This year, Ethiopia’s economy will invite optimistic phenomena as the nation takes bold steps to reshape its financial landscape. The shift to a floating exchange rate marks a pivotal moment, fostering transparency and encouraging investor confidence. Alongside this, the establishment of the Ethiopian Securities Exchange is set to open new doors for businesses and investors, providing a platform for capital growth and economic dynamism. Adding to this momentum, the entry of foreign banks promises to bring global expertise, increased competition, and a fresh influx of capital, positioning Ethiopia’s economy for a transformative leap forward. However, while the capital market presents immense opportunities, experts warn that the entry of foreign banks could pose significant challenges to young and emerging banks.
ZamZam Bank, one of Ethiopia’s pioneering interest-free banks, was officially established in 2020, making history as the country’s first full-fledged Islamic bank. As Ethiopia opens its doors to foreign banks, ZamZam is among the emerging banks likely to feel the impact of increased competition, facing pressure to innovate and solidify its market share amidst a rapidly evolving financial landscape.
“When we talk about foreign banks entering the Ethiopian market, they will primarily come from neighboring Central Eastern countries,” said Melika Bedri, CEO of ZamZam Bank. “We are currently investigating which banks will enter, with the intention of forming partnerships and working together.”
In its first year, ZamZam Bank faced a loss of 145.42 million Birr due to economic adversities. However, the bank’s strategy of boosting income through financing and investment activities ultimately turned its fortunes around.
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