Absa, a South African bank announced that it is considering entering Ethiopia, where lenders are hoping reformist Prime Minister Abiy Ahmed will liberalise an antiquated and state-dominated banking sector.
The Ethiopian Prime Minister has worked hard to implement rapid political, diplomatic and economic reforms since coming to power in April, as the country had prevented foreign ownership in economic sectors including banking.
While not imminent, an entrance into the Ethiopian market of 100 million people would be part of a strategy Absa laid out after its split from Britain’s Barclays in 2017.
The Chief Financial Officer of Absa, Jason Quinn told Reuters that Absa was investigating how and where to enter a number of other growth markets, including Nigeria and Angola. He said “we’re not in Ethiopia at all, so those would be the type of markets we’d look at over time”.
Quinn noted that it would be hard to build a retail banking business from scratch, so Absa was more likely to think about acquiring. He said the bank had already highlighted Nigeria as key to future growth and explained that the country would provide a “nice opportunity” for Absa in corporate and investment banking. Absa had also already flagged Angola and Egypt as attractive markets.
Several South Africa banks have looked to the rest of the continent for growth, as a slow economy and under-pressure consumer weigh on potential at home.
Absa wants to double its share of revenues in Africa to 12 percent. The bank’s annual results showed that earnings from its operations elsewhere on the continent grew by 9 percent in 2018, the fastest of all its divisions.