June 20, 2024

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Ethiopian delegation meeting with Saudi

Ethiopian Financial Sector Reforms Attract Saudi Investment

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Ethiopian Governor Mamo Mehretu of the National Bank of Ethiopia has revealed that a bill aimed at attracting foreign investment in the financial sector will be presented to the Council of Ministers next week.

This announcement was made during an investment forum in Addis Ababa, where a delegation of investors led by the Federation of Saudi Arabian Chambers of Commerce was present. Notably, the Council of Ministers had previously approved a policy decision on August 28, 2014, allowing foreign banks to enter the Ethiopian financial sector market.

A 79-member delegation from the Federation of Saudi Arabian Chambers of Commerce, led by the organization’s representatives, visited Ethiopia from May 28 to 30, 2016. The delegation attended the Ethio-Saudi Arabia Investment and Trade Consultation Forum in Addis Ababa, which aimed to strengthen economic ties between the two nations.

The Governor of the National Bank of Ethiopia, Mamo Mehretu, explained three ways for Saudi financial institutions and Chamber of Commerce members to invest in Ethiopia’s financial sector: opening a new branch, establishing a subsidiary, or direct investment.

Earlier this week, in a recent meeting with banking executives, the regulators discussed proposed reforms regarding the entry of foreign banks into Ethiopia. One crucial aspect of the reforms is enabling local banks to partner with foreign banks through equity sales or mergers, especially during financial crises. The proposed regulations outline four ways foreign banks can operate in Ethiopia: by establishing a subsidiary, opening a branch, setting up a representative office, or acquiring shares in local banks. Foreign ownership in any single bank is limited to 40%. Read More…

According to Governor Mamo Mehretu, the Ethiopian government is undertaking major reforms to its foreign exchange system. As part of this, special accommodations will be made for Saudi Arabian investors in sectors deemed strategic by the government.

For instance, when Saudi investors come to develop projects in Ethiopia, the government is collaborating with the Ministry of Finance to allow these investors to open foreign currency accounts, known as offshore accounts. Additionally, the government will provide Saudi investors with a guarantee that they can convert their Ethiopian earnings back into foreign currency when they are ready to repatriate their wealth.

Over the past 30 years, Saudi Arabia has invested in 233 projects in Ethiopia, generating employment opportunities for over 75,000 Ethiopians, according to Ethiopia’s Investment Commissioner, Mrs. Hana Araya Selase.

Meanwhile, Hassan Mujib, President of the Federation of Saudi Arabian Chambers of Commerce, stated that Saudi investors are primarily interested in sectors such as oil, agriculture, industry, human resource recruitment, general trade, and tourism.

The Governor of the National Bank of Ethiopia, Mamo Mehretu, said, “We attach great importance to Ethiopia’s close friendship with Saudi Arabia. As we attach great importance to our relationship, we want a large number of investments to come from Saudi Arabia.” Moreover, he explained that “when rich people want to invest in Ethiopia, the lack of foreign currency should not be a reason to delay you from starting work.”

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