Ethiopia is preparing to open its banking sector to foreign competition for the first time in its history. Reports indicate that a new law, currently under review in parliament, is expected to be enacted next month.
This significant decision is anticipated to bring transformative changes to Ethiopia’s economy, aiming to enhance competition, improve service delivery, and attract foreign investment. It forms part of broader macroeconomic reforms initiated by the Ethiopian government and the National Bank to modernize the financial sector and create a more conducive environment for domestic and international trade.
The entry of foreign banks is expected to introduce better services and products, though it may also bring challenges to the local banking landscape. The new legislation is designed to address historical barriers that have kept foreign entities out of Ethiopia’s banking industry. By allowing foreign banks to partner with local institutions, the government seeks to leverage global expertise and capital to boost innovation and financial inclusion.
During a recent event organized by the European Business Council in Ethiopia (EuroCham), National Bank Governor Mamo Mihretu emphasized the critical role of these reforms in making Ethiopia’s economy globally competitive. He highlighted that the private sector, especially foreign businesses, plays a vital role in driving economic growth and fostering development.
The upcoming changes are expected to create opportunities for better financial services, increased foreign direct investment, and stronger integration of Ethiopia into the global economy. However, as the law takes effect, stakeholders will closely monitor its impact on local banks and the broader financial ecosystem.
Source: Capital
