The National Bank of Ethiopia (NBE) said that preparations to open up the banking industry for foreign financial institutions is in progress.
The latest push is a part of government’s reform that is opening previously state-controlled sectors to overseas investors to boost the inflow of foreign capital.
The plan to allow foreign financial institutions work in Ethiopia was first announced by Prime Minister Abiy Ahmed last February, telling local banks to get ready for foreign competition.
On Wednesday, NBE Supervision Director Frazer Ayalew told local broadcaster FBC that preparations are being made for foreign financial institutions to enter the sector in line with international experience.
These preparations will enable to introduce advanced changes in the law and regulatory system, Frezer said.
Opening up the sector will help to attract investment, boost foreign exchange, provide sufficient credit in any sector of the country, and make the banking system more advanced and competitive, central Bank officials say.
The banking sector has also shown a strong growth in the last four years, as per NBE report.
Currently, there are 30 banks, including two of state-owned, with a network of 8,944 branches across the country.
Their cumulative annual net profit has jumped by 122% to 49.9 billion Birr in the recently concluded financial year as compared to 2019.
They now have a total capital of 199.1 billion Birr in 2022, up from 98.9 billion four years ago, and shown a 27 percent average growth annually.
The fact that Ethiopia has closed its doors to foreign banks has benefited the sector until now, Abiy told lawmakers in February.
“But after this, banks need to prepare themselves with modern ways and information technologies,” Abiy added.
