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Investing in Development Bank Bond (Directive No. 826/2021)

National Bank Of Ethiopia826/2021

Summary

This directive establishes the 'Investing in Development Bank Bond Directive No. 826/2021' to facilitate the issuance of Development Bank Bonds by the Development Bank of Ethiopia to support economic growth. It mandates that insurance and reinsurance companies invest a minimum of 15% of their net income in these bonds within 90 days of their financial year-end.

Who's affected

Insurance companies and Ethiopian reinsurance companies.

Action required

Insurance and reinsurance companies must invest a minimum of 15% of their net income in Development Bank Bonds within 90 days after the close of their financial year.

Key points

5
  • Mandates insurance and reinsurance companies to invest 15% of net income in Development Bank Bonds.
  • Investment must be made within 90 days of financial year-end.
  • Bonds have a 3-year maturity and an interest rate 2% above savings deposit rates.
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    • Annual interest payment on bonds.
    • Directive supports economic growth by facilitating Development Bank Bond issuance.

Requirements

5
  • An insurance or Ethiopian reinsurance company shall invest an amount equivalent to a minimum of 15% of its net income in Development Bank Bond.
  • An insurance or Ethiopian reinsurance company shall invest the amount stated under sub article 4.1 within 90 days after the close of its financial year.
  • Development Bank Bond shall have a maturity period of three years starting from the issue date.
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    • Development Bank Bond shall pay a bond rate at least 2 percentage points higher than the minimum interest rate paid on saving deposit at the time of issuance.
    • Interest on Development Bank Bond shall be paid annually.

Objectives

2
  • To facilitate the issuance of Development Bank Bond by the Development Bank of Ethiopia.
  • To support the country's economic growth.

Organizations

3
  • National Bank of Ethiopia
  • Development Bank of Ethiopia
  • Federal Government of Ethiopia

Legal references

2
  • Insurance Business Proclamation No. 746/2012
  • Insurance Business (Amendment) Proclamation No.1163/2019
Original sourcehttps://justice.gov.et/en/directives/investing-in-development-bank-bond-directive-no-826-2021/
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