This April Ethiopian Parliament relaxed restrictions on foreign financial institutions. They made amendments to the stringent rules as it paved way for the nation to join the African Trade Insurance (ATI) after the signing of a treaty with the continental body. Experts say Ethiopia represents a major opportunity for Kenyan banks keen on regional expansion primarily due to several factors. The country has a large addressable market, with a population of 96 million. Despite majority being low income, on going economic transformation of the country largely driven by State-led investment in infrastructure and industrialization has spread the benefits of economic growth to the majority of the population, making them more bankable.
Several Kenyan financial institutions have over the years expressed their desire to join the Ethiopian market. They include Cooperative Bank of Kenya, KCB Group and Standard Bank Group which trades under the CFC Stanbic brand in Kenya.
Kenya Commercial Bank and Standard Bank Group which trades under the CFC Stanbic last year said their had received approvals to open representative offices in Ethiopia.
In 2013 Ethiopia locked out Kenyan banks in an agreement that allowed local companies operating in other sectors to make forays into the country.
However, Ethiopia has been keen to deepen regional economic engagement and this became clearer in December last year when the country made its formal entry into the Northern Corridor Integration Projects initiative which has the potential to reshape the regional economy and politics, creating a new trading bloc.
Ethiopia applied to join Kenya, Rwanda, South Sudan and Uganda in the initiative.
Ethiopia is also among the few countries with sustained economic growth.
According to the World Bank GDP growth in the last decade shot up from $10.13 billion in 2004 to $55.61 in 2014, and is projected to be sustained in the 7 per cent to 10 per cent range in the next five years.
