Ethiopia has enacted legislation that opens its banking sector to foreign institutions for the first time in approximately half a century. The Ethiopian Parliament approved Banking Business Proclamation No. 1360/2024 on 17 December 2024, authorising foreign banks to enter the market through three distinct routes: establishing a locally incorporated subsidiary, operating a branch, or acquiring a stake in an existing domestic bank. The law replaces the previous Banking Business Proclamation No. 592/2008, which had confined the sector to Ethiopian nationals and domestically owned entities (and, from 2019, foreign nationals of Ethiopian origin).
The precise conditions under which foreign banks may operate will be determined through directives to be issued by the National Bank of Ethiopia.
NBE TO SET CAPITAL AND GOVERNANCE RULES
The proclamation tasks the National Bank of Ethiopia with issuing implementing directives that will specify minimum capital requirements for foreign bank entrants, permissible activities, and rules on board composition.
Foreign equity stakes in domestic banks are limited to up to 40% for a strategic investor, with total foreign ownership capped at 49%.
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