KENYA – Equity Bank Group, one of the leading Kenyan based financial institution, has opened a representative office in Addis Ababa.
This follows an acquisition of a licence to operate in the Ethiopian market that has so far remained closed to foreign lenders.
“Having completed phase one of our (regional) expansion, the entry into Ethiopia is part of our phase two expansion drive in pursuit of our aspiration of being a Pan African Bank with a presence in 10 African countries by the end of the year,” said Equity Group chief executive officer James Mwangi in a statement.
The Nairobi Securities Exchange-listed lender has appointed an insider, Hassan Maalim, a senior business manager based in Nairobi, to head the unit – that it expects the new office to be fully operational next month.
Representative offices serve as marketing and liaison centres for their parent banks and are not permitted to undertake banking business, such as deposit-taking and lending.
However, they are instrumental to the growth of the business in the country as the company embarks on rolling out of a fully-fledged bank once the pre-requisite licences are granted.
Ethiopia’s banking sector has so far remained closed to foreign banks, but aggressive economic reforms currently being rolled out by Prime Minister Abiy Ahmed’s government have raised the prospects of the sector, opening up to foreign investment.
The insulated market means that less than 15 percent of its 100 million people have access to a bank account, as per available statistics, reports Business Daily.
“The entry follows Ethiopia’s government appointment of a privatisation commission and the ongoing reforms which are aimed at promoting a growing private sector,” Equity Bank said.
Equity Bank already operates regional subsidiaries in Tanzania, Uganda, Rwanda, South Sudan and the Democratic Republic of Congo.
The bank has embarked on a regional expansion plan marked by the recent announcement of a Sh10.6 billion share swap deal with London-listed Atlas Mara.
The deal, which is yet to be concluded, will see the bank acquire four banks in Rwanda, Zambia, Tanzania and Mozambique; which will give it a foothold in southern Africa and raise its Africa presence to eight countries.
A number of other Kenyan financial institutions, including Co-operative Bank and Stanbic and Kenya Commercial Bank (KCB).
In 2015, the Ethiopia granted KCB licence to open its representative office, and has recently said it will be looking to make its entry through a partnership with an Ethiopian bank or opening a fully-fledged subsidiary in the country once the market is opened to foreign lenders.
In addition to the financial sector, the Ethiopia government is also said to be considering opening up the telecommunications sector to foreign investors, which would benefit Kenyan telco Safaricom, potentially through a rollout of its M-Pesa business in that country.