Ethiopia is finally ready to end its restrictive banking policy which has prevented foreign banks from investing and setting up operations in the Horn of Africa country.
Prime Minister Abiy Ahmed disclosed on Tuesday, February 22nd, that plans are underway to open up the country’s banking sector so that foreign players can set up operations and compete with the 18 local banks currently operating in the country.
“We will bring 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,” he said, as quoted by local media.
Back in 2018, the Ethiopian Prime Minister first announced his intention to reform and open the country’s banking and telecom sectors to foreign investors. Apparently, he recognised that these are two important sectors that could potentially contribute much more to the country’s GDP, provided the right investments are made.
Consequently, the reforms began in 2021 with the telecom sector. Business Insider Africa reported that a consortium led by Safaricom (and consisted of Vodacom, Vodafone and Sumitomo) had won a telecom licence to operate in the country. The consortium is now set to become the second telecom operator in the country besides state-owned Ethio Telecom.
Right now, the impending banking reform in Ethiopia presents an opportunity for some of Africa’s biggest banks to position themselves in the Horn of Africa country.
As you may well know, Ethiopia is the second most populous country in Africa with an estimated population of 110 million. Interestingly, only about 20% of Ethiopians own bank accounts, according to the World Bank. This is a problematic reality that also presents immense opportunities for investors to ensure that more people are financially included, whilst creating wealth in the process.