Ethiopia passes law allowing foreign banks to operate

As reported by CNBC Africa

Summary

• Ethiopia has opened its banking sector to foreign competition under new legislation passed by parliament, marking a historic shift in the country's financial sector policy.
• The new law allows foreign banks to establish operations in Ethiopia through subsidiaries, branches, or by acquiring stakes in local banks, subject to a 40% ownership cap for equity investments in existing institutions.
• The Commercial Bank of Ethiopia (CBE) continues to dominate the sector, with the country's 31 commercial banks collectively serving a large and largely underbanked population.
• The 40% cap on foreign ownership in local banks is designed to ensure that domestic institutions retain control while still benefiting from foreign capital, expertise, and technology transfer.
• The reforms are expected to increase competition, improve service quality, and support the development of Ethiopia's financial sector as the economy continues to grow and integrate with global markets.
• BirrValue review: For FX and remittance users, local banks still drive rates. Compare CBE, Awash, Dashen, and others on BirrValue—competition from foreign banks will evolve over years.