Safaricom’s Ethiopia win excites local banks
Safaricom’s telco license win in Ethiopia has created excitement among local banks, as they too mull taking a piece of the market in the near term.
The telco operator became the first foreign entity to earn a telecommunications license in the country, a part of ongoing steps to liberalize the market which has been locked to outsiders for decades.
According to Equity Group Managing Director James Mwangi, the liberalization of the banking industry is likely to follow to see the country’s first foreign lending outfits.
“The liberalization of the telecommunications sector in Ethiopia gives us a lot of optimism and hope that the financial sector and banking industry will be next to be liberalized,” he said.
“Having liberalized almost the entire private sector, the private sector can’t grow unless it’s given private credit. The government of Ethiopia and principal banks may not be able to do it by themselves.”
Kenya’s biggest banks by asset size, Equity and KCB have been on the race to break ground in the market with each of the lenders already having a representative office.
KCB was the first to open its representative office in 2015 with Equity following in the footsteps four years later in mid 2019.
Under the stewardship of Prime Minister Abiy Ahmed, Ethiopia has added market liberalization to its economic development agenda.
Dr. James Mwangi hopes Equity and local banks can leverage the opportunities presented by ongoing liberalization to venture in the frontier market.
“We are keeping our ears on the ground. We have seen increased transactions in our representative office and are keeping ourselves ready when that opportunity crystallizes,” he added.
“We are also very excited that the winner of the first license is a Kenyan company and the company will have control. We would be in very good company if the banking sector opened.”