According to news reports, Ethiopia’s government will be introducing a new code guiding the country’s banking sector which is expected to allow the opening up of the financial industry.
Ethiopia, whose economy grew by at an average rate of 10% before the pandemic in 2020, has had its market coveted by leading firms across the continent and region, but the government has always been keen on protecting the market for local growth.
However, in recent years there has been a shift, particularly when the Ethiopian government granted two new spectrum licenses in a bid to liberalize the long-restricted sector in 2021.
A 40% stake in state-owned Ethio Telecom – the sole mobile services provider in a country of 112 million people – was also put up for sale as mobile network operators hunted for exposure to one of Africa’s final frontiers of potential growth.
Kenya’s Safaricom has since won one of the licenses and is in the process of establishing a mobile operations service as well as its mobile money service, M-PESA, in the country.
The potential for mobile money, and by extension, banking services in Ethiopia, can be seen by looking at the impresive stats on Ethio Telecom growth below:
50.7 million subscribers
$604 million revenue in H2, 2020
21 milion users expected to use Telebirr in the first year of operations
33 million people expected to use Telebirr in the next 5 years
The latest move to liberalize the banking sector is another opportunity that companies and startups across the continent are looking out for with two of Kenya’s leading banking institutions, KCB and Equity Bank, having shown intentions to venture into the large market.
Currently, at least 18 commercial banks are reportedly operating in Ethiopia’s banking sector, including:
National Bank of Ethiopia (Apex)
Cooperative Bank of Oromia
Bank of Abyssinia
Commercial Bank of Ethiopia (CBE)
Development Bank of Ethiopia
A Committee picked to liberalize Ethiopia’s banking sector has already hit the ground running to amend the country’s moribund financial code that has been in place for the past half a century.
The new Financial Service Code will determine engagement modalities of foreign banks in Ethiopia’s financial industry.