Ethiopia hosted the first of a kind annual banking forum aimed at providing a platform for the financial services industry professionals and leaders.
The event held on May 21, 2022, at the Economic Commission for Africa conference centre was organized by Kehali Strategic Advisory Services PLC following the announcement that the Ethiopian banking sector opening up to foreign banks is imminent.
In addition, the National Bank of Ethiopia has also recently mandated that all banks, insurance companies, and microfinance institutions fully digitize their operations.
Bank executives, industry experts along with other stakeholders discussed the future of the banking sector, business fundamentals, regulatory framework and competitive environment, the strategic implications/options for foreign banks seeking to enter the Ethiopian market, the partnership/competitive opportunities possible between local and foreign banks as well as the benefits to the full range of consumers of banking products/services among others.
The financial sector liberalization is expected to open the door to building Ethiopia’s financial infrastructure, a critical missing link in the development and growth of a large and vibrant private sector that can propel Ethiopia’s economic growth and development. It will change the Ethiopian economy by rebalancing the role of the state and the private sector, it will enable the optimal flow and allocation of domestic capital and pave the road for foreign portfolio investment which accounts for much of global investment flows.
Today, Ethiopia is one of a handful of countries in the world to not allow foreign banks and other financial market institutions to operate in their economies. In Ethiopia, the lack of appropriate capital is constraining the growth of profitable companies and businesses.
It is blocking entrepreneurs from taking risks and investing in potentially profitable and productive opportunities for local and export markets. Furthermore, financial inclusion and the development and availability of personal and consumer finance is well below comparable African and developing country levels.
Banking sector liberalization is a great first step in addressing these issues. Establishing a Capital Markets Authority and introducing such financial institutions, products, and services as a stock exchange, investment banking, investment funds and the like is also another great step in the process of financial sector liberalization.
Opening up the insurance industry to foreign players should also not be neglected. Finally, however, without exchange rate liberalization, the economy’s foreign currency shortage will not be resolved and the potential benefits of financial sector liberalization will be severely diminished.
The event included presentations on the strategic implications of the new financial sector developments, a talk from First Bank of Nigeria LTD on the opportunities of the financial sector in Ethiopia, as well as digital solutions from the world’s leading provider of such solutions – Whale Cloud – a subsidiary of Alibaba Group.
This forum also announced a major new collaborative initiative in the process of being formed between the Artificial Intelligence Institute and Whale Cloud to provide world-leading digital solutions in Ethiopia and, amongst other things, address the technological challenges and opportunities facing Ethiopian banks, insurance companies, and microfinance institutions.
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