Ethiopian lawmakers have approved long-awaited legislation to allow foreign banks to operate in the country, a significant step toward economic liberalization.
Why it matters
The move aims to attract foreign investment and modernize Ethiopia’s banking sector, which has been tightly controlled for decades.
With over 120 million people, Ethiopia is Africa’s second-most populous country and one of its largest economies.
Details
- The new law permits foreign banks to establish subsidiaries, open branches or representative offices, and invest in local banks.
- Foreign strategic investors are capped at a 40% ownership stake in any local bank.
Context
Prime Minister Abiy Ahmed has championed economic reforms since 2018, including privatization and liberalization initiatives.
Ethiopia’s banking sector is currently dominated by the state-owned Commercial Bank of Ethiopia.
The big picture
The legislation is part of a broader effort to attract global players and integrate Ethiopia’s economy into international markets.
Source: Semafor
