Monday, June 17, 2024

NBE issues directive that allows the diaspora to buy shares in banks


The highly anticipated directive that enables the diaspora community to invest in the banking business in the country is issued by the National Bank of Ethiopia (NBE) on Thursday and become effective as of Friday February 28.
The directive ‘Manner of Equity Investment by Foreign Nationals of Ethiopian Origin in Banks Directive number SBB/73/20202’ allows implementing the proclamation that was amended in August last year by the parliament.
The directive will give the right for the Ethiopian born foreign nationals or organizations owned by the diaspora and companies owned by Ethiopians and the diaspora to buy shares on existing or newly formed banks.
The directive also allowed Ethiopians who will change their nationality after this directive to pay their existing subscribed share in birr.
“An Ethiopian national, who after acquiring shares in a bank changes her/his/its nationality after the effective of date of this directive, may continue holding the existing share and can also pay existing subscribed share in birr,” article 4.3.6 states.
The directive also allowed the diaspora that shall repatriate his or her dividend generated from other investments in Ethiopia shall buy share at banks by local currency.
Article 4.3.1 indicated that dividend generated from investment activities of the diaspora or organizations in other sectors and deemed eligible for repatriation by the National Bank can be used for the purpose of share purchase in a bank or a bank under formation.
Article 4.1.1 of the directive stated that all subscriptions as well as initial and subsequent sales to foreign nationals of Ethiopian origin or organizations shall take place in the geographical territory of Ethiopia.
Regarding share sales, the directive indicated that transfer of foreign currency made by the diaspora or organization for the purpose of share purchase through foreign payment cards, cash whether declared or not international money transfer organizations that cannot generate credit advance at individual level showing the identity, amount and purpose of the transfer, shall not be allowed.
The directive stated that banks who sale share for the diaspora would deduct the 30 percent of the foreign currency and transfer to the central bank.
Article 4.2.2 indicated that a bank that is under formation instructed by the National Bank to unlock the foreign currency escrow account of a newly licensed bank shall surrender 30 percent of the foreign currency amount to the national Bank within five working days and the article 4.2.3 added that NBE shall credit the payment and settlement account of the same bank for equivalent amount of birr at the prevailing mid exchange rate.
The same article sub article 2.4 also stated that a bank already in operation and that intends to sell share for the diaspora or organization of the diaspora shall have separate foreign currency (mirror account) for accepting share payment and for collection of share premium. it added that the 30 percent of the foreign currency collected to be paid for NBE in accordance with the FXD/54/2018 directive that forced banks to sell 30 percent of the hard currency earnings to NBE on prevailing mid exchange rate.

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