Ethiopia’s parliament passed a bill on Wednesday July 31st to open up the country’s financial sector to an estimated five million of its citizens who have taken other nationalities, Reuters has reported.
The changes, which will allow members of the Ethiopian diaspora to buy shares in local banks and start lending businesses, are part of a raft of economic reforms initiated by Prime Minister Abiy Ahmed when he came to power last year. The reforms are partly aimed at boosting the country’s foreign exchange reserves, which had dropped precariously low.
“The law will enable the Ethiopian born diaspora to take part in the economic growth of the country,” said Lemlem Hadgo, chair of the Revenues, Budget and Finance Committee of parliament.
Ethiopia’s banking sector, which is closed to foreign investment and is still one of the most tightly state-controlled in Africa, is dominated by the two oldest and most profitable institutions, Awash Bank and Dashen.
Ethiopians who had emigrated but returned in recent years to live in the capital Addis Ababa welcomed the reforms.
“We can finally invest in the financial sector,” said Addis Alemayehou, a businessman who returned to Addis years ago but has been restricted in the sectors where he can invest.
Abiy’s government also plans to open up other key sectors of the economy to foreign investment. It intends to offer two telecoms licences to foreign firms, which have been jostling to start operating in one of the world’s last major closed telecom markets.
Ethiopia’s population is young and growing rapidly and the economy has been expanding at a near double-digit annual rate for more than a decade.
However, Abiy’s reformist drive has been threatened by long-simmering ethnic rivalries that have burst into the open in recent weeks, through sporadic acts of violence that have left dozens of people dead.