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.
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.