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Ethiopian legislators have approved a long-anticipated law permitting foreign banks to operate within the country as part of the government’s efforts to draw in more foreign investments.
Ethiopia possesses one of the largest economies in sub-Saharan Africa and, with over 120 million people, ranks as the continent’s second-most populous country.
Prime Minister Abiy Ahmed has aimed to liberalize the nation’s tightly regulated economy since he assumed office in 2018.
The new legislation, approved by Parliament on Tuesday, permits foreign financial institutions to set up subsidiaries, establish branches or representative offices, and acquire shares in domestic banks. However, it restricts foreign strategic investors, limiting their ownership stake to 40% in any local bank.
The Commercial Bank of Ethiopia, which is state-owned, currently holds a dominant position in the country’s banking sector.
