Ethiopia’s central bank has officially announced that foreign banks can now apply for licences to operate in the country, marking a significant shift in the nation’s tightly controlled financial sector.
The move comes months after Ethiopia’s Parliament passed a landmark banking law in December 2024, allowing foreign-owned banks to establish subsidiaries, branches, and representative offices, or buy stakes in local lenders.
According to the National Bank of Ethiopia (NBE), interested foreign banks must meet strict requirements, including a minimum paid-up capital of 5 billion birr (approximately $38 million). Licensing fees are set at 200,000 birr for investigation and 600,000 birr for application, with an annual renewal fee of 400,000 birr.
The new framework also places limits on ownership: a single strategic investor can own up to 40 percent of a local bank, while total foreign ownership is capped at 49 percent. In addition, all subsidiaries must have at least one-third of their board composed of Ethiopian nationals, while representative offices will be restricted to non-banking promotional functions.
“This is a carefully designed policy to attract capital, technology, and expertise, while still protecting the interests of local banks and the broader economy,” the central bank said in a statement.
The liberalization is part of a wider economic reform agenda under Prime Minister Abiy Ahmed’s administration, which also includes the privatization of state-owned enterprises, the launch of Ethiopia’s first stock exchange, and ongoing negotiations with the International Monetary Fund.
The NBE’s announcement has already sparked interest across the region, with analysts predicting that major African banks like Kenya’s Equity Bank and South Africa’s Standard Bank could be among the first to enter the market.
Industry experts view the move as a critical step toward modernizing Ethiopia’s financial system, expanding access to banking services, and increasing foreign direct investment. However, some economists warn that the central bank must strengthen regulatory capacity to manage risks associated with increased foreign participation.
Applications for foreign banking licences are now open, with approvals expected to begin rolling out in the coming months.
