by Nurat Uthman
Ethiopia will allow foreign banks to set up local subsidiaries and foreigners to acquire shares in domestic lenders, according to a bill approved by the cabinet on Friday, as part of the government’s broader plan to liberalize the economy.
“A foreign bank which is well established, reputable and financially sound may be allowed to establish (a) partially or fully owned foreign bank subsidiary, or open a foreign bank branch, or a representative office, or acquire shares of a bank,” the bill states.
The draft law, which lawmakers must first pass, says that foreign bank subsidiaries include local resident non-shareholder Ethiopians on the board of directors.
The aggregate shareholding by foreign nationals and foreign-owned Ethiopian organizations in a bank will be limited to a 40% of total shares, the bill said. Direct shareholding by strategic investors will be limited to a 30% stake
The country of more than 100 million people is one of the biggest economies in Sub-Saharan Africa and has a market long eyed by foreign investors after being closed off for decades.
Authorities are opening up the country to foreign investment in sectors including banking, telecoms, transportation and aviation.
