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Ethiopia’s Central Bank is Fast-tracking the Rollout of a New Legal Framework

Financial services authorities are poised to place a ceiling on the maximum number of shares foreign investors could own in local banks. This is in contrast with regional trends within the East Africa region which have enabled full mergers and acquisitions. Ethiopia’s government is keen to benefit from foreign investment but wants to prevent smaller local banks from being swallowed up by larger foreign rivals. Foreign institutions and individuals will only be allowed to acquire up to 30% of a local bank, which can then sell an additional 10% to another overseas buyer. The remaining 60% must remain under local shareholder ownership. The central bank governor told parliament last week that a framework will be in place by the end of the government’s fiscal year in July 2024.