Addis Ababa, May 12, 2022 (Walta) – Ethiopia is working to increase private sector participation in the financial sector as part of a broad-based and comprehensive reform that has seen a great policy shift, Finance Minister Ahmed Shide said.
Opening the annual East Africa Finance Summit yesterday, he stated that the “finance sector is one aspect that the government is deliberating and working to modernize and increase both domestic and foreign private sector participation in the sector.”
The reform agenda recognizes that there is more to be done and the government is keen to work with the financial industry to build a financial sector that would support a vibrant private sector creating jobs and propelling the country to be a middle-income economy, he added.
According to him, systemic and policy-driven challenges have been affecting the supply and quality of loans issued by the commercial banks over the decades constraining the contribution and role expected from the private sector.
“The government has (therefore) moved ahead with a broad policy shift to encourage and incentivize the private sector by redirecting the significant credit facility and by introducing enabling business environment.”
In the past few years, many policy reform measures were initiated to expand foreign exchange and enhance diversification of export and macroeconomic actions to solve financial constraints.
Ahmed further said that the finance infrastructure has grown with the combined saving of commercial banks reaching over 1.6 trillion Birr this fiscal year.
The ultimate aim of the financial sector reform is ensuring financial stability and inclusion, promoting productivity and competitiveness of the private sector, and solving structural financing constraints of the economy by encouraging domestic savings and facilitating credit supply for the private sector investment, he elaborated.
“To achieve this goal, it is necessary to undertake market-oriented financial sector reform through which the private sector will eventually become a more inclusive and strong backbone of the economy.”
The ministry is also leading the effort to introduce e-payment systems that enable efficient transactions and expand throughout other government institutions.
The minister revealed that the finance sector in Ethiopia will be open to foreign banks soon.
He underlined the importance of holding the summit for five consecutive years in Ethiopia and underscored the need to consult for experience sharing and promote best practices in the sector.
“This (annual) forum will offer a platform from both policy and operational perspectives to exchange information, share ideas, and experiences, and promote effective practices related to the finance sector,” Ahmed said.
Since 2016, Ethiopia has been consecutively hosting the East Africa Finance Summit, an annual platform for knowledge sharing and critical voices where over 300 finance sector stakeholders attend.