A couple of weeks ago, the Council of Ministers passed crucial decision that allows Foreign Nationals of Ethiopian Origin to invest in financial sector and to establish Diaspora bank in Ethiopia. Hopefully, this move will open the door wider to the all members of Ethiopian Diaspora particularly to those who have great interest in buying bank and insurance shares.
After the reformists took power, they have been introducing a number of economic and political reforms including the lifting of the restriction in which members of Ethiopian Diaspora were requested to deposit less than or equivalent to 50,000 USD in Diaspora current account. Thus, the latest announcement is part and parcel of the reform. In fact, the House of Peoples’ Representatives is expected to approve the decision soon.
After the approval, members of Ethiopian Diaspora will be legitimate to purchase bank and insurance stakes and to run their own bank here in the homeland. In fact, the Diasporas are forced by law to buy the stakes in hard currencies and not permitted to transfer the Birr withdrawals to abroad. It is crystal clear that nowadays Ethiopian Diasporas are showing keen interests in investing in homeland and contributing their due part in nation building process.
For instance, they have started making contributions in the Ethiopian Diaspora Trust Fund. According to the Trust Fund Council, it has so far raised close to three million USD. Over past many years, Ethiopian Diasporas have been voicing complaints about the red tapes in the financial sector of the country. Undoubtedly, to some extent, this latest and decisive step will alleviate the unnecessary bureaucracies in this end.
In the efforts to put into action the law, the government and other pertinent bodies are soon expected to elaborate the dos and don’ts of the decision to the Diaspora community and the public at large. This is because several past incentives to Foreign Nationals of Ethiopian Origin were misinterpreted as they had been used only to fatten the pockets of some “chosen” individuals.
One must not forget here that buying bank and insurance shares is a golden business opportunity for those Diasporas who want to earn modest profits out of such kind of investment as the county’s financial institutions are at the infant stage. At the same time, these individuals will support the homeland’s efforts to overcome the current for currency crunches to a certain degree.
Also, directly or indirectly the move discourages capital flight via creating conducive financial environment to all. As to some experts that expressed their views on the issue to The Ethiopian Herald recently, the decision is advantageous in many ways to Ethiopia.
It will definitely boost the local banks’ financial capital, speed up technology transfer, and help sharing best experiences in the field, increase efficiency of electronic money transfer, create thousands of job opportunities and the like. More importantly, it brings competition among the country’s banks as all strive for better quality banking services. Plus, such action will support and gear up the national efforts of embracing the unbanked population in the banking system.
In a nut shell, the move will bring profound banking experience and good-sized capital, besides, making the Diasporas to contribute their share in addressing the challenges of Ethiopia’s banking industry. The members of Diaspora involvement in banking system could also help the service to become more efficient and accessible towards the principal portion of the society.
But, permitting the Diaspora community’s participation and other administrative measures would bring short-term solutions to Ethiopia’s financial industry setbacks, thus, there must be an integrated involvement of the Diaspora and local investors for advanced banking service.
The Ethiopian Herald May14/2019
