Liberalization, Digitizing of Finance Sector Keys to Meeting Economic Ambitions: Expert

Addis Ababa September 6/2022/ENA/ The measures taken by the Government of Ethiopia in liberalizing and digitizing the finance sector are crucial to achieve the economic ambitions of the nation in the years to come, an economic researcher said.

After PM Abiy Ahmed came to power in 2018, the country has been undertaking economic reforms, including liberalization and partial privatization of some sectors.

Addressing the parliament in February this year, the premier noted that Ethiopia has closed its doors to foreign banks for a long time.

He added that henceforth local banks need to prepare for competition as foreign banks would be allowed to operate in the country any time soon.

Abiy advised the banks to modernize their systems and prepare themselves for the upcoming competition with foreign banks since Ethiopia was set to open its doors for the banks.

The Economic Researcher at the independent Ethiopian Economic Association, Adem Feto told ENA that the government has a wider agenda of liberalization and digitalization in the financial market.

“I think the government has taken some steps in liberalizing parts of the financial sector,”  he added.

“Nowadays, more people have the chance to access banks and more people have access to digital financial services, which is an encouraging move.”

According to a recent report of the National Bank of Ethiopia, the introduction of Tele-Birr has, for instance, enhanced the digital system in the sector.

The banking industry has registered better performance on various healthy variables, including in asset, loan repayment, and other healthy parameters, during the concluded Ethiopian fiscal year, the National Bank Governor Yinager Dessie revealed recently.

For the economic researcher Adem, digitalization is growing and “recent measures being taken by the National Bank of Ethiopia would take us one step forward. For example, micro finance institutions are allowed to become banks.”

The researcher noted that there are also liberalization measures in the pipeline that allow foreign banks to enter the economy. “This is one of the tasks that take the economy forward,” he noted.

Last week, the Council of Ministers has passed a decision to open up the banking sector to foreign investors.

Opening up the banking industry to foreign investors supports the sector’s services with knowledge and technology and moves the country’s economy to a higher level of connection with the international market, Office of the Prime Minister stressed in its statement.

The policy also helps to increase competitiveness and efficiency of the financial sector, to have sufficient financial supply, to facilitate the supply of foreign currency, to increase job opportunities, and to ensure continuous economic growth by ensuring economic efficiency and global competitiveness.