– Insurance to follow banking in government’s liberalization campaign
Experts at the National Bank of Ethiopia (NBE) have finalized a draft proclamation that proposes to relieve the central bank of its mandate to regulate the insurance industry, instead granting it to the soon-to-be Ethiopian Insurance Regulatory Authority.
The draft Insurance Business Proclamation promises to address long-standing calls for autonomous regulation from insurers, and marks the industry as next for liberalization as part of ongoing economic reforms.
The NBE has regulated the nascent insurance industry for three decades, alongside banks, microfinance institutions, reinsurance, and lease financing. Insurers have long argued the NBE’s focus on banking growth has stifled their own.
The authority proposed in the amendment will be led by a seven-member board, which will include representatives from the NBE and Ethiopian Capital Market Authority, and will be responsible for issuing licenses and enforcing compliance.
The draft also proposes to open the insurance industry to foreign investment, following up on liberalization under the Banking Business Proclamation of early 2025. If approved, foreign insurers will be able to establish a partially or fully owned subsidiary in Ethiopia, as well as acquire shares in existing Ethiopian insurers.
The draft limits “strategic” foreign investors to 40 percent of an insurer’s subscribed shares, while “non-strategic” foreign nationals can own up to 10 percent of shares.
