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Commercial Bank of Ethiopia President notes risks of opening sector to foreign investors

Abe Sano sees risk in opening Ethiopia’s  banking sector door wide to foreign investors. He advises share restrictions as remedy

Abe Sano, president of Commercial Bank of Ethiopia (Photo : public domain)

borkena 

The Ethiopian government on Saturday announced that it is opening up the banking sector to foreign investors. It is a decision from the council of ministers with Abiy Ahmed’s leadership.  The matter was not even debated in the Ethiopian Parliament. 

The development has created reactions from Ethiopians on social media.  There are those who tend to see, in fact with passion, the decision as something that would transform the sector in terms of service delivery and making more finances available for borrowers.  The line of argument rather supports the rationale that the “council of ministers”  put forward. 

Prime Minister Abiy Ahmed’s administration, which was beating drums for inventing a “home-grown economic model,” made a case for opening the sector to foreigners. “Opening the sector to expatriate investors would help make service knowledge and technology-based, and transform the level of Ethiopia’s economic integration to the world market,” it said.  

On the other hand, there are those who see danger in the move. There is even a tendency to see government decisions as a result of imposition from the Bretton Woods institutions. They see that the banking sector in Ethiopia is not fit enough to compete with giant foreign banks. 

Commercial Bank of Ethiopia, the oldest and largest state-owned bank with over 1500 branches across the country and a huge revenue generator, President Abe Sano spoke to state media regarding the government’s decision to open up the banking sector for expatriate investors. 

He sees a good side to it. But he also underscores the importance of exercising caution in the implementation of the policy.  He seems to buy the case for opening up the market that was put forward by the “council of ministers.” Yet, he sees the menace that opening the door wide could bring about to domestic banks.  

As much as closing the sector to foreign investors has impacted the growth of local banks, says Sano,  opening the banking service door wide to the world market could have dangers. He underscores the importance of striking a balance between the two. 

He advised the gradual opening of the sector to international competition to ensure that local banks are building up strength to the competition. 

He says that international competition could create exposure to draw lessons from international practices. But to avoid harm to local banks, there is a need to limit shares to expatriate banks. 

He seems to be suggesting that local banks be higher shareholders when the banking market opens for foreign investors. He thinks that the measure could transform the strength of local banks in a relatively short time. 

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4 COMMENTS

  1. Genocide on Amhara is not leadership skill but a Criminal Murderous Orommuma Mafia control Corrupted thief and looter regime that must be ousted.

    Monkey see Monkey do, does not work when it comes to performing country level and government level jobs.
    Abiy is the Village Monkey who is still living trapped in Village mentality. Even if one squeezes his small brain except ignorant lies noting will not ooz out.

    The problem in Ethiopia from Derg, Mengistu up until today is unfit, uneducated, unqualified and unintelligent people holding power through Military force.
    Military should stay respected and loved as Military whose main sworn responsibility is to protect the country from invaders. Not using weapon for other unintended purposes as threating its own people and ruin the country

    Despite his father’s honest wish who knew his son ability and who advised him to stay as good farmer Abiy defied his fathers wish and decided to join Derg Military who then waved the white flag to TPLF and Shabia.
    Not having a clue of running a government that requires massive amount of leadership quality, education, intelligence , qualification and requirements and beyond, Abiy using his ruthless lie and deceit TPLF spy tactic cut short to the Premier position by outwitting his own master TPLF that raised him feeding hate for Amhara.
    The so called Prime Minister who used his Military position as a way to the power seat is untamed circus monkey who is quick to jump up and scratch and attack when cornered by wise ethnic Amhara people and knowledgeable people.

    The villager who hates truth and who grew up wishing “I want to be a King when I grow up” now is building a PALACE FOR HIMSELF by throwing 500,000 Addis Ababa residents whom the majority are Amharas out on the street. This is adds to the other hundred thousands homeless Amharas, orpahn children, women and elders including other ethinc Addis Ababa long time residents that Abiy and the Orommuma gang Adanech Abebe, Takele Uma, Shimles Abdissa, Aba Dula and etc,, created just in 4 years.

    This ambitious Villager who is holding the most powerful seat by coming to the big welcoming city with no clue of his political term, role and title is planning to live his village dream at the expense of the general population needs and interest. Now he wants to be a King living in a Palace for life.

    • In all your blabbering above , the ONLY 2 key arguments you have postulated is that : resorting to ad hominem & coming across as an advocate for ANYTHING Amara! The latter is understandable in you attributing exclusive intelligence and know-how as the ONLY groupings qualified (intrinsically ) to rule and determine its destiny – the countryEthiopia – which I found it to be ironic given its past history as well as current one , without going into its details & elaborating on it ! As to the former concept, is it not the Amara elitist & their commoners ( assimilated ones also included in this endeavor) alike tried for centuries in mimicking Western world’s educational systems & ethos, or values, yet failed miserably to deliver it

      As to monkey see, monkey do , it’s self explanatory, so no need to expound on it further! ” Monkey See, Monkey Do is a saying that originated in Jamaica in the early 18th century and popped up in American culture in the early 1920s. The saying refers to learning something by mimicry, without understanding why it works or being concerned about the consequences.” That concept aptly apply to you & your kinds !

      Finally, as to Oromummaa, it’s yet a concept & philosophical underpinnings, you’ve to grasp, yet fully! I sincerely urge you & those who share your views or outlook for the rest of the world differently I say: go back to the drawing table to sort it out ! And good luck!

  2. As long as they observe local laws this can be beneficial to aspiring entrepreneurs. I have been getting reports of nepotism in getting loans for quite some time now. You have to know someone or connected to someone with good rapport. If not it will be a tall order or even impossible to get seed money on loan even though your plan is feasible. That just cannot continue to live in a banking cocoon forever.

  3. Btw, some of you countrymen/women should be on alert if you plan to travel to South Korea on business particularly to that port city of Busan. One of the most violent typhoon in recent history to hit that country is heading straight to that city. It is bullseye Busan. You should postpone your trip at least for a week. It is going to be a mess. I have been to that city once before to meet up a shipping forwarder and visit the facility.

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