After 30 years of barring foreigners from its banking sector, Ethiopia is reportedly considering allowing overseas banks to buy stakes in domestic lenders.
A bill moving through the country’s legislature would allow overseas firms to buy stakes in domestic banks, set up subsidiaries, open branches, establish representative offices and, in some cases, take over a distressed domestic lender, Bloomberg reported Friday (June 14).
The bill requires that direct shareholding by a strategic foreign investor be limited to 30%, that the total holdings by non-citizens and foreign-owned companies be limited to 40%, and that investments be made only in foreign currency, according to the report.
The National Bank of Ethiopia outlined the plan in a Friday press release shared in a post on LinkedIn.
“These legislations represent a significant step in laying a strong foundation for growth and enhancing the credibility, accountability, transparency and governance of the National Bank of Ethiopia,” the bank said in the release.
The bill was approved by Ethiopia’s Council of Ministers but still needs to be approved by lawmakers, according to the Bloomberg report.
Ethiopia aims to attract foreign investment and rebuild the country after a two-year internal conflict that was resolved in 2022, the report said.
The country has seen its foreign exchange reserves plummet, and it became a sovereign defaulter in December, per the report.
In an earlier development in the country, Kenyan telecom Safaricom took its mobile money service M-Pesa to Ethiopia in August, with Safaricom CEO Peter Ndegwa saying at the time that “the opportunity is massive.”
Ethiopia is Africa’s second-most populous country.
It was reported at the time that Safaricom was Ethiopia’s first private telecom company, operating in a country widely seen as a key market for telecom firms and a difficult one to access thanks to the nation’s history of government control of industries like banking.
In other news from the country, it was reported in March that a banking glitch at the state-owned Commercial Bank of Ethiopia let customers withdraw unlimited funds and left the bank trying to recover the over $40 million that was withdrawn or transferred to other banks during the incident.
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