Ethiopia has opened the door to foreign banks. The harder question is who walks through it first, and what they will need to see before they do.

That question was the focus of a webinar hosted by Precise Consult and Africa International Advisors on 28 October.

The timing matters. Foreign investors can now own up to 49% of an Ethiopian bank, the birr floats, and interest rates are increasingly set by the market. A capital market has gone from idea to operating venue in a few years. On paper, the architecture is in place. What the panel tried to unpack was the distance between a market that is open and a market that someone is willing to commit to.

From a regulatory milestone to a credible investment case

Hasnayn Ebrahim, who leads Africa International Advisors, called the new foreign ownership rules a milestone. The next step, he said, is turning them into credible investment decisions. A modern financial system does more than move money; it puts capital where it is most needed.

He described Africa as still largely untapped, with banks at the centre of building a more integrated system and broader investment options. That, he said, needs the private sector, regulators and government working together. For an investor deciding whether to enter a market, liquidity and regulation come first.

What a digital bank looks for before it enters

Rachel Freeman of Tyme brought the operator’s view. Tyme is digital banking at its core, and she offered a striking measure of what that means in practice: around 2,000 employees serving more than 20 million customers.

Scale like that, she suggested, is built less on grand strategy than on getting small things right. In South Africa, Tyme placed kiosks inside Pick n Pay supermarkets, using the places people already shop as the front door to a bank account. The kiosks were not identical everywhere; different formats suited different locations. Where customers still rely on cash, the company assigned cash collectors to bridge the gap. And service is designed as a blend of people and technology, with an AI chatbot working alongside human support rather than replacing it.

Asked what Tyme weighs when deciding whether to enter a new market, Rachel laid out a practical checklist:

  • A supportive ecosystem of partners, retailers and infrastructure to build on.
  • Progressive regulation that leaves room for new models, including the ability to operate from the cloud and to onboard customers digitally through electronic identity checks.
  • Talent available locally to build and run the business.
  • A market where the private sector can lead, rather than one dominated by state players.
  • A route to national reach, so a retail footprint can grow beyond the capital.
  • The ability to move capital home, meaning foreign investors can repatriate profits.
  • Room to add value, rather than simply copying what incumbents already offer.

For Ethiopia, several of these boxes are partly ticked. A national digital ID and interoperable payments are live. Others, notably cloud operations, capital repatriation and the balance between state and private banks, are exactly where a first mover will be looking for clarity.

The exchange is open. The value is still to come.

Yodit Kassa brought the conversation home to the Ethiopian Securities Exchange, and she was candid about where it stands. The exchange exists and is operating, but by her own account it has not yet delivered the value it is meant to.

She described the market as being on a journey of unlearning and learning. Companies used to raising money only from banks are learning what it means to sell shares to the public and disclose to investors. Investors used to keeping savings in deposits are learning what it means to own a stake in a company. Regulators and intermediaries are learning alongside them.

The pipeline gives a sense of the ambition. Over the current fiscal year, the ESX plans to bring 15 companies to its equity market and eight to its over-the-counter market. Kassa also pointed to a company preparing to list, a sign that the pipeline is moving from plan to practice. She touched as well on the foreign exchange market, whose liberalisation shapes how comfortable foreign investors will be putting money into Ethiopian securities.

Her point connects directly to the banking question. A deeper capital market gives banks new ways to raise funds, new fee-earning business and a clearer price for the assets on their books. A venue alone does not create depth; listings and local investors do.

So, what will it take?

The webinar did not name the first foreign bank to enter Ethiopia, and it was not trying to. What it did was narrow the question. The rules now allow entry. What a first mover needs is clarity on how regulation will evolve as new players arrive, evidence to size and price the opportunity, and confidence that committing early, and going beyond simple lending, will pay off.

The three voices pointed to the same conclusion from different directions. Hasnayn framed reform as the start of a more integrated system that puts capital to good use. Rachel showed that entry decisions turn on practical details such as digital onboarding, cloud operations and the ability to take profits home. Yodit reminded the audience that markets deepen through use, not announcements.

Countries that opened their financial sectors before Ethiopia took several years to build real depth, and the choices made early shaped how fast that happened. Ethiopia is now in that early phase. The first bank to commit will be betting not only on the market as it is, but on the reforms continuing in the direction they have started.