What Happened: Ethiopian Prime Minister Abiy Ahmed's office has reportedly scrapped a central bank mandate requiring foreign mining and energy companies involved in exploration and development projects to have local foreign exchange accounts, Fortune News reported June 15. The central bank decision had received heavy criticism from foreign energy and mining companies.
Why It Matters: The course reversal almost certainly came as a result of heavy lobbying from foreign mining and energy companies, and underscores government efforts to stimulate investment despite Addis Ababa's ongoing acute foreign exchange crunch. The rule change will ease the burden on foreign companies, which would have found getting international loans for projects harder if they had to store their money locally.
Background/Context: Ethiopia has faced a foreign exchange crunch for many years largely because of the government's decision to pursue large-scale — and expensive — projects that have eaten up foreign exchange reserves. The result has been acute foreign exchange shortages that have hampered the economy and made importing medicines, machinery, etc., difficult.
- Ethiopia Comes to a Crossroads on Economic Reform (April 3, 2019)
- Ethiopia Offers Investors a Tantalizing, If Tainted, Promise (Nov. 22, 2018)