The National Bank of Ethiopia (NBE) announced that the banking sector would be opened to foreign banks on a gradual process as a mechanism to cope with the possible challenges the opening of the financial sector would bring. According to Solomon Desta, NBE’s Financial Institutions Supervision Deputy Governor, the gradual opening of the sector will provide Ethiopia with the opportunity to learn and gain enough experience while local banks raise competitive capacity.

Initially, licenses will be given to banks that want to open a branch office or a subsidiary or buy 40% stake in local banks.

Foreign banks will be allowed to open limited branches. NBE is working on capacity building, training, strengthening cyber security, financial stability frameworks, and supervision and monitoring mechanisms.

The Reporter, the largest English Newspaper in Ethiopia, reported on November 06 citing the draft policy which is not yet public that only 3 up to 5 licenses would be given to foreign banks within the next five years. It also wrote that the banks that would be allowed to join the Ethiopian financial market would be allowed to open a maximum of four branches in the country.

Solomon Desta said that NBE would focus on the good experience the foreign banks would bring and work to reduce the consequential damages the invitation of foreign financial companies to the sector would create.

Source: Ethiopian News Agency

Additional source: The Reporter