Barely 2 months after Equity Bank revealed its intentions to expand into the Ethiopian banking sector, the group has been granted a license to open a representative office in Addis Ababa, with full operations set to commence in July.
The regional bank has so far proven its commitment to economic reforms that will be both beneficial to the Organization as well as the country of interest. The Kenyan Bank which also just took a step into the banking sector of Zambia and Mozambique is expanding into Ethiopia.
“Having completed Phase One of our expansion, the entry into Ethiopia is part of our Phase Two expansion in pursuit of our aspirations of being a Pan African bank with a presence in 10 African countries by the end of the year. This will enable the Bank to continue to scale up and unlock economies of scale especially in this era of digitalization and virtualization of banking,” said Equity Group CEO and MD, Dr James Mwangi.
This decision is coming after Ethiopia’s Prime Minister announced a move towards liberalizing various sectors of the economy against its initial state of privatization. Prior to this reform, every industry in the country was controlled by the government.
Furthermore, a report by the International Monetary Fund (IMF) has described the eastern state has the fastest growing economy in Sub-Saharan Africa. Therefore, Equity’s choice of the Ethiopian market may be described as deliberate. This projected growth has foreign investors eyeing the ‘Unexploited’ market.
The Equity Group will not be the first financial institution exploring the new market, ABSA, a South African based service provider, in the past has indicated interest in Ethiopia. Egypt’s Commercial International Bank (CIB) has equally made an entry into the Horn of Africa.
At the moment, Ethiopia which has has been granted a license to 18 commercial banks might still need to create room for more. Reuters reports that Kenya’s KCB Group is also gearing towards a partnership with a local bank in the country.