Foreign banks entry may augment capital inflow

ADDIS ABABA- Entry of foreign banks into Ethiopia’s financial sector would bring a positive role to boost the flow of foreign capital to the country, a renowned economist said.

An economist and the African Chamber of Commerce President Kibur Gena told The Ethiopian that permitting foreign firms’ participation would fill the gap in the scarcity of capital in Ethiopia. The participation of foreign firms into the local financial institutions will help to reduce financial problems in some way, but policy towards it would be implemented carefully according to the economic interest of the country.

As to Kibur, most of the local firms and investors channel the profit they gain from one sector to the other, meanwhile foreign companies usually tend to take the net profits out of the country.

The system may not be replacing local financial firms with international institutions. The question is how can inter-connect the system according to the development and growth plan of the country, highly focusing on the economic benefits of the country. The policy towards foreign financial participation should be carefully seen.

Foreign firms would pull out in times of trouble and this would endanger the national economy. However, inter-connecting international financial institutions with local counterparts to enter into the market would bring competitive pressure among the former. This will consolidate and reach a scale at which they can effectively perform and compete, he remarked.



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