The Ethiopian government has been working to allow foreign citizens of Ethiopian origin to engage in the banking and other financial service sectors. Recently, the council of ministers has approved the new draft bill which will enable the diaspora to purchase shares of banks in the nation. They will be pay or earn dividends in Birr as to other Ethiopian citizens.
However, the existing law bars Diasporas of Ethiopian origin, who is foreign citizens, from opening banks and purchasing shares from Ethiopian banks. Therefore, to change this situation and allow Diasporas to participate in the nation’s banking and financing sectors effectively, what could the government do beyond the amendment of the law? and what opportunities could it possibly ushers in for Ethiopian banking and finance system?
Wendaferaw Mulugeta Associate Professor of Economics speaking to The Ethiopian Herald notes Diasporas, who lived lots of year abroad, have ample knowledge and experiences on the financial sector and they also have enough financial capacity. So allowing them to participate in the spheres of
investment and finance will have a big role. It could allow them to live a tranquil and safe life in the country parallel to contributing to economic development.
As they have a sense of belongingness, it will have no repercussions to allow them hop on the investment venture. So, the country will enjoy additional capital which could beef up the country’s task execution muscle, he stated.
Wendaferaw added, on the other hand, they will create a chance for increased technological exchange. And this will make the economic sector modern. They will create effective economic situation.
Concerning the development of the banking system, it is a toddler in Ethiopia and our financial sectors are not efficient. Enough attention was not placed on Diasporas before. When they get such possibilities and when they come here, they will not come with the same system. They will come with cutting-edge systems because they have been working in different huge banks, so things will allow more competition, the Associate professor said.
He stressed that to create an effective financial investment; the government needs to support the Diasporas who join the banking and financial sector investment. But it needs to do away with bad situations like corruption and simplify procedures.
Regarding of its best practice, Ethiopia is going to be a preferable destination for FDI, so this effort should keep going for its own Diasporas and it should encourage them to move their capital to their origin, he added. As to him, it should not simply open the doors and say “please come aboard” But it needs to do other more homeworks.
Fasil Tasew is Economics instructor at Unity University. He says on his part that it is an international trend to make Diasporas invest on their country of origin. But things have not yet been fully realized to facilitate such an opportunity in the country. It will not be good when they come without modernized account system. It may pose a challenge for the government and for the diasporas too if the budget system is not clearly set. The government has to clear it.
The other basic thing the government needs to focus on is investigating the policies which connect with land management and human power to create more comfortable situation, he stated.
Fasil added Diasporas are abreast with the modern financing system. Technological and knowledge exchange is the other advantage to be derived from them. And also, they bring a lot of economic advantages for the government as well as for the country.
Therefore, the government needs to hack the bureaucratic labyrinth and it is necessary to shorten every system to use the opportunity, he stresses.
The Ethiopian Herald, July 14/2019
BY GENET FEKADE
