Kenya’s KCB Group is eyeing entry into Ethiopia’s newly liberalised banking sector via acquisition, as reforms open Africa’s last closed market.
KCB Eyes Ethiopia Entry as Addis Opens Banking Market
Nairobi/Addis Ababa – August 2025 — KCB Group Plc, Kenya’s second-largest lender by market value, is weighing a bold push into Ethiopia through the acquisition of a local bank. The move would make KCB one of the first foreign players to enter one of Africa’s most closely watched financial markets.
KCB Chief Executive Paul Russo told The Africa Report that the Nairobi-listed lender is studying an application for exemption from Ethiopia’s foreign ownership rules, which cap overseas stakes at 49%. “Whenever a market like that opens, getting an exemption is not difficult,” Russo said, adding that Nairobi’s diplomatic ties with Addis Ababa could be leveraged to smooth regulatory clearance.
The bank is also scouting for a local partner before formally approaching the National Bank of Ethiopia for approval.
Ethiopia’s Untapped Banking Market
With a population exceeding 120 million, Ethiopia is Africa’s second-most populous nation and one of its largest economies to have long kept foreign banks at bay. The financial sector, dominated by domestic and state-linked lenders, only began liberalising in December 2024, when the government passed reforms allowing international banks to open subsidiaries, branches, or take minority stakes.
Under the new rules, Ethiopian nationals must retain majority control. Since June 2025, the central bank has been formally accepting licence applications from foreign players, a move analysts say is designed to spur competition, attract fresh capital, and modernise the sector.
Digital Finance Pressure
The arrival of Safaricom Plc’s M-Pesa in 2023 triggered a surge in mobile money adoption, forcing local banks to accelerate their fintech strategies. Agency banking, mobile wallets, and digital payments are rapidly reshaping consumer expectations.
For KCB, which has been ramping up investments in fintech, this represents both a challenge and a potential entry point into Ethiopia’s fast-evolving market.
Regional Growth & Fintech Bets
Over the past decade, KCB has grown into a regional banking powerhouse. By September 2024, subsidiaries outside Kenya contributed 36.6% of group net profit and 34% of assets, compared with less than 5% ten years earlier.
Its Tanzanian unit was among its best performers in 2024, generating about $48.6 million in revenue and $20 million in profit. Beyond traditional banking, KCB has leaned heavily into fintech: in March 2025, it acquired a 75% stake in Riverbank Solutions, a Nairobi-based agency banking technology provider, for $15.5 million.
KCB reported a net profit of $250 million (KSh32.3 billion) in the first half of 2025, up 8% year-on-year, underscoring the group’s solid financial footing.
If the Ethiopian expansion materialises, KCB would gain access to one of Africa’s last untapped financial markets—cementing its reputation as East Africa’s most aggressive cross-border lender.
