ADDIS ABABA– Inviting global actors to Ethiopia’s financial industry will further catalyze the growth of the sector and boost the overall economy, experts in the field said, applauding the Prime Minister Abiy Ahmed (PhD) recent announcement on the issue.
While addressing members of the House of Peoples’ Representatives on Tuesday, Premier Abiy stressed that Ethiopian banks should equip themselves in the technology and knowledge caliber that will keep them competitive during the imminent opening up of the sector for global firms.
Commenting on Abiy’s remarks, the economist Arega Shumete (PhD) said permitting the involvement of international financial institutions would have an immense role in knowledge and technology transfer in the country and introduce new ways of doing things. The rich knowledge and technology package global banks would also contribute to the dynamics of the business.
When compared with neighboring countries, Ethiopia’s economy is highly closed and the government doesn’t allow foreign investment in the financial sector.
Noting this close door policy was rewarding in boosting the capacity of local banks, the expert highlighted that the opening up of the sector will create a conducive business environment that fosters competition. Also, disallowing international financial institutions to be involved in the domestic economy is the contributing factor for a weak economy.
“Our economy is being challenged by inflation, unemployment, foreign debt burden and forex crunch and unable to ensure sustainable economic growth. Opening up the financial sector for international financial institutions would have a significant impact in easing such kinds of problems.”
For another economist Abule Mehari (PhD), disallowing international financial institution’s involvement makes Ethiopia’s rank in the global easing of doing business very low. Liberalization of the domestic financial sector and open space for international banks would significantly change the situation.
The expert further highlighted that the existing banks need to exert maximum efforts to merge their human, material and technological capital to form few strong banks that would have the capacity to compete with global counterparts. In order to attain successful financial liberalization all the necessary preconditions including modern working systems and technologies have to take place.
BY HAILE DEMEKE
25 FEBRUARY 2022
