Conversations of DR ABIY AHMED ALI – Prime Minister of the Federal Democratic Republic of Ethiopia and GIFA Laureate 2022
Dr Abiy Ahmed Ali is the third prime minister of the Federal Republic of Ethiopia, the 2019 Nobel Peace Laureate and GIFA Laureate 2022. ISFIRE would dub him Philosopher Prime Minister, as he is not only an activist but a leader of distinct vision. Highly educated with a PhD, and a Master’s degree in business administration and transformational leadership, he knows how to put his academic knowledge into practice. His new political philosophy based on Medemer is path-breaking, which should be leveraged upon to promote interest-free banking (IFB) in Ethiopia.
Dr Abiy Ahmed Ali, the Prime Minister of Ethiopia, carries a very pleasant personality. With smiling eyes and the softness of his words and tones, it would be hard to imagine that he once was a soldier who participated actively in many battles.
Revered and respected by millions of Ethiopians, and many more outside his native country, he has indeed emerged as a world-recognised and respected political leader with a vision to develop his country to stand along with the advanced nations of the world. He has put the country on the right track, but a lot more needs to be done.
Running the second most populous country in Africa must not be taken lightly. It is a job well done by the PM Dr Abiy Ahmed Ali. His predecessor ruled the country for 18 long years, and given the charismatic personality and untiring efforts of the incumbent, one should expect PM Dr Abiy Ahmed Ali to follow the suit.
In view of his soft image and pleasant personality, no one would assume him to be a tough negotiator until they have reached the middle of the conversation when the real meanings behind his words start becoming evident. A PhD scholar who happens to be a politician as well must be listened to carefully, as at times, comprehending the true meanings of his words may require a bit of concentration and understanding of the context.
This piece of article written in a conversational style aims to explicate some of the views of PM Dr Abiy Ahmed Ali. The focus must remain on interest-free banking. However, it necessarily ventures into other aspects of policy debate.
Under the dynamic leadership of the PM Dr Abiy Ahmed Ali, Ethiopia is opening up, and in this respect the liberalisation of the financial sector is important. Interest-free banking can be a beneficiary of the liberalisation of financial sector, and in due time, must play a crucial role in the development of the country.
Dr Abiy Ahmed Ali is not only a doer – he is a fast doer. On May 22, 2019, he made a statement, “I promise that we will work together to establish an [interest-free] bank, which was long awaited by Muslims”. Within weeks, work was underway at the National Bank of Ethiopia to bring the required changes in the law and regulations to pave way for the establishment of ZamZam Bank. This was remarkable.
Although he made a slew of political decisions after assuming the office of the prime minister in 2018, which included releasing thousands of prisoners, unblocking numerous TV channels and websites, and allowing exiled non-conformists safe return home, ISFIRE takes the view that his contributions to the establishment of interest-free banking in the country can make him one of the most popular leaders in the countries comprising the Organisation of Islamic Cooperation (OIC).
INTEREST-FREE BANKING CAN BE A BENEFICIARY OF THE LIBERALISATION OF FINANCIAL SECTOR AND IN DUE TIME MUST PLAY A CRUCIAL ROLE IN THE DEVELOPMENT OF THE COUNTRY
“A key part of our economic reform agenda has been our effort to strengthen the financial markets. We understood early on that a stable macroeconomic system supports growth and job creation. Enabling savers to invest their financial assets with confidence and providing investors the predictability they need to invest in job creating projects have been two critical ingredients in growing the financial sector.” This is what he said in his acceptance speech at the 12th Global Islamic Finance Awards ceremony held in Djibouti on September 14, 2022.
HOW DO YOU ENVISAGE BRINGING REFORMS IN THE ETHIOPIAN FINANCIAL SECTOR?
Dr Abiy Ahmed Ali: “We will bring [in] foreign banks because we need additional wealth and hard currency. Regarding this, the government is now preparing a policy amendment. Once preconditions are met and banks are prepared, we will [implement] that.”
This offers a huge opportunity for interest-free banks as well. A Sudanese bank is also considering setting up a shop in Ethiopia as part of its foreign expansion plans. “We are sitting on the fence; and the moment the [Ethiopian] government announces the new policy, we shall move forward,” said a senior official of the said bank on the condition of anonymity.
A Saudi billionaire with Ethiopian background, Mohammed Hussein Al Amoudi, has already heavily invested in Ethiopia, including in the banking sector. His family owns the majority shareholding in Dashen Bank (which also runs a vibrant interest-free banking window as well). The sustainability of peace in the country will attract many more like him to invest in the Ethiopian interest-free banking sector. He is not the only one. There are scores of other billionaires who must be enticed by the big market Ethiopia offers to them for business ventures. Sustainable peace will bring in a lot of investment from the Gulf countries. This may also be helpful in terms of rehabilitation of thousands of Ethiopian migrants returning from countries like Saudi Arabia.
The entry of foreign players into the Ethiopian market is expected to bring in the required breadth and depth of financial services. Given the rampant financial exclusion in the country, foreign banks with proven track record of reach out in the rural areas should be encouraged to open their shops in the country.
WHY DO YOU CONSIDER PEACE SO IMPORTANT?
Dr Abiy Ahmed Ali: “Peace is a very expensive commodity in my country.” This is what he said after receiving the Nobel Peace Prize 2019, and it is the resolute intention of his government to make the national financial system all-inclusive, and consequently peaceful, for various faith communities in the country.
“My economic model is capitalism,” Abiy Ahmed Ali re-affirms. This means the private sector must play an important role in the economic development plans of the country. Its proximity with the Gulf region, where Islamic banking and finance is a force to reckon with, puts it in an enormously advantageous position to attract foreign direct investment, especially in the financial sector.
This will require Ethiopia to be more visible in and relevant to the Middle East, in general, and the Gulf countries, in particular. After winning the Nobel Peace Prize in 2019, he became a globally recognised and respected politician. However, his reforms agenda centred around the concept of Medemer (i.e., synergy) has yet to take root in the wider Ethiopia. Medemer should be applied comprehensively to include offering choices to all the ethnic and faith-based groups to opt for whatever they deem consistent with their values. Muslims in Ethiopia – comprising a very sizeable minority – has for long demanded the development of Islamic banking and finance (known as ‘interest-free’ banking and finance) in Ethiopia.
WHAT IS MEDEMER?
Dr Abiy Ahmed Ali: “The Medemer reform is people-centred and has three interdependent pillars. The first pillar is [a] vibrant democracy. The second one is economic vitality; and the third pillar is regional integration and openness to the world.” There has been a lot of follow-up debate on Medemer since it was introduced by the Prime Minister Dr Abiy Ahmed Ali as part of his Nobel Peace Prize speech in 2019. The Prime Minister insists that Ethiopians must forge a consensus and forgive the past and build rather than burn bridges between each other. This futuristic approach must be embedded in the practice of interest-free banking in Ethiopia. There is a huge responsibility on the shoulders of those who are running fully-fledged interest-free banks to make the sector all inclusive, without reference to any one particular faith. Interest-free banking must bring benefits to all segments of the Ethiopian society. It should be developed as part of the Prime Minister’s vision of Medemer.
PEACE IS A VERY EXPENSIVE COMMODITY IN MY COUNTRY
WHAT WAS YOUR REACTION TO RECEIVING THE GLOBAL ISLAMIC FINANCE LEADERSHIP AWARD 2022?
Dr Abiy Ahmed Ali: Honoured to receive this award for the miles we are going as a nation to make the sector inclusive.
PM Dr Abiy Ahmed Ali is very careful with the choice of words, as he understands the deep meanings of these. Reference to inclusivity is again to emphasise on Medemer, something very dear to him and he feels passionate about.
GIFA Laureate 2021
His Excellency Ma’ruf Amin, Vice President of the Republic of Indonesia
This year’s top award – GIFA Leadership Award 2021, was bestowed on His Excellency Prof. Dr (HC) KH Ma’ruf Amin, for the Indonesian Government’s efforts in the mission of developing Islamic economics and finance in the country. Indonesia is one of the five out of 135 countries with asset value amounting to US$3 billion. The Government is on the road to strengthening Islamic finance and realising its vision to become a global Islamic financial and economic hub through several initiatives such as, the establishment of Bank Syariah Indonesia (BSI), boosting the halal industry and Shari’a MSMEs.
GIFA Laureate 2020
His Excellency Dr Arif Alvi, President of the Islamic Republic of Pakistan
Pakistan has been playing a highly active role in developing a progressive and steady Shari’a compliant Islamic financial system in the country. With a 17% market share, Islamic banking & finance is progressing at a very stable rate to be the leading choice of financial services for the masses in Pakistan. His Excellency’s support for the government’s decision to convert the government debt to Shari’a-compliant debt was acknowledged as an important step towards the promotion of Islamic Banking and finance in the country. His government has given a boost to the development of a vibrant Islamic capital market in Pakistan by preferring Sukuk over conventional bonds.
GIFA Laureate 2019
His Excellency Matamela Cyril Ramaphosa, President of the Republic of South Africa
GIFA Leadership Award 2019, was bestowed on His Excellency Matamela Cyril Ramaphosa, President of the Republic of South Africa, for his support and efforts to provide a level-playing field to Islamic banking and finance in South Africa. During Mr Ramaphosa’s term as Deputy President, South Africa issued its maiden sovereign sukuk of US$500 million. He established the Cyril Ramaphosa Foundation, focusing on education and small business development. He also sat on the International Commission of Intervention and State Sovereignty and the UN Secretary General’s Panel on International Support to NEPAD.
GIFA Laureate 2018
His Excellency Mr Bakir Izetbegovic, Chairman of the Council of Presidency of the Republic of Bosnia-Herzegovina
The GIFA Leadership Award 2018 was presented to His Excellency Mr Bakir Izetbegovic, Chairman of the Council of Presidency of the Republic of Bosnia- Herzegovina for the great strides his country has made in the field of Islamic banking and finance under his direct patronage. It is due to the keen personal interest taken by President Bakir Izetbegovic that Bosnia and Herzegovina is now serving as a gateway for Islamic banking and finance as well as halal sector to the Southeast Europe region. The award was presented by His Excellency Ismail Omar Guelleh, President of the Republic of Djibouti and GIFA Laureate 2017 and Ms Lisa Doughten, Chief of the United Nations Central Emergency Response Fund (UNCERF) Secretariat.
GIFA Laureate 2017
His Excellency Ismail Omar Guilleh, President of the Republic of Djibouti
The Global Islamic Finance Leadership Award 2017 was presented to His Excellency Ismail Omar Guilleh, President of Djibouti, for the great strides his country has made in the field of Islamic banking and finance under his direct patronage. It is due to the keen personal interest taken by President Guilleh that Djibouti is now serving as a gateway for Islamic banking and finance to the East African region. The award was presented to him by President Nursultan Nazarbayev who himself was GIFA Laureate for 2014.
GIFA Laureate 2016
His Excellency Mr Joko Widodo, President of the. Republic of Indonesia
His Excellency President Joko Widodo was the guest of honour and received the prestigious Global Islamic Finance Leadership Award 2016 for his championship role in promoting Islamic banking and finance in Indonesia. The award was presented to by Emir Muhammadu Sanusi II of Kano who himself was installed as GIFA Laureate 2015 in Bahrain last year. He shared the vision that his government would like to make Indonesia as a global hub of Shari’a tourism in which Islamic finance has to play a lead role.
GIFA Laureate 2015
His Royal Highness Muhammadu Sanusi II, Emir of Kano
The GIFA Laureate this year was His Royal Highness Muhammadu Sanusi II, Emir of Kano, who received GIFLA 2015 for his leadership role in promoting Islamic banking and finance in Nigeria, the greater African continent and worldwide. His Royal Highness specially flew from Makkah to Bahrain to receive the award despite his busy schedule as Amir-ul-Hajj for the Nigerian hujjaj performing pilgrimage.
GIFA Laureate 2014
His Excellency Nursultan Nazarbayev, President of the Republic of Kazakhstan
Receiving the Global Islamic Finance Leadership Award 2014, His Excellency Nursultan Nazarbayev became the fourth GIFA Laureate in the presence of His Royal Highness Sheikh Mohamed Bin Rishid Al Maktoum, Ruler of Dubai and Vice President and Prime Minister of the UAE.
GIFA Laureate 2013
His Excellency Shaukat Aziz, Former Prime Minister of Pakistan
In 2013, GIFA celebrated the championship role played by His Excellency Shaukat Aziz, Former Prime Minister of Pakistan, for overseeing introduction of a dual banking system in Pakistan, which subsequently allowed Islamic banking in the country to capture 11% of the market share.
GIFA Laureate 2012
His Royal Highness Sultan Nazrin Shah, Sultan of Perak, Malaysia
In 2012 at a prestigious GIFA Ceremony held at Royal Chulan Hotel Kuala Lumpur, His Royal Highness Sultan Nazrin Shah, Sultan of Perak, Malaysia became the second GIFA Laureate who received the top award for his advocacy role as Financial Ambassador of Malaysia International Islamic Financial Centre (MIFC).
GIFA Laureate 2011
His Excellency Tun Abdullah Badawi, former Prime Minister of Malaysia
In 2011 on the occasion of the first Oman Islamic Economic Forum held at Muscat, Global Islamic Finance Leadership Award was presented to the first GIFA Laureate, His Excellency Tun Abdullah Badawi, former Prime Minister of Malaysia, for his vision and leadership role in laying the foundations of a comprehensive infrastructure that helped the subsequent Malaysian government to develop Malaysia as a global centre of excellence for Islamic banking and finance.
Financial inclusion allows integration of not only communities, but also brings benefits of growth to the grassroots. In a country of around 118 million people, diversity and inclusion must go hand-in-hand for everyone in the country to benefit from the increase in the size of the pie.
WHAT IS YOUR GOVERNMENT’S POLICY ON WOMEN PARTICIPATION IN THE ECONOMIC ACTIVITIES?
Dr Abiy Ahmed Ali: Today, Ethiopia is one of the two African nations that has attained gender parity in cabinet appointments, and we are one of the ten countries that have done so worldwide.
This should speak for itself when it comes to the government’s policy towards women empowerment. It is not only gender parity that the country has achieved, but its composition reflects on the all-inclusive approach the government has taken in this respect. The women ministers come from different faiths and ethnic backgrounds, ensuring that women participation in government affairs is not tilted in favour of any particular social group.
ETHIOPIANS MUST FORGE A CONSENSUS AND FORGIVE THE PAST AND BUILD RATHER THAN BURN BRIDGES BETWEEN EACH OTHER
From the office of the president to the ministry of defence and other important ministries like trade and industry are held by women. The effects of this government policy are also reflected in the interest-free banking sector as well. The CEO of the first fully-fledged interest-free bank in the country is also a woman.
HOW DO YOU SEE THE ETHIOPIAN INTEREST-FREE BANKING SECTOR?
Dr Abiy Ahmed Ali: The Ethiopian interest-free banking market is now only not competitive but is thriving with close to 14 million customers and growing.
PM Dr Abiy Ahmed Ali chooses his words very carefully. His answer to the question alludes to his government’s policy of allowing interest-free banking as a market phenomenon. The advocates of interest-free banking believe that this is enough, as they don’t demand any special treatment of interest-free banking other than providing it a level-playing field.
Interest-free financial services are among the priorities of the current edition of National Financial Inclusion Strategy. Providing a level-playing field to the providers of interest-free banking is part of a wider agenda of financial inclusion, which the government of PM Dr Abiy Ahmed Ali is pursuing. The strategy has a total number of 11 programmes, of which two are dedicated to interest-free financial services.
One of the programmes focuses on expanding infrastructures that will strengthen the reach of interest-free financial services. Service providers like banks, micro-finance institutions, insurance firms, and leasing companies solely dedicated to interest-free services will be expanding their branches. The National Council for Financial Inclusion, under the secretariat of National Bank of Ethiopia (NBE) is undergoing three main activities under this programme. They are conducting studies on enabling environments, expanding branches of the interest-free financial service providers, and encouraging deposits at interest-free banks.
The other programme is an expansion of the financial services and products under this principle.
As these services are new to the country, more works in terms of regulation and application of financial technology are needed.
These are only a few ideas of PM Dr Abiy Ahmed Ali. If his vision is implemented fully, there is no doubt that Ethiopia will emerge as a major player in the African continent. Interest-free banking could be central to this vision if the global stakeholders in Islamic financial services attempt to engage with this visionary leader.
