Addis Ababa, Dec 18 (IANS): The Ethiopian House of Peoples' Representatives (HoPR), the lower chamber of parliament, has passed a bill that allows foreign banks to operate in the country.

During its regular session on Tuesday, the HoPR reviewed and passed the Banking Business Proclamation, marking a significant step toward opening Ethiopia's banking sector to foreign investment, according to state-affiliated Fana Broadcasting Corporate.

The proclamation, adopted with a majority vote, aligns with the Ethiopian government's prior policy decisions to liberalise the financial sector. It is expected to attract foreign banks and investors, bringing much-needed capital to the East African nation's economy.

Mamo Mihretu, governor of the National Bank of Ethiopia (NBE), said the newly approved proclamation will enable the Ethiopian economy to remain stable, noting that the bill has clearly set out the NBE's core objectives, including ensuring price stability and fostering a robust financial system.

Historically, Ethiopia's banking sector has been closed to foreign banks, Xinhua news agency reported.

The move signals the end of decades of exclusivity for local financial institutions, paving the way for foreign competition and innovation.

Since taking office in 2018, Prime Minister Abiy Ahmed has consistently advocated for liberalising the financial sector as part of broader economic reforms aimed at attracting foreign investment and driving economic development.

Ethiopia recently floated its foreign exchange, marking another significant shift from the central bank’s strictly regulated interventions.