Fortune News | Jul 02,2022
Over a dozen banks hoping to join the industry saw their ambitions screech to a halt last week as they failed to meet a deadline to raise half a billion Birr in paid-up capital. The central bank gave them a six-month window to raise the equity in March this year, but the uphill climb proved too steep. A pandemic, widespread instability, a full-blown civil war, and restrictions on foreign nationals of Ethiopian origin while investing are among the impediments promoters failed to overcome. An extension request submitted to the central bank in the final weeks was rejected, and promoters of banks under formation were left scratching their heads, wondering what to do next.
There are only three options. Raise a whopping five billion Birr in paid-up capital and apply for a banking license, attempt to patch together a merger with others in the same boat, or dissolve. What they decide remains to be seen.
Some have succeeded. Goh, Amhara, Tsehay, Gadaa and Ahadu banks have squeezed through. Rammis Bank is set to enter the industry as the third full-fledged interest-free bank, following in the footsteps of ZamZam and Hijra banks.
Microfinance institutions are looking to join the mix, with no less than six gearing up to transform into commercial banks. Regulators at the central bank and experts expect the army of new entrants to boost competition and foster innovation in the industry—a good sign for a country with nearly two-third of the population remains unbanked.
You can read the full story here
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