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Ethiopia’s insurance industry is approaching what could become its most significant regulatory reform in decades. Under a draft proclamation expected to be enacted this year, insurance supervision would shift from the National Bank of Ethiopia (NBE) to an independent regulatory authority.

For a sector long sheltered from foreign capital and overshadowed by the banking industry, the draft proclamation signals a major transformation. Developed with World Bank support, the proposed reform could bring the most consequential structural change the Ethiopian insurance market has seen in recent history.

A central feature of the draft is the removal of the long-standing practice of composite licensing, which allows insurance companies to offer both life and non-life, or general, insurance under a single corporate structure.

Under the proposed framework, new entrants would no longer be granted composite licences. Entities seeking to provide life insurance would need to register independently and obtain a life-insurance licence, while companies specialising in general insurance would be required to obtain separate general-insurance licences.

The reform is intended to address structural weaknesses in the life-insurance segment, enforce risk-based capital requirements and improve protection for policyholders as the country’s economy and asset base expand.

A central pillar of the draft proclamation is the proposed establishment of the Ethiopian Insurance Regulatory Authority (EIRA) as an independent legal entity with perpetual succession.

While accountable to the Ministry of Finance, the proposed authority would have operational independence and broad powers to license, supervise and regulate insurance companies and intermediaries. The proposal responds to a long-standing demand from insurance-industry operators for a dedicated regulator.

Historically, most Ethiopian insurers have operated under a composite structure. All insurers, including the state-owned Ethiopian Insurance Corporation, have provided life and non-life insurance through the same corporate entity.

Asseged Gebremedhin, an insurance-sector executive and consultant, said the composite structure has contributed to limited focus on life insurance, compared with more profitable general-insurance segments such as property, motor and marine insurance.

“Under the composite model, life insurance received limited attention compared with the more lucrative general-insurance business lines,” Asseged told Capital. “As a result, life-insurance penetration in Ethiopia has remained very low.”

By requiring separate licences for new operators, the proposed framework aims to encourage dedicated life-insurance businesses, build specialised expertise, support product innovation and ensure more targeted allocation of capital and resources.

Over time, industry participants expect the transition to expand access to insurance, diversify coverage options and increase the sector’s contribution to gross domestic product.

The separation of licences comes as the NBE has increased minimum paid-up capital requirements for insurers.

Under earlier directives, composite insurers were required to maintain paid-up capital of 75 million birr, comprising 60 million birr for general insurance and 15 million birr for life insurance.

Subsequent revisions raised the minimum requirement for composite operations to 500 million birr, including 400 million birr for general insurance and 100 million birr for life insurance.

Asseged said insurers are now operating under a multi-year transition period that runs through 2028 to meet the revised paid-up capital requirements.

“More than 70 percent of existing insurers have either met or are close to meeting the required capital threshold,” he said, adding that new entrants are also working toward compliance.

According to NBE data for the fiscal year ending in June 2025, the insurance sector improved its liquidity position as total assets increased by 29.3 percent to 84.9 billion birr. General insurance accounted for 93.5 percent of total assets.

The sector’s capital also expanded by 30.4 percent, driven partly by the NBE directive requiring insurers to raise their paid-up capital by June 2027.

Gross written premiums reached 41.1 billion birr during the year, a 43.1 percent increase from the preceding year. General insurance generated 38 billion birr, or 92.5 percent of total premiums, while long-term insurance and Shariah-compliant Takaful operations accounted for 3.1 billion birr, or 7.5 percent.

The figures underline the industry’s continued dependence on general insurance. Recent sector estimates have placed insurance penetration at around 0.27 to 0.3 percent of GDP, while life insurance accounts for less than 10 percent of gross written premiums. The draft proclamation also provides for the partial opening of the insurance sector to foreign investors.

Foreign insurers would be allowed to establish partially or fully owned subsidiaries, acquire shares in local insurance companies or open representative offices. However, the draft sets limits on foreign ownership.

Direct equity participation by a strategic foreign investor would be capped at 40 percent. Non-strategic foreign individuals and entities would be limited to 7 percent and 10 percent, respectively. Total foreign ownership in a single insurance company could not exceed 49 percent of subscribed shares.

Initial investments would be required in foreign currency, while dividends could be reinvested in Ethiopian birr.

Industry observers say foreign participation could introduce additional capital, technical expertise, specialised products, technology and stronger risk-management practices. However, domestic insurers will also face greater competition and pressure to improve governance, service quality and operational efficiency.

Asseged said domestic insurers should not resist the opening of the market.

“Strong domestic insurers will actively seek strategic alliances under 60–40 or 51–49 ownership structures,” he said. “Mergers, acquisitions, joint ventures, strategic alliances and conglomeration are not simply viable options; they are necessary paths forward.”

The proposed law also seeks to strengthen policyholder protection through the creation of a formal Policyholders’ Protection Fund and a resolution framework for distressed insurers.

The framework would require recovery planning and give the proposed regulator powers to establish “bridge insurers” to assume critical functions of failing insurance companies, protecting policyholders and reducing broader market disruption.

The draft also raises corporate-governance standards. Insurance companies would be required to appoint independent directors and maintain dedicated risk-management, compliance and internal-audit units.

Administrative penalties would apply to violations of capital-adequacy rules, while operating an insurance business without a licence could carry criminal penalties of between 10 and 15 years’ imprisonment.

The draft further proposes a regulatory sandbox, a controlled environment in which insurers and technology companies could test innovative products and services under regulatory supervision before wider rollout.

The sandbox could support the development of digital insurance products, micro-insurance, inclusive insurance and alternative models such as Takaful.

Industry experts say the new framework reflects a broader shift in government policy from restrictive privatisation toward gradual financial-market liberalisation.

If adopted, the proclamation could fundamentally change how insurance companies operate, compete and raise capital. The immediate challenge will be ensuring that the transition is managed carefully so that stronger governance and market openness translate into deeper insurance penetration, better policyholder protection and more inclusive access to financial protection.

ENDC Calls for Implementation of Hard-Earned Recommendations

Capital News

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August 22, 2026

ENDC Calls for Implementation of Hard-Earned Recommendations

The Ethiopian National Dialogue Commission (ENDC) has announced the completion of detailed recommendation documents for full implementation, following a month-long national conference that senior officials have hailed as a historic milestone in resolving the country’s deep-seated political divisions.

The conference, which ran from July 15 to August 22, 2026, brought together over 4,000 delegates representing a broad cross-section of Ethiopian society. Participants included representatives from political parties, civil society organizations, religious institutions, federal and regional government bodies, academia, former combatants, and the diaspora.

“This process has opened a new chapter in our country’s history,” said Hirut Gebreselassie, Deputy Chief Commissioner of the ENDC. “We have established a political culture where long-standing disputes and historical fractures are addressed through civilized dialogue and collaboration rather than the barrel of a gun.”

Throughout the month-long session, delegates were organized into working groups of 10, 50, and 250 to refine core concepts across eight major thematic areas. These key agendas focused on state-building, government structure, federal cities and heritage, religious affairs, institutional capacity, socioeconomic development (including pastoralist and agrarian issues), peacebuilding, and anti-corruption and good governance.

Addressing the closing ceremony, President Taye Atske-Selassie described the outcome as a testament to national commitment and resilience. He urged Ethiopians to guard against divisive narratives and remain unified in building the nation’s future.

“Ethiopians are a people who know how to cross rivers and history,” President Taye remarked, invoking the imagery of the River Nile to emphasize the nation’s resilience in overcoming complex challenges.

With the conclusion of the deliberations, the commission highlighted that the primary responsibility now shifts to executing the final framework.
“We trust that these hard-earned recommendations will be fully implemented by the government and all relevant stakeholders,” stated Deputy Commissioner Rebqa. “This was a monumental national effort, and its ultimate success depends on our collective responsibility.”

Established by Parliament in 2021 as an independent body, the ENDC has pursued its mandate amidst significant political and security complexities. Its consensus-building approach has drawn commendations from international partners, including the African Union and the Intergovernmental Authority on Development (IGAD), as a vital step toward long-term peace and stability in Ethiopia.

Addis Ababa cracks down on unlicensed auto yards, orders immediate vehicle clearance

Capital News

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August 22, 2026

Addis Ababa cracks down on unlicensed auto yards, orders immediate vehicle clearance

The Addis Ababa Revenues Bureau has issued a directive ordering vehicle commission agents and brokers operating across the capital to clear client-owned vehicles from their business compounds, saying the widespread practice is illegal under existing tax legislation.

Following the bureau’s warning, many car brokers across Addis Ababa have begun clearing their premises. Enforcement has gained momentum over the past [48] hours, reshaping the city’s auto-yard landscape.

Affected business owners have voiced concerns, arguing that the sudden enforcement is unfair and will severely disrupt their day-to-day operations and livelihoods. However, they said they are complying with the order and removing displayed vehicles from their properties to avoid regulatory penalties.

The bureau said its decision is based on existing legislation. Under the Federal Income Tax Proclamation No. [979/2016], registered taxpayers are required to pay income tax based on their earnings. The amended VAT Proclamation No. [1341/2024] defines the “place of supply” as a supplier’s registered place of business, warehouse, or authorized public showroom.

Applying these provisions, the bureau said only licensed auto importers and primary car dealerships may store, display, and sell vehicles on registered commercial premises. Commission-based brokers and intermediary agents, it said, are limited to facilitating transactions between prospective buyers and sellers in exchange for an authorized service fee.

The bureau maintained that brokers who store and market third-party vehicles on private lots are effectively operating unlicensed car dealerships. The practice, it said, undermines market transparency and may result in lost tax revenue.

To ensure compliance, the bureau has ordered commission businesses to remove all unauthorized vehicles within the specified grace period. It warned that brokers who fail to comply could face measures under the Tax Administration Proclamation, including the sealing of commercial premises, fines, and legal action.

“A Small Problem Can Grow into a Major Crisis”

Opinion

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August 22, 2026

Addis Ababa: How Can the City Where the Fathers of Africa Gathered Become a Symbol of Ethiopians’ Confusion?

The Ethiopian proverb “A small problem can grow into a major crisis if left unattended” warns us that a problem that initially appears small can, if repeatedly ignored over time, eventually become a serious crisis.

Political wisdom is not simply about repairing a crisis after it has erupted. It is about recognizing the warning signs before a crisis occurs, understanding its causes, and seeking solutions through dialogue and lawful means.

The political, legal, historical, and identity-related debates surrounding Addis Ababa today should also be viewed through this lens.

Addis Ababa: More Than a City

Addis Ababa is not merely a city for Ethiopia. It is a city that occupies a unique place in modern African history.

It is one of the cities where African leaders gathered to determine the continent’s common destiny, where the idea of African unity was strengthened, and which became one of the major centers of African diplomacy.

The establishment of the Organization of African Unity (OAU), and later Addis Ababa becoming the headquarters of the African Union (AU), gave the city a continental significance extending beyond national borders.

Therefore, the question is not a simple one: How could Addis Ababa, while being a symbol of Africa’s shared history, become the subject of confusion within its own country over its identity, legal status, and future direction?

Understanding History Rather Than Clashing with It

Cities are not built only with bricks and cement. History, culture, memory, and the connections between generations are what make a city a city.

Addis Ababa is a city where generations of people have lived, studied, worked, and preserved their family memories. Therefore, decisions concerning the city should not be based solely on the interests of one era or one political group.

Denying history, or interpreting history from only one perspective, can worsen today’s problems. When history becomes a political weapon, it can be transformed from a source of memory into a source of division.

The Legal Question: Not Emotion, but Law

The issue of Addis Ababa should not be governed by emotion alone. The provisions of the Federal Constitution, the city’s legal status, the rights of its residents, and its relationship with the surrounding area must be carefully examined.

In particular, Article 49 of the Constitution of the Federal Democratic Republic of Ethiopia is a major legal starting point for understanding Addis Ababa’s special status and its relationship with the Oromia Regional State.

This provision needs to be examined not through political slogans, but through legal interpretation, historical context, and the rights of citizens.

The purpose of law is not merely to determine “Who won?” Law is necessary to protect rights, resolve conflicts peacefully, and protect future generations from today’s conflicts.

“Who Does Addis Ababa Belong To?”

This question itself can lead us down a dangerous political path.

Defining a city solely in ethnic terms by asking “Whose city is it?” can put the citizens who live there in conflict with the city itself.

Addis Ababa is the capital city of Ethiopia; at the same time, it is a city with a unique role in Africa’s shared history. Its residents are citizens with diverse histories, cultures, and identities.

Therefore, the solution does not lie in a competition over ownership in which one side says, “This city belongs to us.” The solution lies in respecting the city’s history, the rights of its residents, and the constitutional order equally.

A Symbol of Pan-Africanism

Addis Ababa is a city deeply connected to the history of Pan-Africanism. When African leaders challenged colonialism and envisioned a common destiny for the continent, Addis Ababa became closely associated with that history.

Respecting this historical role does not mean denying the city’s present-day challenges. Addis Ababa needs development, roads, housing, better infrastructure, and modern administration.

But development should not stand in conflict with history. Modernizing a city does not mean destroying its history; it means enabling future generations to remain connected to the past.

Today’s Decisions Are Tomorrow’s History

The decisions we make today will be written into history tomorrow. Therefore, the issue of Addis Ababa should not be governed solely by short-term political calculations, ethnic competition, or emotional rhetoric.

What is needed is deep, calm, and forward-looking dialogue that goes beyond short-term political interests—a dialogue that respects history, respects the law, protects the rights of residents, and considers future generations.

Above all, the question should not simply be:

“Who does Addis Ababa belong to?”

The greater question is:

“For whom do we want Addis Ababa?”

For today’s politics or for tomorrow’s generation?

For one group or for all citizens?

For short-term political interests or for a lasting common understanding?

If we do not answer these questions today with calm and reason, tomorrow we may be forced to search for their answers in the midst of a crisis.

Conclusion: A Small Problem Can Grow into a Major Crisis

Addis Ababa should be a city where Ethiopia’s shared history, the memory of African unity, and the hopes of future generations meet—not a symbol of confusion and division.

Protecting Addis Ababa does not mean protecting the interests of one group. It means respecting history, upholding the law, protecting the rights of residents, and building a shared vision for the future.

What we decide today will become the history that is told tomorrow. Therefore, before the problem explodes, we must talk, listen to one another, and seek a common solution based on the rule of law.

A small problem can grow into a major crisis if left unattended. The issue of Addis Ababa is no different. Before it grows into an even deeper crisis, creating a common understanding is the responsibility of today’s generation.