General and long-term insurance firms in Ethiopia are now required to have a minimum paid-up capital of 500 million birr ($9.5M), an increase of 567 percent. According to the 2013 order, insurance firms needed a minimum of 75 million birr in paid up capital (60 million birr for general insurance and 15 million birr for long-term insurance).
Minimum paid up capital for general insurance would be 400 million birr and 100 million birr for long term (life) insurance company operation, as per the new order released on September 23 and effective from September 15, signed by Yinager Dessie, Governor of NBE. When compared to the 2013 mandate, the proportion for both has increased by 566.6 percentage points.
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Current insurers have until June 30, 2027 to meet the minimum capital requirement, while new insurers will have until June 30, 2040 to do so.
Foreigners Are Still Not Allowed To Participate In Ethiopia ’s Financial Services Sector
Under new investment rules, banking, insurance, brokerage services, and legal consultancy remain off limits for foreign investors, according to the regulations published on the Ethiopian Investment Commission’s website.
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Exports of coffee, and media and security services are also exclusively for local investors.
The updated regulations are part of economic reforms by the government of Prime Minister Abiy Ahmed and include the privatization of state-owned enterprises such as sugar and cement companies.
The country has also revealed plans to finalise the partial privatisation of its telecommunications sector by February 2021. This new development comes just three weeks after the Ethiopian Communications Authority (ECA) suspended the country’s telecom privatisation plans.
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Several foreign banks have representative offices in the country, including Equity Group Holdings of Kenya. Lease companies, such as a unit of New York-based Africa Asset Finance Co., which pledged to bring in equipment worth $600 million after being licensed in August, can also operate there.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexpert