INTRODUCTION
The Ethiopian Parliament has approved the Proclamation that allows Ethiopian by Birth but Holding Foreign Nationality to Invest in the insurance sector in its session of October 5th 2019. Similarly, the Parliament has also approved the Proclamation that allows Ethiopian by birth but holding foreign nationality to invest in the microfinance sector in the same session.
These Proclamations have amended the provision of Article 10 of the Insurance Business Proclamation No. 764/2012 and Article 25 of the Microfinancing Business Proclamation No. 626/2009. In addition, to these two provisions, the current amendments, repeal and replaces the provision of Article 3 of the Investment Incentives and Investment Areas Reserved for Domestic Investors Council of Ministers Regulation No. 270/2012, which prohibit Ethiopians by birth not to acquire shares in Ethiopian financial institutions, including insurances and microfinances.
As per these new Proclamations Ethiopian by birth are allowed to acquire shares in an existing Ethiopian insurance or microfinance institutions or establish their own insurance companies or microfinances institutions, as long as they meet the requirements of the National Bank of Ethiopia that are required to be fulfilled to establish these institutions in Ethiopia.
In addition, the amendment to the Insurance Business Proclamation allows the introduction of insurance policies based on Islamic principles (a.k.a Takaful), and also it also envisages the possibility of introducing minimum premium that can be charged by insurance companies. As per the new amendment microfinance institutions are also allowed to engage in micro-insurance business.
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