Absa group, formerly known as Barclays Africa has announced plans to enter the Ethiopian market. The lender, Africa’s third largest with operations in12 African countries is the parent company to Kenya’s Barclays Bank.
It is the second such announcement by an African Bank after Kenya’s KCB Group expressed its interest in the Ethiopian market during its investor briefing meeting last week.
In the past, Ethiopia’s financial sector has been guarded from foreign investments with only local banks operating in the country. The country’s new Prime Minister Abiy Ahmed has introduced numerous changes in the country which are expected to attract foreign investors.
Ethiopia is attractive to foreign banks due to its huge population and large percent of unbanked residents. The nation has Africa’s second largest population estimated at 100 million. Absa’s Chief Financial Officer told Reuters, “We’re not in Ethiopia at all, so those would be the type of markets we’d look at over time.” Absa plans to enter the populous country through the acquisition of a local bank.
Absa’s subsidiary in Kenya earned KSh7.4 billion in after tax profit representing a 7 percent growth from KSh6.9 billion earned in 2017. Barclays Bank of Kenya anticipates costly separation expenses as it finalizes its separation from UK based Barclays PLC. Part of the cost will be used in rebranding to acquire a new identity as Absa Africa.