Ethiopia Lift Restrictions on KCB and Equity Bank

Ethiopia announced plans on Tuesday to relax restrictions on foreign banks investing in the country, making it easier for Kenyan lenders to set up shop in the populous country.

Ethiopian Prime Minister Abiy Ahmed stated that the country’s banking industry would be open to foreign competition as soon as parliament passed policies allowing it.

“We will bring foreign banks because we need more wealth and hard currency,” he said, according to local media.

“In this regard, the government is currently preparing… a policy amendment.” We will (implement) that once the prerequisites are met and the banks are ready.”

He did not, however, provide a timetable for easing restrictions.

Furthermore, Ethiopia currently has 18 commercial lenders, two of which are state-owned, according to the central bank.

Because of the country’s large population, Kenyan banks have had their sights set on the Ethiopian market for years.

Its 110 million-person population, the second-largest in Africa after Nigeria, provides enormous business opportunities.

Fewer than 15% of Ethiopians have bank accounts, highlighting the opportunity for foreign lenders.

In 2015, KCB Group established a representative office in Addis Abeba to be ready in the market when opportunities arise. Equity then followed suit, establishing a representative office in Addis Abeba in 2019.

This followed a 2012 agreement that allowed Kenyan banks to open representative offices in Ethiopia but prohibited full banking operations for direct lending and deposit-taking.

Kenyan banks, on the other hand, have aggressively opened subsidiaries in South Sudan, Uganda, Tanzania, Rwanda, and Burundi in the last decade to reduce their reliance on the domestic market.

KCB Group CEO Joshua Oigara previously stated that if Ethiopia’s economy were liberalized and foreign banks were allowed to invest, KCB would consider collaborating with a local bank.

Alternatively, he suggested that the bank establish a separate business.