Kenya Commercial Bank (KCB) Group Limited is poised to become the first foreign banking institution to enter the Ethiopian financial services sector, following the country’s recent banking liberalisation reforms.
Sources at the National Bank of Ethiopia (NBE) told The Reporter that discussions are ongoing between Ethiopian regulators and senior KCB executives regarding the compliance and licensing requirements the bank must meet before it can establish operations in the country.
The development follows Ethiopia’s landmark decision to open up its tightly controlled banking sector to foreign participation, made possible through the Banking Business Proclamation, amended by lawmakers in November 2024.
The revised law now allows foreign banks to enter the Ethiopian market through one of four legal entry models:
Incorporating a wholly owned subsidiary,
Acquiring equity stakes in a domestic bank,
Opening a local branch office, or
Setting up a representative or liaison office.
However, there are regulatory limits. Foreign ownership in any single bank is capped at 40%, while domestic banks may not sell more than 49% of their authorised shares to foreign entities.
Despite these restrictions, KCB Group is reportedly undeterred. In an interview with 1st Afrika last month, KCB CEO Paul Russo described Ethiopia as a high-potential market, citing its large population, low banking penetration, and untapped digital finance opportunities as strong incentives for market entry.
“Ethiopia represents one of the last major frontiers in African banking,” said Russo. “It has the demographics and the demand, and while the rules are cautious, the opportunity for long-term growth is clear.”
KCB Group is currently one of East Africa’s largest financial institutions, with operations in Kenya, Rwanda, Uganda, Tanzania, Burundi, and South Sudan. The Group reported over USD 1.5 billion in revenues and a net profit of USD 478 million in 2024, driven by regional expansion and growing uptake of digital financial services.
Industry analysts say KCB’s planned move into Ethiopia marks a historic milestone not only for the Kenyan banking giant but also for the wider East African financial ecosystem. Ethiopia, with over 120 million people, remains one of the most financially underserved markets on the continent, with bank account penetration below 40% and limited access to credit, especially among SMEs and rural populations.
The decision by Ethiopian authorities to open the sector follows years of cautious reforms and pressure from international institutions, investors, and regional trade partners seeking a more open and competitive financial environment.
If finalised, KCB’s entry could pave the way for other regional and international banks, potentially transforming Ethiopia’s banking landscape in the coming decade. For KCB, early-mover advantage could also offer long-term strategic benefits—particularly in digital banking, mobile money, and SME lending.
While neither KCB nor the NBE has given a firm timeline, sources close to the process say the bank is expected to begin laying foundational work for its Ethiopia expansion “in the near future.”
