Absa Bank says it will consider entering Ethiopia’s financial services market if the government further loosens regulations and deepens liberalisation of the banking sector.

 

The South African lender says banking sector reforms to date are encouraging, but insufficient to justify a long-term commercial commitment in a market that remains tightly controlled.

In March 2025, Ethiopia’s central bank, the National Bank of Ethiopia, issued Business Proclamation No 1360/2025, allowing foreign institutional and foreign national investment in local banks for the first time.

“We are closely following developments in Ethiopia and we think the first few necessary steps have been taken, but we would like to see more opening of the regulatory environment insofar as it relates to banking in that market.“When we are of the view that we have the necessary comfort at the threshold required for us to make a long-term decision, we will definitely consider entry into that market,” Absa Group Chief Executive Officer Kenny Fihla told The EastAfrican during his visit to Nairobi this week.

Nigeria’s Zenith Bank is acquiring Paramount Bank, while South Africa’s Nedbank has agreed to buy a 66 percent stake in NCBA Bank.

Absa already operates a Kenyan subsidiary with an asset base of $4.29 billion (Ksh554.32 billion) and says it plans to use Kenya’s relatively open regulatory environment to deepen its East African footprint.“We are always on the lookout for opportunities, whether organic or inorganic, but the regulatory environment must be conducive and positive for that. Fortunately, Kenya and many of the countries in East Africa have a very conducive environment for us to consider inorganic growth.“We have not yet come across anything, but we continue to look, we continue to explore, and at the right time we will do what is necessary to ensure that our business grows,” Fihla said.

Capital pressureKenya’s consolidation push has been accelerated by regulatory changes.

The Business Laws (Amendment) Act of 2024 amended the Banking Act to introduce a staggered five-year increase in core capital requirements.

This began with a rise from $7.75 million (Ksh1 billion) to $23.26 million (Ksh3 billion) by the end of 2025, and will scale up to $77.52 million (Ksh10 billion) by 2029.

By December 2025, several banks had secured capital injections from their parent entities and other investors to meet the higher threshold set by the Central Bank of Kenya.

Ecobank Kenya received $27.0 million (Ksh3.5 billion) from its parent in March, lifting its capital position to Ksh8.5 billion, while CIB Bank received $8.2 million (Ksh1.1 billion) in October.

© Copyright 2026 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).