The National Bank of Ethiopia (NBE), the county’s central bank, is reportedly planning to draft a policy framework to regulate the microinsurance industry. The companies that offer microinsurance now incorporate it into their general or life insurance plans rather than offering stand-alone microinsurance services. Tesfaye Desta, manager of Oromia Insurance, an Ethiopian insurance company that offers microinsurance, reportedly commented, “There is a high level of risk involved in micro-insurance and it requires some external funding, or at least a re-insurer.”
NBE recently met with the World Bank, a member of the World Bank Group, to discuss the content of the proposed framework. Further details are unavailable.
By Nicole Boyd, Research Associate
About National Bank of Ethiopia (NBE)
NBE regulates microfinance institutions (MFIs), which are classified as non-bank financial institutions, and commercial banks. NBE establishes the licensing requirements for MFIs, promotes the participation of commercial banks in the microfinance industry and provides training for MFIs. MFIs are subject to audits by Microfinance Supervision Department of NBE including on-site audits, which are based upon CAMEL (Capital Adequacy Asset Quality Management Earnings Liquidity Management) guidelines. As of December 2012, NBE reported total assets of ETB 128 trillion (USD 7 billion).
About The World Bank Group
The World Bank Group consists of five institutions, all of which are owned by its member countries. The Group’s mission is to improve living standards for people in the developing world. The World Bank Group encompasses the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); the International Centre for Settlement of Investment Disputes (ICSID) and the World Bank, which consists of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
About Oromia Insurance
Oromia insurance is a for-profit Ethiopian insurance company. The company offers property and liability insurance coverage including risk, product liability, public liability, motor and personal insurance. Reportedly, the company had total assets of ETB 186 million (USD 10 million) as of 2011.
Sources and Additional Resources:
Merkato. “National Bank of Ethiopia Set to Regulate Micro Insurance Services,” http://www.2merkato.com/201302272079/national-bank-of-ethiopia-set-to-regulate-micro-insurance-services
MicroCapital. January 22, 2013, “MICROCAPITAL BRIEF: M-Birr, Ethiopian Microfinance Institutions to Launch Mobile Money Service,” https://www.microcapital.org/microcapital-brief-m-birr-ethiopian-microfinance-institutions-to-launch-mobile-money-service/
MicroCapital. June 1, 2012, “MICROCAPITAL BRIEF: Women Entrepreneur Development Project of Ethiopia Borrow $50m From World Bank,” https://www.microcapital.org/microcapital-brief-women-entrepreneur-development-project-of-ethiopia-borrow-50m-from-world-bank/
MicroCapital Universe Profile: National Bank of Ethiopia (NBE) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=National+Bank+of+Ethiopia+%28NBE%29
MicroCapital Universe Profile: The World Bank Group https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group
MicroCapital Universe Profile: Oromia Insurance https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Oromia+Insurance
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