Ethiopia, sub-Saharan Africa’s second most populous country, is slowly but cautiously opening up it’s financial sector to regional banks as it seeks to increase competition in the local market.
The country of more than 96 million people is one of the world’s poorest, but has seen an average economic growth rate of above 8 percent over the last decade as the country recovered from some of the worst famines ever seen.
Less than 15 percent of the East African nation’s population has access to a bank account.
Kenya’s KCB Group and South Africa’s Standard Bank, both the largest banks by assets in their home country, on Thursday announced that the Ethiopian government had allowed them to set up representative offices.
Another bank that has been eyeing Ethiopia’s untapped banking market include Equity Bank, which had built the largest financial institution in terms of customers in the region by targeting low income earners.
Executives from General Electric , Dow Chemical, Standard Bank Group and MasterCard, attending a recent World Economic Forum on Africa gathering in Cape Town,singled out the Ethiopia as a market with strong potential for investment, Bloomberg reported.
“It’s got a government that is managing economic development in a very deliberate, cautious manner,” Ross McLean, Dow’s president for sub-Saharan Africa, told Bloomberg.
“It hasn’t urbanized like other African countries, but it’s going to. It’s a very exciting place.”
Ethiopia is looking at countries like Kenya, where a mobile phone revolution has increased financial inclusion to over 80 percent of the population, to help it open up its financial sector.
The country’s Prime Minister Hailemariam Desalegn visited Kenya largest telecoms company and the pioneer of mobile money, Safaricom, in 2012 in an effort to understand the system works and find feature he could export to his people.
Most banks in Ethiopia are state-owned and for a while the country has been closed off from foreign banks seeking to venture into its fast growing market.
The country is however now courting foreign investors from as far as China and Europe to participate in the growth story of one of the continent’s fast emerging economies.
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