In line with the newly implemented mandate from the National Bank of Ethiopia (NBE), Bunna Bank has become the first financial institution to appoint independent members to its board of directors.
The election of the board took place during Bunna Bank’s general assembly held a week ago, where nine individuals were selected, including three independent directors, in accordance with the new governance rules.
As stipulated in the “SBB/91/2024 Bank Corporate Governance Directive,” which takes effect on June 12, banks are required to ensure that one-third of their board members are independent individuals with no connections to the bank.
The directive defines an independent director as a non-executive director who does not have any first-degree familial relationships or business, professional, or commercial ties with the bank, and who is neither part of senior management nor involved in the daily operations.
An independent director is described as an experienced board member who is free from any undue influence—whether internal, external, political, or ownership-related—that could compromise their ability to make objective judgments.
Industry experts have noted that this type of governance is common in other countries and will contribute to greater transparency. “The NBE’s decision is positive because independent directors without stakes in the bank tend to adhere more closely to professional principles,” said a banking industry expert.
However, there are concerns about finding highly qualified specialists.
“It is challenging to attract qualified experts at the compensation levels offered by banks. Independent board members are often very expensive in other countries,” one expert shared.
Sewale Abate, chairperson of the interim committee that oversaw the election, acknowledged the challenges posed by committee members who may not be familiar with NBE regulations or the industry.
“I attended the meeting as a shareholder and am not prepared to take full responsibility for the election process, but in accordance with the new law, we nominated candidates during the general assembly and were elected to manage the election,” he explained.
Sewale, who previously served as board chair at Bunna Bank around three years ago and currently holds a position on the board of Zemen Bank, stated, “I am familiar with the process, even though I haven’t participated in this specific type of election.”
He noted that the previous board had submitted nine nominations to select three independent directors, while the remaining board members were nominated during the general assembly as per the NBE directive.
As a result, Meseret Woldemariam, Fikir Abere, and Mulugeta Asmare, a prominent figure in the financial industry who led Goh Betoch Bank until last February, were elected as the first independent board members under the new governance directive.
According to Article Seven of the directive, one-third of the directors must be independent, nominated by the existing board and elected by all shareholders.
Furthermore, it specifies that a third of the directors must be nominated and elected by non-influential shareholders, and that at least two board members must be female.
Independent directors will serve on various committees.
