Opens up banking sector to FDI
12 Mar 2025
On 12 March 2025, Ethiopia adopted Proclamation No. 1360/2025 on Banking Business. It permits foreign banks to enter the Ethiopian market by establishing subsidiaries, branches or representative offices, or by acquiring shares in Ethiopian banks. Under the previous law (Proclamation No. 592/2008), the sector was entirely closed to foreign banks: only banks wholly owned by Ethiopian nationals (individuals or companies) could be licensed, and foreign entities were prohibited from opening branches, subsidiaries or investing in domestic banks.
Foreign ownership is now permitted, subject to the following limits: up to 40 per cent for a single strategic investor, 10 per cent for a foreign juridical person, 7 per cent for a foreign individual, and a cumulative foreign ownership cap of 49 per cent per domestic bank.
Strategic investor is defined as “a foreign bank or a bank group with in-built good reputation in its country of incorporation or owned by the government of the country where it was incorporated, or [an] international development finance institution, private equity fund or other similar entities to be determined by the National Bank directive”.
Nature of measure:
Type:
-
Entry and establishment (Ownership and control)
Industry:
-
Services (Financial and insurance activities)
Inward FDI:
Yes
Outward FDI:
No
Sources:
