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Kenyan banking giant, KCB Group, has formally initiated discussions to explore its entry into Ethiopia's recently liberalised banking sector.
This move positions KCB as a potential first-mover in one of the continent's largest and previously untapped markets.
The talks, which commenced in 2025, follow Ethiopia's landmark legislative changes in late 2024 that officially opened the door for foreign banks to operate in the country after decades of state protectionism.
An AI-generated image showing a customer being attended to at a bank
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High-level delegations from KCB, including Group Chairman Dr. Joseph Kinyua and CEO Paul Russo, have met with Ethiopian regulators to deliberate on the requirements for market entry.
Ethiopia's Council of Ministers endorsed a bill in June 2024, which was subsequently ratified by Parliament in December of the same year, outlining the framework for foreign bank participation.
The new law permits international banks to establish a local subsidiary, open a branch, or acquire a stake in an existing Ethiopian bank.
Under the new regulations issued by the NBE in June 2025, foreign banks have several avenues for entry.
They can establish a wholly-owned subsidiary, set up a branch, or acquire shares in a domestic bank.
For a new subsidiary or branch, the minimum paid-up capital has been set at approximately $36.7 million (Birr 5 billion).
Foreign ownership in a local bank is capped, with a single foreign strategic investor permitted to hold up to a 40% stake, and the aggregate foreign ownership limited to 49%.
KCB Group CEO Paul Russo has publicly expressed the bank's strong interest in the Ethiopian market, citing its large population of over 120 million and a relatively low banking penetration rate as significant opportunities for growth.
The group, which has had a representative office in Addis Ababa since 2015, is keen to expand its regional footprint beyond its current operations in Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo.
The liberalisation of Ethiopia's financial sector is a key component of Prime Minister Abiy Ahmed's broader economic reform agenda.
The move is anticipated to attract substantial foreign direct investment, enhance competition, and introduce new technologies and banking practices, ultimately benefiting Ethiopian consumers and businesses.
KCB Group CEO Paul Russo
While KCB appears to be at the forefront of this new wave of foreign interest, other regional and international banks are also closely watching the developments.
The successful entry of a major player like KCB could pave the way for a significant transformation of Ethiopia's financial landscape.
The National Bank of Ethiopia has indicated that it will issue a limited number of licenses, up to five, to foreign banks within the next five years, signalling a measured and strategic opening of the sector.
The outcome of the ongoing discussions between KCB and the NBE is being keenly observed by the African financial community.