Ethiopia’s Parliament made the amendments to the stringent rules as it paved the way for the nation to join the African Trade Insurance (ATI) after the signing of a treaty with the continental body.

By Brian Ngugi |

The April 5, 2016 decision by the Ethiopian Parliament to relax restriction on foreign financial institutions into its markets is being seen as a watershed moment in the unfolding story of the country’s economic transformation currently underway.

Ethiopia’s Parliament made the amendments to the stringent rules as it paved the way for the nation to join the African Trade Insurance (ATI) after the signing of a treaty with the continental body.

Following the move, ATI CEO George Otieno, said the pan African insurer will set up base in Ethiopia by June this year once the administrative procedures are completed by the Ethiopian Government.

“In general, membership to ATI will help Ethiopia to attract much-needed trade and investments. In 2015, we supported $1.7 billion worth of insured trade and investments within our member countries and since inception in 2001, we’ve supported $21.5 billion worth of investments and trade. We are very proud of this achievement,” Mr Otieno said in interview.

Smart Company had by the time of going to press not received a clarification from the Ethiopian Treasury through its Ethiopian Embassy in Nairobi on whether the amended provisions apply to foreign participation of multilateral development finance institutions such as Tunis-based PTA Bank, Cairo-based Afrexim Bank and now Nairobi-based ATI only, or whether it represents a total opening for all foreign financial institutions including commercial banks.

But experts nevertheless termed the move a good signal for Kenyan banks who have been eyeing a piece of the Ethiopian market.

“I think this is one of the smoke signals. If Ethiopia is serious about joining the World Trade Organization then that will mark the ‘Open Sesame’ moment,” said Nairobi-based analyst and Rich Management CEO Aly Khan Satchu.

Several Kenyan financial institutions have over the years expressed their desire to join the Ethiopian market. They include Cooperative Bank of Kenya, KCB Group and Standard Bank Group which trades under the CFC Stanbic brand in Kenya.

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