Kenyan banks planning to enter Ethiopia through local joint ventures will be able to buy only up to 30% stake in the latter’s banks.
The cap is applicable for foreign lenders that want to acquire stakes in existing banks.
An additional 5% stake will be allowed for foreign individuals and foreign non-bank investors each, taking the maximum stake a local bank can sell to foreigners at 40 per cent.
The much awaited foreign investment law is expected to clear the way for Kenyan banks such as Equity, KCB and Co-operative Bank to set up operations in the country.
Co-operative Bank said earlier it would prefer to enter the Ethiopian market through a joint venture with Ethiopia’s cooperative movement in a deal similar to its South Sudan business in which the government has a stake.
Former KCB Group Chief Executive Joshua Oigara had also earlier said that KCB would consider partnering with a local bank if Ethiopia’s economy were to be liberalised and foreign banks allowed to invest.
Under the new investment law that is being firmed up, banks will have four options for Ethiopia entry. They include opening local subsidiaries, buying stakes from local partners capped at 30 per cent, opening a branch or opening a representative office.
At present, the country has over 30 commercial lenders, two of which are State-owned.
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