ADDIS ABEBA – Governor of the National Bank of Ethiopia, Yinager Dessie, declared the East African nation will not open up the banking sector for foreign investors anytime soon despite its government’s recent reformist moves.
“We have not [got fully operating] international banks here; they are not allowed here because we want to make our local banks strong,” Yinager said in an interview with Financial Times on Monday.
Despite having nearly 20 commercial banks, the state-owned Commercial Bank of Ethiopia (CBE) covers almost 60 percent of the country’s banking activities.
A September research note by credit rating agency Moody’s warned the lack of commercial foreign banks had resulted in a “dominance of state-owned banks”, which account for about three-quarters of Ethiopia’s total banking assets.
Yinager said that although “it will take some time” before foreign banks are permitted to fully operate in Ethiopia, the country’s banking sector “will not be closed all the time”.
He adds that more than a dozen commercial banks are seeking approval to set up shop in Ethiopia where, according to the World Bank, 35 percent of adult Ethiopians held bank accounts in 2017, below the 43 per cent average in sub-Saharan Africa.
“We are encouraging the private sector to [buy into] digital fintech operators. We have recently introduced a directive that allows non-financial institutions to operate,” he continues. “Anyone who fulfils the criteria can be engaged and it is not expected to be a financial institution.”
“Now we are trying to expand this mobile banking, internet banking,” Yinager adds. Last month, the
National Bank gave a greenlight to the national telecom company, Ethio telecom, to start mobile money services after a series of negotiations.
Foreign firms can’t engage in mobile money services, which a recent study conducted by Ethio telecom projects that the country can generate USD 13 billion from mobile money by 2025.
Featured Image: Yinager Dessie, governor of Ethiopia’s central bank: ‘Foreign banks are not allowed here because we want to make our local banks strong’ [Photo Mustafa Kamaci/Getty Images]