Banking, Finance & Economic Policy
Equity Bank Eyes Ethiopia Expansion as Addis Ababa Opens Financial Sector
Equity Bank is preparing a phased entry into Ethiopia after new laws opened the market to foreign lenders. CEO James Mwangi says the expansion could unlock millions of new customers.
Equity Bank CEO James Mwangi begins talks with Ethiopia’s Investment Commission to expand into Africa’s second-most populous nation, as rivals like KCB race for entry.
Equity Bank Pushes Into Ethiopia After Sector Reform
NAIROOBI / ADDIS ABABA — Equity Group Holdings Plc is moving closer to its long-awaited entry into Ethiopia after reforms opened one of Africa’s last closed banking markets. Chief Executive Officer James Mwangi met this week with the Ethiopian Investment Commission in Addis Ababa, where Commissioner Zeleke Temesgen pledged support for credible foreign investors.
In December, parliament passed the Banking Business Proclamation No. 1360/2025, ending decades of restrictions on foreign lenders. The National Bank of Ethiopia followed in June with directives spelling out how banks may set up subsidiaries, branches, representative offices, or buy into local lenders.
Why Ethiopia Matters
Ethiopia, with more than 120 million people, is Africa’s second-most populous country — and one of its most underbanked. According to the World Bank, only about a third of adults used formal financial services in 2022.
That gap is what excites lenders like Equity. The Nairobi-based group reported $13.9 billion in assets as of March 2025 and already operates in six markets across East and Central Africa. “Ethiopia is the last major frontier in this region,” Mwangi said, adding that Equity has been preparing for entry for more than a decade.
Competition Heats Up
Equity won’t have the field to itself. KCB Group Plc, Kenya’s largest bank by assets, is also in talks with Ethiopian authorities. People familiar with the matter say it may seek as much as a 40% stake in a domestic lender.
KCB has maintained a representative office in Addis Ababa since 2015 and has signaled it will apply under the new law. The race between Kenya’s two banking heavyweights reflects the high stakes: early entrants could secure a first-mover advantage in a market ripe for digital and retail banking.
The Risks
Ethiopia presents big potential but equally big risks. The economy is weighed down by foreign exchange shortages, persistent inflation, and heavy state control. The Commercial Bank of Ethiopia, a state-owned giant, still dominates the sector.
“There is opportunity, but implementation risk is high,” said Nairobi economist Robert Shaw. “Passing a law is one thing. Ensuring clear, consistent regulation is another.”
Political uncertainty also lingers. Ethiopia has endured bouts of instability in recent years, and investors remain cautious about security and policy continuity.
Equity’s Likely Strategy
Equity is expected to move gradually. Insiders say the lender may start with a representative office, then roll out digital platforms and agent banking before opening branches. Partnerships or acquisitions of minority stakes in local banks are also on the table.
Mwangi pointed to lessons from the Democratic Republic of Congo and South Sudan, two frontier markets where Equity already operates. “We’ve built resilience in difficult environments,” he said. “Our model will be lean, tech-driven, and focused on inclusion.”
Analysts expect the bank to lean heavily on mobile banking to reach Ethiopia’s largely unbanked population quickly and cheaply.
Liberalization Drive
The reforms reflect Prime Minister Abiy Ahmed‘s broader agenda to open Ethiopia’s economy. Telecommunications, insurance, and logistics have already been liberalized, drawing foreign players such as Safaricom.
The IMF has urged Addis Ababa to accelerate such changes, arguing that foreign capital and expertise are crucial for growth and stability. Banking reform is now a key test of that strategy.
The Bigger Picture
For Equity, success in Ethiopia would add millions of new customers and further cement its role as one of Africa’s fastest-growing indigenous banks. For Ethiopia, allowing lenders like Equity and KCB in could expand financial inclusion, strengthen small business access to credit, and deepen regional economic integration.
“This is more than banking,” said Addis Ababa-based analyst Meron Bekele. “It’s about Ethiopia signaling to the world that it is serious about joining the global economy.”
The race is now on. With rules in place and authorities signaling readiness, the next year will show whether Kenyan lenders can turn ambition into a foothold in Africa’s most promising frontier.
Banking, Finance & Economic Policy
Ethiopia Tightens Banking Rules for Stability
The National Bank of Ethiopia is pushing lenders to strengthen their balance sheets under new capital and forex requirements. Analysts say the reforms could pave the way for foreign investment in Ethiopia’s banking sector.
Ethiopia’s central bank raises capital and forex rules to strengthen banks and attract investors seeking stable frontier markets.
Ethiopia Tightens Banking Rules for Stability
By Charles Wachira | November 10, 2025
Ethiopia’s central bank has rolled out sweeping reforms to strengthen its banking sector and restore investor confidence. The National Bank of Ethiopia (NBE) announced new rules that raise capital requirements and limit banks’ exposure to foreign exchange risks.
In October,NBE proposed a new directive limiting foreign ownership in domestic banks to 49%.
The move aims to align Ethiopia’s financial system with global standards. It also signals a push to restore market confidence after years of inflation, currency shortages, and liquidity pressure.
According to StockMarket.et, the reforms target stronger balance sheets and more disciplined currency management. Analysts say this is one of the most decisive steps by the regulator in recent years.
New Capital and FX Requirements
Banks must now meet higher minimum paid-up capital levels, consistent with international benchmarks. The NBE has also introduced a foreign exchange exposure cap of ±18% of Tier 1 capital per day.
This means banks can no longer hold large foreign currency positions beyond that limit. The goal is to control speculative trading and protect the banking system from shocks in the currency market.
“We want to build a safer and more transparent banking system,” said an NBE official. “Capital adequacy and currency discipline are essential for long-term stability.”
Impact on Local Banks
The reforms come at a time when many Ethiopian banks are expanding aggressively. Yet several remain below global capital thresholds.
The Commercial Bank of Ethiopia (CBE) still dominates the market, but private players like Awash Bank, Dashen Bank, and Nib International Bank have been catching up fast. They now face pressure to raise new capital or explore mergers to meet the new requirements.
According to analysts at Cepheus Capital, these changes mark the start of a new phase in Ethiopia’s financial liberalization. The government is preparing to open the banking sector to foreign investors, a move that could attract regional and international capital.
Building Investor Confidence
Ethiopia, home to more than 120 million people, has long been seen as a potential investment destination in East Africa. Yet regulatory uncertainty and currency volatility have discouraged many global investors.
The new rules aim to change that perception. They are part of a wider plan to build transparency, predictability, and resilience into the financial system.
Economist Dr. Tsedale Mebratu of Addis Ababa University believes this policy shift could mark a turning point. “The reforms strengthen trust and transparency,” she said. “But smaller banks may struggle to meet compliance costs without raising extra capital.”
Addressing Foreign Exchange Risks
Ethiopia’s currency, the birr, has been under constant pressure. The country has faced chronic foreign exchange shortages that have disrupted imports and debt payments.
By limiting exposure to ±18% of Tier 1 capital, the NBE hopes to reduce speculative positions in the FX market. This step mirrors similar reforms taken by the Central Bank of Kenya (CBK) and the Bank of Ghana, which tightened rules after currency turbulence in recent years.
If properly implemented, the policy could help stabilize the birr and reassure global lenders like the World Bank and the International Monetary Fund (IMF).
Part of a Broader Economic Reform Agenda
The changes form part of Ethiopia’s wider economic transformation plan under Prime Minister Abiy Ahmed. His administration has been liberalizing strategic sectors such as telecommunications, logistics, and finance to attract private investment.
One of the most notable milestones was the 2023 entry of Safaricom Ethiopia, a subsidiary of Safaricom PLC (Kenya). That deal marked one of the largest foreign investments in Ethiopia’s history.
The government hopes the same success can be replicated in banking, insurance, and other services. The NBE’s new regulations, therefore, set the groundwork for a more modern, globally integrated financial system.
Analysts’ Global Perspective
International markets have taken note of Ethiopia’s reforms. Investors tracking African frontier economies say the new measures show commitment to transparency and policy discipline.
However, they also caution that effective enforcement will be key. “Ethiopia’s challenge isn’t introducing new rules — it’s enforcing them fairly,” said Richard Manson, Africa analyst at Frontier Advisory Group in London. “If done right, these reforms could put Ethiopia closer to Kenya and Nigeria in investor confidence.”
The Road Ahead
The tightening of banking rules represents more than a regulatory change. It reflects Ethiopia’s determination to build credibility in global financial markets.
For the NBE, success will depend on consistent enforcement and collaboration with commercial banks. For investors, the reforms offer a clearer signal that Ethiopia is serious about modernizing its economy.
In the long term, these moves could strengthen the country’s financial stability and help it emerge as a regional financial hub in the Horn of Africa.
Banking, Finance & Economic Policy
Treasury Ousts Consolidated Bank Board
Treasury Cabinet Secretary John Mbadi dissolves Consolidated Bank board. The move signals heightened regulatory scrutiny and raises questions about governance in Kenya’s state-owned banks.
Kenya’s Treasury fires Consolidated Bank’s board and CEO, signalling tougher financial governance and oversight reforms.
Kenya Fires Consolidated Bank Board in Governance Shake-Up
November 10, 2025—Kenya’s financial sector grabbed global attention after Treasury Cabinet Secretary John Mbadi dismissed the entire board and CEO of Consolidated Bank of Kenya. The move triggered regulatory intervention from the Central Bank of Kenya (CBK). It also raised concerns about political influence in the banking sector.
The decision came after Treasury rejected the board’s plan to renew CEO Sam Muturi’s contract. Muturi had just delivered the state-owned lenders’ first profit in 15 years. On October 3, Mbadi revoked the appointments of three directors who supported Muturi. He then installed Dr. Murage Njeru, a University of Nairobi lecturer, as acting CEO. CBK immediately rebuked the move.
“Institutions must ensure that no person is appointed or elected as a director or senior officer unless the Central Bank has certified them,”
— Timothy Kimutai, Deputy Director of Bank Supervision, CBK
Regulatory Clash and Political Overtones
CBK protested that Dr. Njeru had not undergone the mandatory “fit and proper” assessment under Section 9A of the Banking Act.
Dr. Njeru had recently stepped down from the Mbeere North parliamentary by-election. He stepped aside in favor of a United Democratic Alliance (UDA) candidate. The party is led by President William Ruto. Meanwhile, his brother, Charles Njagagua, who chaired the bank, was also removed. The institution was left without a functioning board.
Founded in 1989 through a merger of nine troubled lenders, Consolidated Bank has long reflected Kenya’s delicate balance between commercial independence and political oversight.
“This development signals heightened regulatory scrutiny and a possible shift in how Kenya enforces governance in publicly owned banks,” said an analyst at Sterling Capital Ltd.
“But it also raises concerns about board autonomy and the predictability of oversight.”
CBK’s Balancing Act
CBK now faces a tough task. It must enforce prudential rules while managing political pressure. The regulator has questioned the legality of some Treasury appointments. One example is Jane Njogu, a Treasury representative whose second term allegedly lacked CBK approval.
The Bank insists that no senior officer should assume office without clearance. This protects depositors and maintains market confidence. Analysts say CBK’s firm stance reassures investors that supervision standards remain intact despite political challenges.
Global Implications
The dispute has drawn international attention. It mirrors governance challenges across emerging markets. For investors and multilateral lenders, the situation raises questions about policy consistency and institutional independence. These are key factors when assessing country risk.
“What’s happening at Consolidated Bank is not just a domestic issue; it’s a test of Kenya’s commitment to corporate governance reforms,”
— Dr. Emmanuel Okoth, Economist, University of Nairobi
As Nairobi aims to become a regional financial hub, such governance disputes could hurt investor confidence. The success of Kenya Vision 2030 and the Bottom-Up Economic Transformation Agenda (BETA) depends on a stable and credible banking system.
Legal Fallout and Leadership Vacuum
Ousted CEO Sam Muturi filed a petition at the Employment and Labour Relations Court. He seeks reinstatement or KSh76 million in compensation. Muturi argues the Treasury overstepped its authority. The case could set a landmark precedent on executive interference in bank governance.
The bank now faces a leadership vacuum. Six of eleven senior roles are held in acting capacity. This includes heads of legal, risk, finance, and retail divisions. Analysts warn that instability could reverse the gains achieved under Muturi, just as the bank was starting to recover.
What Lies Ahead
The shake-up highlights Kenya’s ongoing struggle to balance government oversight with institutional independence. Treasury’s push to restructure state-owned enterprises may increase accountability. But it also exposes weak points in governance frameworks.
For investors and policymakers in East Africa, the Consolidated Bank saga sends a clear message: transparency, consistency, and regulatory autonomy are essential for sustaining confidence in Kenya’s banking future.
Bottom Line
The ouster of Consolidated Bank’s leadership is more than a boardroom reshuffle. It is a litmus test for Kenya’s governance credibility. How quickly the State, CBK, and judiciary resolve this standoff will determine whether reforms strengthen or strain investor faith in one of Africa’s most dynamic banking markets.
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Banking, Finance & Economic Policy
I&M Bank Kenya Announces CEO Leadership Change
Regional operations now play a major role in I&M’s revenue. Leadership change may strengthen cross-border synergy.
I&M Bank Kenya appoints Kihara Maina as interim CEO, replacing Gul Khan—signalling a strategic shift at the East African lender.
I&M Bank Kenya has announced a leadership change. Gul Khan, the current CEO, will step down. Kihara Maina, Regional CEO of I&M Group PLC, will take over on an interim basis. The move is pending regulatory approval.
The announcement signals a possible strategic shift at one of East Africa’s top banks. It may affect investors’ perception and operational priorities.
Leadership Transition Details
Gul Khan has led the Kenyan unit for several years. Under his leadership, I&M Bank expanded digital services and SME lending. Meanwhile, Kihara Maina previously served as CEO and later as Regional CEO.
According to Dawn Africa, Maina’s return emphasizes continuity and alignment with regional operations. Analysts say this may improve coordination between Kenya and the group’s subsidiaries in Rwanda, Tanzania, and Uganda.
Strategic Implications
The Kenyan banking sector is highly competitive. Banks face challenges from rising interest rates, fintech disruption, and regulatory changes.
By appointing Maina, I&M Bank signals a renewed focus on regional integration. It also suggests the bank wants to strengthen digital channels and improve operational efficiency.
Company Background
I&M Group PLC is listed on the Nairobi Securities Exchange. The group has operations in Kenya, Uganda, Tanzania, Rwanda, and Mauritius. Its strategy focuses on digital banking, regional expansion, and SME ecosystem services.
The group’s “iMara” initiative aims to integrate technology and customer experience across borders. Maina’s leadership is expected to accelerate this agenda.
Investor Perspective
Leadership changes at the CEO level carry investor attention. Shareholders will watch how the new leadership manages growth and profitability.
I&M Bank Kenya reported KSh 11.3 billion profit after tax in 2024, up 17% from the previous year (Business Daily Africa). Maintaining momentum during this transition is critical.
Regional Context
I&M Bank competes with major regional banks such as Equity Group, KCB, and Co-operative Bank.
Regional subsidiaries are crucial. They now contribute significantly to group deposits, loans, and revenue. Maina’s experience across markets is expected to strengthen these operations.
Outlook
Investors and clients will be watching closely. Key questions include:
- Will digital banking expansion accelerate under Maina?
- How will SME products evolve in Kenya and the region?
- Can the bank maintain growth and profitability amid the leadership change?
According to Dawn Africa, the transition may mark a strategic chapter for I&M Bank. The focus will likely be on innovation, digital expansion, and regional integration.
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