Dr. Kassahun Melese, an economics professor at Oregon State University, has stated that allowing foreign banks to operate in Ethiopia will significantly increase the country's foreign exchange reserves.
In an interview with ETV, Dr. Kassahun said that the draft National Bank of Ethiopia Proclamation, recently approved by the House of People's Representatives, will help to address the challenges facing the financial system and establish a stable financial system.
He explained that foreign banks, with their vast resources, experience, and expertise, will introduce innovative banking practices and new financial products that are uncommon in Ethiopia.
He also noted that they will help attract foreign direct investment by gaining the trust of foreign investors.
As foreign banks use modern technology and have a skilled workforce, they will play a role in integrating Ethiopia into the global economic system. This, he said, will help stabilize inflation in the country.
The professor noted that exporters have been facing foreign exchange shortages, and the entry of large foreign banks will significantly boost the growth of the export sector.
While acknowledging the experience and capital advantages of foreign banks over domestic banks, Dr. Kassahun emphasized that domestic banks also have their own strengths.
He suggested that domestic banks should adopt new technologies and practices to remain competitive in the future.
Finally, he expressed his belief that the new proclamation will create competition and increase productivity in the banking sector.