KCB Group, Kenya’s leading bank by assets, could partner with a local Ethiopian bank as it hopes the new leadership in the country will open up the banking sector to foreign investment.
The bank opened an Addis Ababa office three years ago in a strategy aimed at taking advantage of any opportunities that may arise in the Ethiopian market. At present, the country’s government prohibits investment by foreign banks.
Oigara in an interview with Reuters said the status quo could change if the country’s economy is liberalised under the new leadership, allowing foreign banks to invest. If this happens, KCB could partner with a local bank or establish its business by itself.
“We believe with the changes we see, the peace initiatives, that there will be very exciting opportunities for us,” he said.
Possible Economic Liberalisation
The Ethiopian government has dominated most sectors in the country such as telecommunication and banking since the ruling coalition came into power 27 years ago.
However, the reformist Prime Minister Abiy Ahmed who took over in April has been changing the situation politically and economically through his efforts to attract investment.
For instance, the government decided to sell stakes in the dominating telco last month a move that has the raised hopes of foreign investors who are keen to tap into the country’s market.
KCB is one of the two African banks that have established offices in Addis Ababa with the hope of tapping into the market.
The KCB chief executive is also optimistic about the effects of the rapid re-approachment between Ethiopia and Eritrea after the Prime Minister kicked off a peace initiative in June. The initiative has seen Prime Minister Ahmed and President Isaias Afwerki sign a pact on recommencing ties, ending a 20-year military standoff following a border war.
Oigara is positive that the peace pact and other reforms the Prime Minister has initiated could open up the country’s economy and significantly boost its growth.
