ADDIS ABABA – The recent revised law that permits Ethiopians living abroad to invest in finance sector will go beyond boosting investment as it combats illicit capital flow among the Diaspora community, experts said.
Early in November, the parliament has approved the revised proclamation to revoke the earlier law that prohibits Ethiopian Diasporas from engaging in insurance and micro finance businesses.
Approached by The Ethiopian Herald Executive Director of the Ethiopian Diaspora Trust Fund, Fikre Zewdie said that the revised law would help to utilize the Diaspora for economic growth through facilitating formal ways of money transaction and financial investment.
It also permits the Diaspora community to easily do business by avoiding tiresome bureaucratic proceedings, he noted. He believed that the law is significant to aware the Diaspora and to consider the legality of the system and institutions it prefer to transfer money to its country so as to avoid illicit financial flow.
The country needs to attract more Diaspora engagement for its socioeconomic progress regardless of the amount of their capital and the revision of the binding law is an encouraging move to this end, he stated. As to him, government officials had been playing trivial role in grieving the Diaspora with hindering laws and tiresome bureaucracy.
Therefore, the lifting up such restrictive laws is crucial to encourage the Diaspora to assist the country to speed up development programs with cumulative finance, knowledge investment, he indicated. The permission to insurance, micro finance and banking investment will enable the Diasporas to know more about their country, he believed. “When they work here paying tax, they will develop sense of belongings which lead in response to remittance and investment increment.”
However, the government also needs to assure them to the wellbeing of their assets beyond offering lucrative business, he underlined. According to Selamawit Dawit, Ethiopian Diaspora Agency Director General for her part noted that the eradication of such laws is significant to boost the Diaspora participation in county’s economy.
The agency has been working to avoid bureaucratic system in the proceedings of the Diaspora investment in collaboration with stakeholders. “We have been urging the government to make open the door for the Diaspora engagement in finance and knowledge to national development.”
As to her, it is a wise act to fill the economic gap in the country with the finance and knowledge of Ethiopians living abroad. Among other reasons, it is illicit capital flow that currently affecting country’s economy Selamawit said, adding that it is a global problem which has been undertaking across the world and nothing new to Ethiopia.
It is challenging to halt illicit capital flow 100 percent but it is possible to reduce its impact by strengthening financial security and improving legal ways of business making, she noted. The revised law will help to reduce the harm to a certain level by formalizing money transfer and improving the Diaspora participation in this regard through ensuring legal ways of money transaction in the area, she stated.
Currently, a number of Diasporas are using the opportunity in buying bank shares and opening accounts to deposit their money in the country which is an important step to revitalize country’s economy, she underlined. “In literal terms, buying shares and deposing money in bank account is the legal ways to the Diaspora to bring their capital to their country free from any illicit flow.”
Through time, this will help to reduce illicit financial flow with the expansion of legal engagements, she noted. Currently, the National Bank of Ethiopia (NBE) is assessing situations to draft rules and regulations to the law implementation.
NBE recently announced that the revision is intended to reduce the growing engagement of the Diasporas in the informal money transfer and will boost the remittance that brings a relief income to country’s steady economy affected by forex crunch.
The financial sector has been closed for Ethiopians living abroad holding a foreign country passport. For long the Diaspora community has been demanding the government to invest in banking, insurance and micro finance.
The Ethiopian Herald, December 3/2019
BY YOHANES JEMANEH
