Ethiopia Continues To Open Its Economy: For The 1st Time, It Has Issued Financial Services License To A Foreign Firm
Ethiopia’s Central Bank has for the first time granted a financial services license to a foreign firm, Ethio Lease.
This is in line with Prime Minister Abiy Ahmed’s plans to open up and reform the country’s economy, the government previously opened state-owned Ethiopian Airlines and telecoms, to international private and local investors
This is a seen as a move by the government to loosen its monopoly on several economic sectors,
The company will be mandated with the leasing of equipment such as MRI scanners,tractors and drilling rigs to companies which dont have the capability to import.
In addition, it will remove the bottleneck of foreign exchange shortages as the firm will be acquiring the equipment in foreign currency and provide them to companies using local currency.
Chairman and CEO, Frans Van Schaik says the company will import USD 600 million of equipment annually.
“There is a liquidity shortage and a lot of businesses are craving equipment that they just can’t get.
“Almost every factory in Ethiopia can tell you about how an equipment shortage or other issue is delaying construction or operations. The bureaucracy in Ethiopia is overwhelming, if you want to succeed in Ethiopia, you need to be patient and persistent ,” said Van Schaik.
The capital leases will provide companies and individuals with lease contracts that cover the significant portion of the economic life of the purchased equipment.
Girma Wake, Board chairman of the Ethio Lease noted that the move is a game-changer and has a huge potential to transform Ethiopia.
” It allows companies to free up their liquidity and generate revenue without having to heavily invest in equipment. A leasing agreement would also allow companies to pay for the equipment as it generates revenues for them,” he stated.
Mr Van Schaik added that “By providing leasing solutions to growing businesses, we believe our capital will help stimulate economic activity while generating attractive risk-adjusted returns for our lenders and investors.”
Featured Image Courtesy: Voice of Africa