South Africa’s Absa bank has become the latest multinational corporation to express interest in exploiting the Ethiopian market, following last year’s decision by reformist Prime Minister Abiy Ahmed to liberalise the economy.
Ethiopia has long prevented foreign ownership in economic sectors including banking, but Abiy has embarked on rapid political, diplomatic and economic reforms since coming to power in April.
READ MORE: Ethiopia opens up telecoms, airline to private, foreign investors
Absa targets banking reforms
Jason Quinn, the bank’s chief financial officer, told Reuters that Absa was investigating how and where to enter a number of other growth markets, including Nigeria and Angola.
“We’re not in Ethiopia at all, so those would be the type of markets we’d look at over time,” he said on Monday.
An entrance into the Ethiopian market of 100 million people, while not imminent, would be part of a strategy Absa laid out after its split from Britain’s Barclays in 2017.
It would be hard to build a retail banking business from scratch so Absa was more likely to think about acquiring, he added.
The bank had already highlighted Nigeria as key to future growth, where Quinn said there was a “nice opportunity” for Absa in corporate and investment banking. It had also already flagged Angola as attractive, alongside Egypt.
Absa, which wants to double its share of revenues on the continent to 12 percent, saw earnings from its operations elsewhere in Africa grow by 9 percent in 2018, the fastest of all its divisions, its annual results showed.
Kenya’s biggest bank by assets, KCB Bank said in July last year, that it was ‘ready to invest’ in Ethiopia as opportunities arise from a possible liberalisation of foreign investment rules.
Last month, the finance ministry said it would prioritise the privatisation of the state-owned telecommunications company, as it takes note of the best approach to the process.
South Africa’s MTN Group and Vodacom Group have already expressed interest in taking up stakes in the lucrative market, as and when they are made available.
Vodacom’s CEO, Shameel Joosub described Ethiopia as ‘probably the most attractive potential new market’ for the company, explaining that they exploit opportunities here through their Kenyan associate company, Safaricom.
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Ethiopia plans to liberalise state-owned companies including Ethiopian Airlines, Ethio Telecom, Ethiopian Shipping & Logistics Services Enterprise, and Ethiopian Electric Power, in order to attract foreign direct investment and stimulate growth.