ETHIOPIA · BANKING
Key Facts
- —The country Ethiopia, home to about 135 million people, kept foreign banks out from 1975 until a law passed in December 2024.
- —What happened Ethiopia’s central bank is reviewing applications from two foreign banks that want to build fully owned subsidiaries from scratch.
- —Why it matters No foreign commercial bank had opened in Ethiopia by September 2026, almost two years after the law allowed it.
- —The entry ticket A foreign bank subsidiary or branch needs at least 5 billion birr (US$31 million) in capital.
- —The catch The regulator did not name the two banks or say when they might receive licences.
- —What it means for you For investors, it is an early sign that Ethiopia’s banking opening is moving from paper into practice.
Two foreign banks have applied to open fully owned banks in Ethiopia, the country’s central bank has confirmed. Both want to build new operations from scratch rather than buy into existing Ethiopian lenders.
Frezer Ayalew, banking supervision director at the National Bank of Ethiopia (NBE), disclosed the applications at a forum in Addis Ababa. The Reporter and Capital, two Addis Ababa weeklies, reported his remarks on Saturday 3 October and Sunday 4 October.
What Ethiopia’s Central Bank Said
“Currently, there are two foreign bank applicants whose applications are being processed by the central bank,” Frezer said, according to Capital. Both have chosen what bankers call a greenfield entry, meaning a new bank built from the ground up.
According to The Reporter, both want subsidiaries that they will own 100 percent. Frezer spoke on a panel at the second Ethiopia Finance Forum, held from Tuesday 29 September to Thursday 1 October.
The forum took place at the Adwa Victory Memorial Museum in Addis Ababa, the capital. Frezer declined to name the applicants or say when they might start operating.
Several other foreign banks are studying stakes in existing Ethiopian banks instead, The Reporter wrote. “We hope that in the very near future, we will see new institutions operating within our financial system,” Frezer said.
Why the Banks Chose to Build From Scratch
Ethiopia now lets foreign banks in through several doors. They can open fully or partly owned subsidiaries, open branches, or buy shares in local banks, Capital reported.
Buying into an Ethiopian bank comes with caps. Under the central bank’s licensing rules, total foreign ownership of such a bank may not exceed 49%.
A single strategic investor, such as a reputable foreign bank, may hold up to 40%, Capital reported. A bank built from scratch avoids those limits and can be fully foreign-owned.
Stanbic Bank, part of South Africa’s Standard Bank Group, has said it is weighing that route. Its regional chief executive, Joshua Oigara, said so in June 2026, the Kenyan business site Khusoko reported.
Stanbic usually enters new markets as a large owner, Oigara said. In his words, “a minority position is always going to be a difficult point to start with.”
Kenya’s NCBA Group would rather buy an existing bank, its managing director John Gachora said, according to Capital. “I do not believe at this point, given where banking is, that green fields work,” he said.
What Foreign Banks Must Bring
A foreign bank setting up a subsidiary or branch must put in at least 5 billion birr (US$31 million) of capital. The conversion uses about 161.5 birr to the US dollar on 5 October 2026.
Under the central bank’s licensing directive, that money must be paid in foreign currency. Applicants also need a no-objection letter from their home regulator confirming the bank is in good financial standing.
The licence review covers governance, capital strength, financial soundness, compliance and the value each bank would bring, according to Capital. Frezer said the central bank stands ready to amend its rules as the market develops, with some operational directives already under review.
How Ethiopia Kept Foreign Banks Out for Half a Century
Ethiopia’s banks were nationalised in 1975 by the Derg, the military regime that took power in the 1974 revolution. After the Derg fell in 1991, private banks returned from 1994, but only Ethiopian citizens could own them.
Parliament approved a law opening the sector to foreign banks on Tuesday 17 December 2024. At the time, some opposition lawmakers warned that young private Ethiopian banks lacked the capital to compete, the news site Borkena reported.
Yet no foreign commercial bank had begun operating in Ethiopia as of September 2026, according to Capital. The opening is part of wider reforms that include letting the birr, Ethiopia’s currency, float in July 2024.
That float came with an IMF-backed programme, covered in Ethiopia Economy Battles 161 Birr Dollar as IMF Lifeline Grows. On the forum’s first day, central bank governor Eyob Tekalign said banks should take a bigger role in financing the economy.
More capital, mergers and foreign banks are part of that push, he told reporters, the broadcaster Fana reported. “The Central Bank will be focused on creating a very strong, vibrant financial sector,” he said.
What It Means for US Readers
For American investors, the applications are a concrete sign that Ethiopia’s banking opening is moving from law into practice. The country has about 135 million people, the World Bank estimates, and its banks have long been shielded from outside competition.
Martin Rohner heads the Global Alliance for Banking on Values, a network of lenders. He told the state news agency ENA that foreign entrants could make local banks more dynamic.
For now, no foreign commercial bank operates in Ethiopia. Firms, residents and visitors still rely on Ethiopian banks.
The news does not mean foreign banks are about to open branches in Addis Ababa. The two applications are still under review, and the regulator has given no timetable.
Readers new to the country can find background in Ethiopia Explained: The Country, Abiy’s Reforms, the Economy and What to Watch.
What Is Not Known
The names of the two applicants have not been disclosed. Kenya’s KCB Group and South Africa’s Standard Bank have long signalled interest, The Reporter noted.
The central bank has not said whether either one applied. It is also unclear when licences will be granted.
Confidence in the wider reforms is another open question. In a June 2026 survey by the Ethiopian Economics Association, 56.4% of 266 economists doubted the birr float would last.
The Ethiopian Business Review reported the findings on Saturday 3 October. Renewed armed conflict in northern Ethiopia adds a further risk for any long-term investor.
What Comes Next
The central bank is finalising a financial-sector roadmap covering the next five to ten years, Capital reported. Several foreign banks are still doing due diligence on stakes in local lenders.
The next milestone would be a first licence for one of the two applicants. Until then, the applications signal intent rather than a change in the market.
More: Ethiopia news in English, every day from The Rio Times.
Can foreign banks operate in Ethiopia?
Yes, legally. A law approved in December 2024 lets foreign banks open subsidiaries, branches or representative offices, or buy shares in local banks. No foreign commercial bank had begun operating by September 2026.
Which foreign banks have applied to enter Ethiopia?
The National Bank of Ethiopia has not named the two applicants. Kenya’s KCB Group and South Africa’s Standard Bank have long signalled interest, but neither has been confirmed as an applicant.
How much capital does a foreign bank need to open in Ethiopia?
At least 5 billion birr (US$31 million) for a subsidiary or branch, paid in foreign currency. Applicants also need a no-objection letter from their home regulator confirming the bank is in good financial standing.
How much of an Ethiopian bank can foreigners own?
A single strategic investor, such as a reputable foreign bank, can hold up to 40% of an Ethiopian bank. Total foreign ownership is capped at 49%. A foreign bank that builds a new bank from scratch can own all of it.
Why did Ethiopia keep foreign banks out for so long?
The Derg military regime nationalised the banks in 1975. Private banks returned from 1994, but only Ethiopians could own them until the 2024 law.
Sources: Capital (Addis Ababa), “Two foreign banks apply to enter Ethiopia through greenfield investments”, 4 October 2026; The Reporter (Addis Ababa), “Central Bank Weighs Greenfield Entry for First Fully Owned Foreign Banks”, 3 October 2026; Capital, “NCBA target Ethiopia as next major regional expansion market”, 3 October 2026; National Bank of Ethiopia, Directive No. SBB/94/2025, Requirements for Licensing and Renewal of Banking Business and Representative Office, 25 June 2025; Fana Media Corporation, NBE governor at the Ethiopia Finance Forum, 29 September 2026; Ethiopian News Agency (ENA), interview with Martin Rohner, 2 October 2026; Ethiopian Business Review, EEA survey on the birr float, 3 October 2026; Khusoko, Stanbic weighs greenfield entry into Ethiopia, 9 June 2026; Borkena, Ethiopian parliament approves law allowing foreign banks, 17 December 2024; World Bank, Ethiopia population (SP.POP.TOTL), 2025.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.