The Council of Ministers has recently approved two draft proclamations as part of the National Bank of Ethiopia's (NBE) ambitious economic reform agenda. Under the new Banking Business Proclamation, foreign banks can now invest in Ethiopia by establishing subsidiaries, branches, or acquiring shares in domestic banks. Additionally, the NBE will have enhanced regulatory powers to swiftly address troubled banks and mitigate risks to customers, fostering innovation with a regulatory sandbox framework.
These legislative advancements signify a substantial move towards bolstering the credibility, accountability, transparency, and governance of the NBE. The establishment of a Monetary Policy Committee and a National Financial Stability Committee under the NBE’s proclamation is poised to enhance the quality and effectiveness of monetary policies, ensuring the robustness of the financial sector. Furthermore, the introduction of consumer protection measures and the potential implementation of a Central Bank Digital Currency (CBDC) highlight Ethiopia's commitment to modernizing its financial landscape.
By opening up its core industries to foreign investment, Ethiopia aims to stimulate economic growth, create employment opportunities, and enhance competitiveness within its populous nation. This strategy follows the successful liberalization of the telecommunications sector, attracting major players like Safaricom. As the draft proclamations move to the House of Peoples Representatives for final ratification, Ethiopia stands on the cusp of transformative growth, setting a strong foundation for future prosperity.