The Ethiopian Government is planning to allow foreign banks to buy up to 30% stake in the country’s commercial banks, Bloomberg has reported. 

The move is aimed at encouraging investment in Ethiopia, one of the leading economies in Africa. 

A draft document, which was circulated to local banks last week by the Council of Ministers, stipulates the extent of stake foreign investors can buy, the publication said. 

Last month, the Ethiopian Government announced that it will open the country’s banking sector to allow foreign investments. 

Announcing the move, the Prime Minister’s office said: “Opening up banking to foreign investors would transform our country’s economy by boosting it to have a better link with the international market.” 

The move to allow foreign investments in the banking sector is part of the government’s plan to foster competition, enhance foreign currency inflows, and create employment opportunities.   

National Bank of Ethiopia Governor Yinager Dessie did not respond to requests for comments. 

Based on Vice Governor Fikadu Digafe’s remarks last month, the draft legislation could come into force this year. 

The draft also proposes that foreign individuals can acquire a 5% stake in the domestic bank and foreign banks will be allowed to set up subsidiaries or open branches in the country. 

According to World Bank data, the country currently has 25 commercial banks which cater to 117 million people. 

Currently, companies including Kenya’s Equity Group and KCB Group along with Standard Bank Group have representative offices in Ethiopia, which has been opening other sectors such as telecommunications, transportation and aviation for foreign investment.