Ethiopia has opened its insurance sector to foreign competition, as Prime Minister Abiy Ahmed presses ahead with reforms to shift the economy from state control to private-sector-led growth.

 

The move adds momentum to liberalisation after decades of state dominance. It follows the opening of banking and telecommunications to foreign investors, drawing millions of dollars into both sectors.

The National Bank of Ethiopia (NBE), in a draft law, says foreign insurers will be allowed to establish wholly or partially owned subsidiaries, acquire stakes in local firms or open representative offices, subject to conditions.

Ownership capsForeign strategic investors will be capped at 40 percent ownership in a domestic insurer. Non-strategic foreign individuals and entities will be limited to seven percent and 10 percent respectively.

Combined foreign ownership, including foreign nationals and foreign-owned Ethiopian entities, will not exceed 49 percent. The rules take effect upon gazettement.“Foreign nationals and foreign-owned Ethiopian organisations fully owned by foreign nationals shall invest in an insurer only through foreign direct investment in foreign currency,” the rules say.

Dividends may be reinvested locally in birr, provided ownership limits are maintained. Returns, including dividends, salaries and proceeds from share sales or liquidation, may be repatriated in line with regulatory directives.

Foreign-owned Ethiopian firms may also repatriate proceeds proportional to their foreign shareholding.

The regulator may set additional conditions on licensing, licence renewal and foreign investment, and may also limit the number of foreign insurer subsidiaries. It can determine minimum capital requirements, governance standards and “fit and proper” criteria for directors, senior management and key control functions.

A foreign insurer will not be permitted to establish a subsidiary or acquire stakes unless it satisfies the Eira that it is well established, financially sound and properly supervised in its home jurisdiction. Authorities may impose additional conditions, including capital thresholds and limits on the number of foreign entrants.“Dividends earned from investment by foreign nationals in an insurer and salaries of foreign national employees and proceeds from sales of shares or the liquidation of an insurer, may be repatriated in accordance with the provisions of a directive issued by the Authority,” the rules say.

Foreign insurer subsidiaries must also meet governance requirements. “A foreign insurer subsidiary… shall have a board of directors composed of foreign parent insurer, other shareholders (if any) and local resident non-shareholder Ethiopians,” according to the draft.“The Authority may, on the application of a foreign reinsurer, grant a license for the establishment by the foreign reinsurer of a representative office in Ethiopia, and specify activities that may be undertaken,” the rules say.

The opening of insurance extends broader economic reforms. In June 2025, Ethiopia allowed foreign banks to establish subsidiaries, branches or acquire stakes in local lenders, with a 49 percent ownership cap.

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