mamo Mihretu, believes increased competition would bolster the domestic banking sector.
SOURCE: EAST AFRICAN