Kenya’s biggest bank is waiting eagerly for Ethiopia to open its closely guarded financial services sector as new Prime Minister Abiy Ahmed warms up to foreign investment in ongoing market reforms
KCB Group Ltd. set up a representative office in Addis Ababa, the Ethiopian capital, in 2015 to position itself for when Africa’s fastest-growing economy finally relaxes its policy toward external investment in key industries, Chief Executive Officer Joshua Oigara said. It might not have to wait much longer.
Ethiopia’s banking industry has been closed to investors since a Marxist junta nationalised banks four decades ago.
“Ethiopia is a very exciting market today and the level of financial inclusion is relatively low,” Oigara, 43, said Wednesday in an interview in Nairobi, the capital of neighboring Kenya. “I see a country that is ready for a major take-off in terms of infrastructure, economy etc.”
Ethiopia has 18 commercial banks serving 102.4 million people, according to the National Bank of Ethiopia’s annual report. Commercial Bank of Ethiopia, one of two state-owned lenders, held assets worth 485.7 billion birr ($17.6 billion) and caters to 15.9 million customers, according to its website. In comparison, KCB’s assets total 555.6 billion shillings ($5.5 billion).
Ethiopia’s Abiy said this month the government would sell as much as 40 per cent in the state-controlled Ethiopian Telecommunications Corp. monopoly, part of a raft of political and economic reforms to open up the country’s economy. The International Monetary Fund projects economic growth at 8.5 per cent this year.
“We are very much confident that between now and the next two years we’ll have an opportunity,” Oigara said. “Our focus is clients conducting business with Ethiopia from the Eastern Africa region.”
KCB has operations in at least seven East African nations including war-battered South Sudan.
The outlook for foreign investment in Ethiopia will improve in the near-to-medium-term, according to DaMina Advisors LLP. FDI is expected to reach $7.3 billion within five years, surpassing South Africa and Nigeria, the Mississauga, Canada-based consultancy said.