By Staff Reporter
November 5, 2019 (Ezega.com) -- The Ethiopian parliament has lifted a ban that prevented foreign nationals of Ethiopian origin from engaging in insurance and finance businesses. Foreign nationals of Ethiopian origin can now engage in insurance and microfinance businesses.
In its 3rd regular session on Tuesday, November 5, 2019, the parliament unanimously approved the amended insurance business proclamation, allowing foreign nationals of Ethiopian origin to participate in the country’s insurance sector.
The most probable reason for the Ethiopian government to prevent foreigners but of Ethiopian origin from engaging in insurance business was to protect the infant domestic insurance companies which do not have the desired financial strength, know-how and human resources to be able to compete with foreign insurance which have superior capacity in these areas.
The draft proclamation came into force after the necessary amendments were made on several articles of the previous law and considering complaints raised by investors in the insurance industry, said Nafekush Dessie from the Income, Budget, and Finance standing committee of the parliament.
The amended law will help combat illicit financial transactions, said Nafekush, as opposed to concerns raised by some MPs who had also doubts over the capability of the National Bank of Ethiopia to control the activities of the insurance banks.
She said the amended insurance law will enable foreign nationals of Ethiopian origin to contribute their role in the country’s economic growth.
Accordingly, foreigners of Ethiopian origin need to have a minimum capital of 3 million Birr to apply for license to undertake general insurance business i.e., insurances other than insurance of persons, and 4 million Birr for applying for a license to undertake long-term insurance business, i.e., insurance of persons, and 7 million Birr where the application is to undertake both classes of insurance. Such capital has to be paid up in cash and deposited in a bank in the name of the company to be established as an insurance company.
The national parliament also approved the revised draft proclamation on microfinance institutions by majority vote. The proclamation will allow foreign nationals of Ethiopian origin to engage in microfinance business in Ethiopia.
Meanwhile, the national parliament approved a $280 million loan agreement signed with the International Development Association (IDA).
The loan would be utilized to implement development projects in pastoral areas to benefit 2.5 million pastoral communities.
The same day, the Ethiopian parliament also approved a $22 million loan agreement signed with the OPEC Fund for International Development (OFID) for the implementation of the Dilla-Bulle-Haro Wachu road project.
The road project mainly aims to reduce the time and cost of travel as well as raising the standards of living of the population in Gedeo and Guji Zones and boosting their trade activities.
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