Ethiopia is planning to open its long-protected insurance sector to foreign players through a draft law that could mark one of the country’s most significant financial sector reforms in decades.
The proposed Insurance Proclamation, released by the National Bank of Ethiopia (NBE) for public consultation, with comments due by April 29, 2026, seeks to create an independent regulator and pave the way for foreign participation in the market.
The reforms are part of a broader liberalisation drive by Prime Minister Abiy Ahmed’s government aimed at attracting investment, boosting competition and modernising the economy.
Under the proposal, foreign insurers would be allowed to enter through subsidiaries or by acquiring stakes in domestic firms, in a move expected to inject capital, expertise and innovation into a market that has remained largely closed.
Ethiopia’s insurance sector has long been seen as underdeveloped, with low penetration despite a population of more than 120 million.
The industry currently comprises about 19 insurers and one reinsurer, with limited product diversity and constrained underwriting capacity.
Authorities say opening the market could help expand insurance access, strengthen risk management and support coverage in areas such as agriculture, infrastructure and climate-related risks.
At the centre of the draft law is the proposed Ethiopian Insurance Regulatory Authority (EIRA), an autonomous body that would take over licensing, supervision, consumer protection and resolution functions from the central bank.
The draft also introduces foreign ownership safeguards, including a 40 per cent cap for strategic investors in local firms and an aggregate foreign ownership ceiling of 49 per cent.
Additional provisions include a regulatory sandbox to support innovation, a framework for Takaful and Re-Takaful products, and a new “inclusive insurer” licence aimed at underserved and informal economy segments.
Stronger governance rules, independent board requirements and risk-based capital standards are also proposed as part of efforts to align the sector with international best practice.
Analysts say the reforms could accelerate product development and help narrow Ethiopia’s sizable protection gap, while also boosting investor confidence in one of Africa’s fastest-growing economies.
However, domestic insurers have raised concerns about competing with well-capitalised global players, prompting calls for phased implementation and strong institutional capacity at the new regulator.
Once approved by the Council of Ministers and Parliament, the new law would replace existing insurance frameworks and formally shift oversight to the EIRA.
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