The Ethiopia government has no plans to open up domestic banking and insurance firms to foreign ownership but made its intention clear to allow overseas investors into other sectors.
After coming to power last year, Ethiopia Prime Minister Abiy Ahmed has launched a programme to overhaul several industries by opening them to foreign investment as part of efforts to transform the African country into a middle-income country.
However, the Prime Minister has decided to keep foreign companies away from the domestic banking, insurance, micro-credit and micro-savings services, Reuters reported, based on a draft investment law.
International aviation, in which state-controlled Ethiopian Airlines dominates, as well as power, postal services and weaponry will be done by, or in partnership, with the government, Bloomberg reported, quoting draft regulations released by the Ethiopian Investment Authority.
Banking, one of the state-controlled sectors in Africa, is dominated by Awash Bank and Dashen, the two oldest and most profitable institutions.
In July, the Ethiopian parliament passed a bill under which approximately five million citizens who had taken other nationalities will be allowed to buy shares in local banks, raising hopes that the sector would be opened up to foreigners.
As part of the Prime Minister’s plan to open up the economy, state sugar companies are expected to be privatised next year.
Furthermore, the draft investment law also stated that the government intends to offer two new mobile telephony licences and sell a minority stake in state-owned Ethio Telecom to a strategic investor.
International telecommunication carriers, including Orange, MTN Group and Vodacom Group, will be open to foreign ownership.
The government intends to keep un-starred hotels, gaming and trading, barring high-capital items such as petroleum imports, for locals.
The draft law has proposed a 75% cap on external ownership of businesses such as domestic air and certain transport and logistics services, and the remaining will be held by local partners.
Media and grade-two construction services are expected to take only 49% foreign ownership.
The draft investment law is expected to be tabled in parliament in the next two to three weeks for debate and approval.