Ethiopia passes law to Open Banking to foreign competition

Following this announcement, Ethiopia's parliament aims to accelerate its efforts to attract more overseas investments in order to accelerate development and optimise competitiveness in the market. 

The country has been gradually opening up its controlled economy, aiming to allow customers and companies from other geographical areas to operate in the region. 

More information on the announcement

According to officials of the company, the parliament backed the law, although a handful of opposition lawmakers also expressed concern that local banks and financial institutions would not be able to compete with foreign competitors. At the same time, it was also mentioned that the competition will also strengthen local lenders and accelerate the development of the local landscape. 

The financial institution also secured an International Monetary Fund support programme in July 2024, following the decision to approve the draft law, which took place in June. This allowed foreign banks and financial institutions to establish subsidiaries, open branches or representative offices, as well as buy shares in local banks. Through this initiative, ownership of local banks by foreign strategic investors is expected to be capped at 40%. Ethiopia's banking sector is currently dominated by the state-owned Commercial Bank of Ethiopia.

The institution will focus on meeting the needs, preferences, and demands of clients and users in an ever-evolving market, while prioritising the process of remaining compliant with the regulatory requirements and laws of the industry as well.