As the financial industry continues to become broad in terms of operation, the National Bank of Ethiopia (NBE) discloses that it is taking diligent steps in enhancing its capacity to shoulder its new responsibilities.
The central bank over the course of the past four years has undertaken massive reforms to align the financial industry with the Home Grown Economic Reform (HGER) and the ten year economic plan.
In this process, the regulatory body has amended a lot of directives or issued new laws besides the amendment of proclamation through parliament. Similarly, some crucial proclamations have been tabled to parliament for revision.
In its new pathway to improving services, the bank has also paid keen attention on refining its service and has beefed up its capacity to regulate the financial industry prudently.
As massive reforms continue to rejuvenate the sector, the responsibility of the central bank continues to expand making the bank to enhance its capability in all relevant spheres.
Yinager Dessie, Governor of NBE, said that one of the targets to attain success in the budget year was building the capacity of the regulatory body.
He said that there are several engagements in the bank as in any office.
“Capacity building and better services are priorities that we are working on, in the budget year, in addition to other planned activities,” Yinager said whilst delivering NBE’s quarterly report to the standing committee in parliament.
Besides rolling out cautionary measures to safeguard the country’s economy, the central bank has regular operations like supervision of financial entities such as microfinance institutions and insurers, currency administrations, and ensuring financial inclusion.
In connection to introducing reforms including the major moves like the establishment of the capital market, which NBE conducted the inception work, the regulator has also been engaged on massive capacity building to handle the upcoming possible challenges linked to the opening up of the financial sector.
To some extent international organizations and countries have also provided their support on skill development and financial support besides hiring prominent experts as advisors.
The government on its aim to improve the financial sector and telecom business, it has set sail to open up the market which was once highly protected from foreign investors and private companies including individuals from the diaspora.
With regards to the opening up of the telecom business, parliament recently approved a proclamation that would allow foreign fintechs to invest on the sector.
Directly or indirectly the central bank is said to have a stake on the upcoming alternative financial source, that is, the capital market.
The draft Banking Business Proclamation amendment that would allow the opening up of the financial sector for foreign actors has also been tabled to parliament.
The National Payment System, which allows foreign operators to be involved in the financial sector through digital schemes like mobile money, Payment Instrument Issuers, Payment System Operators are some of the major moves that would make the regulatory body engagements much broader since it includes more stakeholders including foreign operators.
Foreign Currency Intermediary directive that allow banks to facilitate credits from foreign sources for local borrowers is also the other new directive introduced in the reform period.
Open market operations and standard facilities that are a money market to the central bank or between financial institutions were also introduced in this period.
NBE has also been assigned additional responsibility in looking after private and public employees’ pension funds. The role of the two pension funds are expected to expand their operation in terms of generating more value for the benefit of pensioners.
The opening of the exchange rate which is said to be determined by the market is also expected to come to fruition in the near future.