NBE announce 4 preconditions for foreign banks seeking to start services in Ethiopia

Addis Ababa, November 12, 2022 (FBC) – The National Bank of Ethiopia (NBE) has announced four preconditions for foreign banks that seek to begin services in the country.

NBE revealed that the process of opening up the banking sector to foreign investors will start only with a limited number of foreign banks.

According to the Deputy Governor of Financial Institutions Supervision of the National Bank of Ethiopia, Solomon Desta, the capital brought by foreign banks will alleviate the shortage of foreign currency in Ethiopia and create a favorable environment for further investment.

He pointed out that the government will not entertain requests and grant licenses to all foreign banks that come to participate in the banking sector in Ethiopia.

Hence, NBE set the following four preconditions for foreign banks wishing to open services in Ethiopia.

The first condition, according to the Deputy Governor, is foreign bank who can get a license are banks that request to establish a subsidiary bank and branch in Ethiopia and buy up to 40 percent of shares from local banks.

Apart from services, especially for agriculture, housing and other infrastructure construction, as well as for rural areas, the benefits of banks that dream of providing various services will be significant.

He pointed out that if foreign banks that meet the four conditions come in to invest, they will contribute greatly to Ethiopia’s financial sector.

He indicated that as foreign banks come with good fortune, there will be risks. Until the experience in the sector is developed, NBE will work diligently by limiting the number of foreign banks entering the country and doing the necessary monitoring.

It is to be recalled that on September 3, 2022 the Council of Ministers, on its regular session, approved a system that allows foreign banks to start services and join the banking sector in Ethiopia.