National Bank of Ethiopia Urges Local Banks to Brace for Foreign Competition











“Many Foreign Banks Are Applying for Licenses,” Says Governor Mamo Mihret

The Governor of the National Bank of Ethiopia (NBE), Mamo Mihret, has called on domestic banks to step up their preparedness as Ethiopia’s banking sector inches closer to opening its doors to foreign competitors. His remarks come at a time when a growing number of international financial institutions are applying for entry into the Ethiopian market—marking a significant shift in the country’s financial landscape.

Speaking during the launch event of Bank of Abyssinia’s paperless banking initiative, Governor Mamo warned that the banking sector will soon face unprecedented levels of competition.

“The industry will no longer be the same. We are entering a new era of competitive banking,” he stated. “Many foreign banks have already applied and are actively submitting license applications. Their entry into the market is no longer a question of ‘if,’ but ‘when.’”

A Call for Modernization and Reform

Governor Mamo emphasized the urgency for domestic banks to modernize their operations and raise service standards across the board. He cited two primary reasons for this imperative shift:

Rising Customer Expectations: Ethiopian consumers are demanding more efficient, technology-driven, and user-friendly financial services. As digital transformation accelerates globally, expectations around speed, accessibility, and personalization are reshaping the banking experience.

Imminent Market Liberalization: With foreign banks set to enter the Ethiopian financial market under the revised banking directive (SBB/94/2025), the competition will intensify, forcing local banks to innovate or risk being left behind.

“Whether we like it or not, the market is opening up. This will not just be competition—it will be fierce competition,” Mamo stressed. “Domestic banks must anticipate this and act accordingly.”

Sector Reform Gathers Momentum

The liberalization of the banking sector is part of Ethiopia’s broader economic reform agenda aimed at increasing efficiency, attracting foreign investment, and modernizing financial services. The policy shift has already led to widespread restructuring, with banks investing in digital infrastructure, customer experience enhancements, and strategic partnerships.

Bank of Abyssinia’s paperless banking launch—which eliminates physical documents in favor of digital workflows—was held up as an example of the kind of forward-thinking innovation the NBE hopes to see across the sector.

The Road Ahead

With Kenya’s KCB Group, South Africa’s Standard Bank, and institutions from the Gulf and Asia reportedly expressing interest, Ethiopia is on track to become one of the last major African economies to open its banking industry to foreign players. While this creates immense opportunity for capital inflow and knowledge transfer, it also places pressure on legacy institutions to evolve rapidly.

As the regulator tightens licensing processes and emphasizes capital adequacy, cybersecurity, and compliance, banks that fail to modernize could find themselves unable to compete in the liberalized landscape.

Governor Mamo’s message was clear: the countdown to competition has begun, and only those banks willing to adapt will thrive in the new Ethiopian banking era.