ADDIS ABABA – Ethiopia’s sweeping financial sector reforms are generating strong interest from international insurance and banking institutions, signaling a new era of cross-border collaboration and competition in the country’s financial landscape.
Speaking to The Ethiopian Herald, the African Insurance Organization (AIO) President Patty Karuaihe-Martin praised Ethiopia’s regulatory shift as a critical step toward modernizing the financial sector and enhancing service quality.
“We have observed the financial reforms in Ethiopia with great optimism,” she said. “These developments pave the way for partnerships and cooperation, and the insurance sector is particularly eager to play a role in supporting Ethiopia’s progress.”
Patty emphasized that the presence of foreign insurers can help overcome systemic challenges in service delivery and elevate the overall efficiency and competence of the sector. However, she also cautioned that broader issues—such as Africa’s debt burdens—continue to pose challenges for the insurance industry continent-wide.
The Association of Ethiopian Insurers (AEI) President Yared Molla echoed this sentiment, stating that while the entry of international firms will increase competition, it also brings significant benefits.
“This competition will be a wake-up call for local insurers. But it is also an opportunity—for knowledge transfer, technological advancement, and improved customer service,” Yared said.
The AEI has formally requested the National Bank of Ethiopia (NBE) to open the domestic market to foreign insurers. However, Yared stressed that this liberalization must be carefully managed through a phased approach that identifies priority areas—such as life insurance, which remains underdeveloped in the Ethiopian market.
He also underscored the importance of strengthening domestic regulatory institutions, particularly the need for an independent insurance commission, enhanced insurance awareness campaigns, and significant investment in sector-specific human capital.
“Foreign investment alone won’t solve everything,” Yared added. “We need parallel reforms that address structural gaps—regulatory, institutional, and educational—to make sure the benefits are sustainable.”
The emerging consensus among regional and local insurance leaders is that Ethiopia is on the cusp of transformation. If managed wisely, the current wave of reforms could position the country as a dynamic hub for financial innovation and insurance growth in East Africa.
BY TSEGAYE TILAHUN
THE ETHIOPIAN HERALD SATURDAY 31 MAY 2025
