The much-awaited foreign investment law is expected to clear the way for Co-operative Bank and other banks eyeing Ethiopian market to set up operations in the country.
The lenders will now be able buy only up to 30 per cent stake in Ethiopian banks.
This is after the Ethiopian government set the foreign holding cap in local banks for banking entities at 30 per cent.
According to new details of the laws guiding the opening up of the local banking sector the cap is applicable for foreign lenders that want to acquire stakes in existing banks.
Co-operative Bank said earlier it would prefer to enter the Ethiopian market through a joint venture with Ethiopia’s cooperative movement in a deal similar to its South Sudan business in which the government has a stake.
Under the new investment law that is being firmed up, banks will have four options for Ethiopia entry which include; opening local subsidiaries, buying stakes from local partners capped at 30 per cent, opening a branch or opening a representative office.
Other banks are Equity and KCB where the former KCB Group Chief Executive Joshua Oigara had earlier said that KCB would consider partnering with a local bank if Ethiopia’s economy were to be liberalised and foreign banks allowed to invest.