Central bank Governor Mamo Mihretu told a gathering of African finance professionals that he expects Parliament to ratify a pivotal bill permitting foreign banks to enter the Ethiopian market in the coming week.
The announcement came during the Africa Financial Summit (AFIS 2024), which took place this week in Casablanca, Morocco. Pressed for a timeline for Ethiopia’s impending banking liberalization, the Governor told summit attendees that legislative preparations would be finalized very soon.
“We have been working on it for the past year, and next week it will be ratified,” said Mamo, emphasizing the significance of the upcoming legislation. “For any bank that wants to explore the largest economy in East Africa, a country of 120 million people is open to business. This is the historic liberalization of the Ethiopian economy to foreign investment.”
Ethiopia’s banking industry, recognized as one of Africa’s last finance frontiers, is poised for transformation as the Governor briefed a gathering of prominent African bank executives about the country’s substantial growth and untapped opportunities for foreign investment and innovation.
The draft Banking Business Proclamation, which was approved by the cabinet in June this year, is under review by lawmakers. Last month, the parliamentary committee for Planning, Budget and Financial Affairs conducted its first round of discussions on the proposed amendments.
If ratified, it would pave the way for foreign lenders to establish local subsidiaries and acquire stakes in domestic banks. The legislation would allow them to operate branches, purchase shares, and employ foreign nationals in senior roles while ensuring that Ethiopian residents are included on their boards.
The proclamation would enable the government to issue up to five new banking licenses to foreign institutions. Foreign companies that have expressed interest include Kenya’s KCB Bank and Standard Bank.
The National Bank of Ethiopia (NBE) Governor hopes to see recent economic reforms encourage other investors to join. He presented a promising report on the fiscal, monetary, external, and financial during a briefing at the summit in Morocco.
The summit drew over 1,000 leaders from the financial sector, including bankers, insurers, fintech innovators, and regulators, to foster dialogue and collaboration on the continent’s economic future and the evolving landscape of financial services.
