Ethiopia plans to issue up to five banking licenses to foreign investors over the next five years as part of the government’s efforts to open up the financial services sector to foreign competition. The move is expected to boost foreign investment inflows and economic growth in the country.
Currently, Ethiopia’s banking industry is dominated by the state-owned Commercial Bank of Ethiopia, and all 29 players in the sector are locally owned. However, with the issuance of new licenses, foreign investors will have the opportunity to enter the industry either by forming joint ventures with domestic players or establishing local subsidiaries.
The central bank’s vice governor, Solomon Desta, confirmed that three to five banking licenses would be issued within the next five years. This is in line with Prime Minister Abiy Ahmed’s government’s commitment to opening up sectors previously controlled by state firms.
Besides being interested in banking licenses, foreign investors have long paid attention to sectors such as telecoms, transportation, and aviation in Ethiopia, which is one of the biggest economies in Sub-Saharan Africa and has a population of over 100 million people.
Two years ago, Ethiopia’s government granted a telecoms license to a private operator to break the monopoly of state-owned Ethio Telecom in that sector. A consortium led by Kenya’s Safaricom, Vodafone, and Japan’s Sumitomo paid $850 million for the license.
In addition to the banking licenses, Ethiopia has launched a tender process to sell a 45% stake in Ethio Telecom and issue a third telecom license. These efforts are part of the government’s commitment to liberalizing the economy, attracting foreign investors, and creating more jobs for its citizens.
The issuance of new banking licenses to foreign investors is a significant step towards promoting competition in Ethiopia’s banking sector, fostering innovation, and driving economic growth.
