PM Abiy administration open up banking for expatriate investors

PM Abiy administration open up banking for expatriate investors

Amid spiraling military conflict in Northern Ethiopia after the Tigray People’s Liberation Front (TPLF) opened its third war in less than two years, PM Abiy’s government seems to think that it is the right time” to open up” banking sector in Ethiopia to foreign investors. No vibrant resistance yet.

PM Abiy Ahmed leading cabinet meeting on September 3,2022 in his office (Photo credit : OPM)

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One of the reform measures the Prime Minister pledged ( perhaps to the western masters as well) when the now defunct Ethiopian People’s Revolutionary Democratic Front (EPRDF) picked him to replace Hailemariam Desalegne, former PM, was privatization of the economy. 

There was anticipation, apparently, that the process would trigger resentment among Ethiopians as key national assets were being steadily put up for sale to expatriate investors. 

In what seemed to be an effort to deflate it, he introduced an “advisory council” and filled it with notable Ethiopians from different walks of life including media personalities. 

Amid continuing war with the Tigray People’s Liberation Front (TPLF) in multiple battle fronts, Abiy Ahmed’s cabinet seem to have felt that it is an opportune time to open the door to expatriate banking in the country.  It is unclear if it has something to do with the heavy handed policy of western powers in Abiy Ahmed’s administration.  

His government presented , based on a report from state media, an argument that the decision would enhance “integration of our country’s economy with the world economy,”  and promote competition in the financial sector leading to efficiency and quality service delivery. It also said it will enhance supply of finance and facilitate foreign currency  supply, and create jobs. 

The 13th regular session of council of ministers has  passed a decision for the draft proposal to be implemented. 

Ethiopia saw flourishing private banks in the last two or so decades. In the last two years alone, over five private banks have been established across the country. 

Since many of the private banks do not have the capacity to withstand competition from giant corporate banking from overseas, it is likely that the decision could curtail their development – if not trigger their demise. 

The decision to open up the banking sector for foreign investors came about three or so weeks after his administration put all the Sugar factories for sale. 

Earlier this year,  his government opened the telecom sector to foreign investors bringing challenges to one of the leading revenue generators in the country, Ethio Telecom. 

Prime Minister Abiy Ahmed’s commitment to privatize key national asset areas of Ethiopia’s economy is not unnoticed. There have been voices from prominent economists in the country that opposed the moves as disastrous.   People like Kebour Genna argued that privatization of national assent would not make Ethiopia better. 

There also seems to be views that many of his team members have links to western powers and that the influence of those powers have been growing despite Russia and China emerging to be major players.  But the influence of the latter in government policy making is negligible – if at all. 

There was even a plan to sell a portion of Ethiopian Airlines ( it was rumoured the Americans pushed for it) but it was delayed. 

Who knows Abiy Ahmed might sell the Ethiopian Airlines next. There is no clue if he is facing challenges internally for his policy initiatives that aimed at deepening privatizing the key sectors of the Ethiopian economy. 

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