Nov 9 , 2019
By YOSEPH MERGU ( FORTUNE STAFF WRITER )
Three years after financial institutions were ordered to auction off shares owned by non-nationals of Ethiopian origin, parliament passed an amendment to allow Ethiopian diaspora to invest in the insurance sector.
The amendment was passed on October 5, 2019, after parliament deliberated on the matter.
The current growth and expansion of the financial sector and the improved capacity of the National Bank of Ethiopia (NBE) to regulate the sector were forwarded as reasons enough to lift the ban on non-nationals of Ethiopian origin. The importance of the participation of the Ethiopian diaspora in investing their resources into the economy was also cited as grounds for the amendment.
“The need for the amendment of the proclamation was to consider Ethiopian born foreign citizens in the wide range of reform frameworks,” read the statement from the Prime Minister’s Office.
The draft of the amendment was sent to the Budget & Finance Affairs Standing Committee on October 10, 2019, for further debate. After holding a meeting on the amendment two weeks later, it held a discussion with members of the National Bank of Ethiopia later that month.
Parliament voted to unanimously pass the amendment to the insurance business proclamation that was put into force back in 2012.
Non-nationals of Ethiopian origin were booted from the financial sector in 2016, following a November directive from the National Bank. All banks and insurers were forced to notify non-Ethiopian shareholders to return their shares. The non-nationals were estimated to have held an aggregate amount of 40 million Br.
The shares were auctioned beginning in 2017 by the financial institutions, and the profits made by the banks and insurers were turned over to the National Bank despite the outcry of industry outsiders. The central bank’s decision was taken to enforce the 2008 banking business proclamation.
The decision led to court proceedings, namely by Sophia Bekele, a non-national Ethiopian native, who sued the central bank for forcing her to sell shares in United Bank and United Insurance Bank that she inherited from her father.
Ethiopia’s insurance sector has grown significantly since the 1990s. Currently, the nation has 17 insurers that had 532 branches at the end of last year, over 80pc of which were located in Addis Abeba.
Insurance companies increased their total capital by over a quarter in the 2017/18 fiscal year to 5.5 billion Br. The share of private insurance companies was 72.1 percent, while that of the lone state insurer, Ethiopian Insurance Corporation, makes up the rest.
Tewodros Meheret, a lawyer and a lecturer at Addis Abeba University's College of Law & Governance Studies, believes that non-nationals of Ethiopian origin should not have been prohibited from investing in the sector to begin with.
“Allowing them to invest in the sector will increase the capital of the banks and insurance sector and increase the flow of forex,” he said. “It also transfers know-how to the country.”
PUBLISHED ON Nov 09,2019 [ VOL 20 , NO 1019]
Fortune News | Mar 14,2020
Fortune News | Dec 07,2019
Commentaries | Jan 07,2022
Radar | Jan 29,2022
Radar | Sep 28,2019
Fortune News | May 09,2020
Fortune News | Dec 11,2021
Viewpoints | Mar 12,2022
Fortune News | Oct 11,2020
Dec 24 , 2022
Biniam Mikru heads the department of cabinet affairs under Mayor Adanech Abiebie. But...
Jul 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
Nov 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
Nov 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
Recent headlines seem to augur a global debt crisis. The United States is teetering on the precipice of a self-inflicted default. Egypt,...
Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...
When the country's most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or two...
May 27 , 2023
Tauted as a somnolent giant, Ethiopia's financial scene now stirs, roused by favourab...
May 20 , 2023
The pungent irony wafting from Pretoria last week was hard to miss. Cyril Ramaphosa,...
May 13 , 2023
In March this year, Kamala Harris, the United States Vice President, visited Ghana, T...
May 6 , 2023
The history of the Ethiopian labour movement dates back to the 1940s, marked by perio...
Or see contact page