Ethiopia’s parliament recently passed a bill to open up the country’s financial sector to an estimated five million citizens living abroad or with dual nationality, including allowing them to buy shares in local banks and start lending businesses. Reports Reuters
The changes are part of a raft of economic reforms initiated by Prime Minister Abiy Ahmed when he came to power last year, 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.
She also added
“It will also address the grievances raised over the issue.”
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.
Dual-nationals living in the capital Addis Ababa welcomed the reforms. This comes after some diaspora complaints, and Sophia Bekele, an Ethiopian American who took the financial and insurance institutions to court over the shares, in a milestone legal battle against Ethiopia’s Central Bank – that is the National Bank of Ethiopia and won. Sophia appealed for the return of her auctioned shares and further requested the Court to order for the transfer of her shares. In their ruling, the Judges ordered United Bank and insurance Companies to reinstate the shares while allowing Sophia to transfer them to a third party of her choice.
In a recent opinion article to the Addis Fortune, Bekele urged a way forward to rectify the situation of NBE. “At first instance to correct the wrongful act it did in order for the Ethiopian diaspora to feel whole, build trust and contribute to the future investment in Ethiopia”, she wrote..
She further argued the following as a remedy:
Allow the executive organ of the country to be involved in the decision-making process when it issues important directives such as selling property illegally and or making key directives, such as the one they are doing now to liberalise the space. We should not suffer from our loss. The organs that have caused the damage must be responsible to make us whole, by reinstating our original share ownership, or if that seems unattainable, new shares must be issued at equivalent value to us with all the premiums covered by the tortfeasor.
The monies and profits confiscated from the sale of the diaspora shares should be returned in full. All unsold shares in the banks and insurance companies should remain at par value at the respective institutions. Directives should be made by the central bank communicating to all private banks and insurance firms that participated in the sale of diaspora shares. If the NBE fails to rectify its previous position with the above measures.
Lastly, she noted that “I strongly caution that we do not come running to Ethiopia to invest. We will be running a fool’s errand”