Upcoming proclamation to unlock foreign digital finance

Foreign mobile money operators or digital financial service givers will be allowed to operate in Ethiopia even before the revising of banking proclamation is done as digital payment proclamation is under preparation for the first time.
The Digital Payment Proclamation bill will allow foreign investors to offer mobile money services, boosting firms such as Safaricom- Ethiopia that are seeking to start operations in the country this year.
“Revising the banking proclamation and allowing mobile money operators is different,” said Yinager Dessie, governor of the National Bank.
A he explained the mobile money operators will be liaising with the local banks, as opposed to working independently, which is different from bring in foreign banks.
A firm that stands to benefit from this proclamation is Safaricom Ethiopia, with its mobile money platform M-Pesa.
“When the proposed law is approved, including M-Pesa and other foreign Fintech firms will be allowed to operate,” said Yinager adding that Safaricom Ethiopia will be able to get a new license to launch its M-Pesa services.
According to the current banking proclamations, Digital Financial Service institutions including payments, remittances and insurance accessed and delivered through digital channels with foreign investors cannot be able to fully or partly own businesses that provide these services in Ethiopia.
On related news, as part of increasing digital financial inclusion, the national Bank has given a green light to Ethio telecom’s telebirr so as to start giving micro credit and saving services.
“We are working to strength the digital economy in order to enable citizens to have an easy system whilst promoting financial inclusion,” said Yinager indicating the central bank’s go ahead decision to the new services.
Ethio telecom has been requesting for a license to the National Bank to start giving loans and saving services through telebirr as part of expanding its digital financial service, and that seems to have borne fruit.
As Yinager explained, this will allow a huge portion of citizens to be beneficial in the financial sector.
Similarly, Ethiopia plans to open up its banking industry to foreign competition as soon as parliament passes policies permitting it.
The committee has already begun working on reforming Ethiopia’s old financial services code. The first draft of the new code will be ready this December and will stipulate the modalities for foreign banks to operate in Ethiopia.
A new financial services code in Ethiopia is expected to allow foreign banks to invest in Ethiopia as the existing proclamation does not allow foreign banks to come and operate in Ethiopia.
“Opening up the sector will benefit both the economy and local banks more importantly it will increase investment,” underlined Yinager indicating that the country needs more investment.
“The opening up will be done in a win-win situation, without affecting local banks and will highly benefit the economy, local banks and also other businesses,” said Yinager as he highlighted that many African banks are already showing interest to come and invest in Ethiopia.