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Africa: Ethiopia takes a different path

The government insists that its banking sector will remain closed to external investment. But can the country’s economy thrive without better access to international credit?

Ethiopia light railway-R-600

A man walks beside the electrified light railway track in Ethiopia's capital Addis Ababa

Ethiopia’s banking sector will not be open to international investment for at least five years,” according to Abraham Tekeste Meskel, state minister, ministry of finance and economic development in Ethiopia. He made this declaration at a summit in Addis Ababa in October hosted by The Economist. 

Yet Meskel’s statement did not stop delegates posing the same question about the country’s banking sector throughout the conference. It came up in discussions about agriculture, manufacturing and the rise of Ethiopia’s consumer class. Each time the answer was the same; Ethiopia’s financial services sector will not be opened to international investment for the foreseeable future

But it will have to open eventually. In 2003 Ethiopia applied for World Trade Organization membership. One of the main preconditions for joining is the liberalisation of financial markets. “People looking at Ethiopia are completely preoccupied by the financial services sector because this tends to be seen as one of the most profitable sectors in developing African countries,” says CEO of state-owned Ethiopian Airlines, Tewolde GebreMariam.