Ethiopia’s parliament has passed a bill to allow members of the Ethiopian diaspora, who have taken up nationalities in other countries, to invest, buy shares, and set up lending businesses in the country’s state-dominated financial sector.
It’s the latest step in a general push to liberalize the country’s economy. The government has previously said it will privatize Ethio Telecom, the state-owned telecommunication monopoly.
Since Ethiopia does not allow citizens to have dual nationalities, the latest round of reforms is seen as good news for the country’s 5 million-strong diaspora community as well as Ethiopians with foreign nationalities living inside the country.
The government has been eyeing overhauls to the financial sector, along with other sectors, since Abiy Ahmed’s appointment as prime minister. But authorities have previously called for preparation ahead of any full-scale effort that might create an influx of international banks, and hurt local lending practices.
Some see the opening up of the financial industry to the country’s diaspora community as a trial run for its eventual full liberalization, a move that excites Ethiopian investors abroad. “It will be great for both the country and diaspora community to be able to invest in the whole financial sector,” says Kassy Kebede, founder and managing director at Cepheus Growth Capital, a New York-based Ethiopia focused private equity fund.
Outside of the US, Mimi Alemayehou, a Dakar-based managing director of the investment platform, the Black Rhino Group, says she is keen to invest, and has spoken with other Ethiopians in the diaspora who are looking to do the same.
Targeting the diaspora for Ethiopia’s economic growth has been a recurring theme by the prime minister. Last year, Abiy set up a council for the Ethiopian Diaspora Trust Fund, a non-profit organization which raises money from the global diaspora community, and works alongside the government to build development projects in Ethiopia. The call was simple: donate $1 a day to restore your home country. Ethiopians in the diaspora listened, and so far, the organization has raised over $4 million for projects in financial inclusion, entrepreneurship development, and much more.
Birhanie Beka Geleto, a finance director at the DC-based consulting firm, Dewey Square Group says the opening is a good opportunity for the diaspora to bring “technology advancement in the industry with them.” Digital transformation is something the country has in mind, with Ethiopia’s parliament placing provisions in the recent overhaul to allow the private sector to operate digital-based financial services in the country.
Source: Quartz
