Love Or Red Tape?

Welcome to the latest edition of ፍራንክ Digest!

Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.

Here’s what’s coming your way:

• 🎯 Banking on Opportunity: FirstBank Sets its Sights on Ethiopia

• 🔒 The Safe Future of Money?

• 🗝️ The Key Takeaways

Thanks for reading!

FirstBank May Be Ethiopia’s First Foreign Bank

Banking

Big news, Ethiopia—FirstBank of Nigeria is possibly packing its bags and heading our way!

With Ethiopia finally letting foreign banks set up shop, FirstBank isn’t wasting any time taking a peek. It’s like someone just opened the gates to a buffet and FirstBank is first in line, probably walking in with a plate the size of a satellite dish. So, what does this financial heavyweight want in our backyard? And more importantly, what does it mean for you?

FirstBank: A Banking Big Shot

FirstBank isn’t your run-of-the-mill financial institution—it’s a 130-year-old titan. Established in 1894, it’s not just Nigeria’s oldest bank but one of Africa’s as well. Here’s a quick snapshot of its résumé:

• Total Assets: A solid $10.5 billion as of 2023.

• Branch Network: Over 700 branches across Nigeria, with a presence in Ghana, DRC, Sierra Leone, and more.

• Global Reach: Offices in London, Paris, and even Beijing—because why not?

Now, let’s talk local comparison. Ethiopia’s Commercial Bank of Ethiopia (CBE), the country’s banking colossus, reported assets of 1.9 trillion birr (roughly $14.9 billion at current exchange rates) as of December 2024. So, FirstBank might be CBE’s junior in terms of assets, but best believe its battled bigger giants on the global stage, offering products and services like credit cards and digital banking platforms—things Ethiopia’s banking sector hasn’t quite mastered yet.

Why Ethiopia?

So, what’s luring FirstBank to Ethiopia? The answer is simple: potential.

1. Population Goldmine: Ethiopia is Africa’s second-most populous country, with over 130 million people, many of whom are underbanked or unbanked entirely.

2. Economic Growth: Ethiopia is East Africa’s largest economy, with a forecasted GDP growth of 6.5% in 2025.

3. Untapped Market: Only about 45% of Ethiopians have access to formal banking services. That’s a massive gap waiting to be filled.

As FirstBank’s Deputy Managing Director Ini Ebong puts it, “Ethiopia represents a significant opportunity due to its large economy and substantial banking pool.”

What FirstBank Brings to the Table

FirstBank isn’t here to dabble; it’s here to dominate. Here’s why Ethiopian banks might be sweating a bit:

• Tech Game on Point: FirstBank’s digital banking platforms and fintech services are light-years ahead, potentially leapfrogging Ethiopia’s sector into the future.

• Battle-Tested: Having expanded into emerging markets like Ghana and the DRC among others, FirstBank knows how to adapt, compete, and win.

• Product Variety: From credit cards to robust lending services, it’s bringing products Ethiopian banks don’t yet offer.

What This Means for Ethiopian Banks

Let’s face it—local giants like Awash Bank ($2.2 billion in assets), Bank of Abyssinia ($1.75 billion), and Dashen Bank ($1.44 billion) are in for a wake-up call. But competition isn’t necessarily bad news:

• Customers get better services, lower fees, and exciting new products.

• Local banks will likely step up their tech game to keep up.

• The overall quality of banking services in Ethiopia could see a much-needed upgrade.

Regulatory Hurdles: The Unseen Competition

Before we get too carried away with excitement, let’s talk about the not-so-glamorous part: regulatory hurdles. Because, let’s face it, every good party has a bouncer.

Breaking into a market as tightly controlled as Ethiopia’s isn’t going to be a cakewalk. Just ask Safaricom, Kenya’s telecom superstar, which came into Ethiopia with high hopes and found itself tangled in red tape.

Despite securing a license, Safaricom quickly realized it was playing second fiddle to the state-owned Ethio Telecom. Want to pay taxes as the shiny new telecom provider? Sure, but only on Telebirr—Ethio Telecom’s flagship mobile money service. Yep, you read that right: Safaricom has a Telebirr account. Not just to fuel up their company vehicles, but to settle their taxes.

If FirstBank thinks they’ll simply waltz in and start making waves, they might be in for a similar reality check. Ethiopia’s banking regulations are likely to favor local giants like Commercial Bank of Ethiopia (CBE) and big private players such as Awash Bank and Dashen Bank. After all, these banks are deeply entrenched in the system, and regulators might not be in a rush to shake up its shareholders and the status quo.

Throw in other regulatory hoops that foreign banks are likely to face—restrictions on repatriating profits, capital requirements, and approvals for every new service—and FirstBank’s path looks more like a marathon than a sprint.

A New Chapter in Ethiopian Banking

FirstBank and other foreign banks like it are likely to step in like the main character in a rom-com, ready to win hearts and wallets. This isn’t some polite “Hello, we’d like to contribute.” It’s more like, “Step aside, we’ve got global experience, digital swagger, and credit cards to boot.” 

It’s a chance for collaboration, innovation, and growth for everyone involved. For Ethiopian customers, it could mean better banking. For businesses, it opens up financing options on a whole new level.

Key Takeaways

1. FirstBank’s Eyeing Ethiopia: The Nigerian banking giant is considering a move to Ethiopia. With $10.5 billion in assets and 130 years under their belt, it’s not exactly the new kid on the block—more like the cool kid on the block.

2. Ethiopia’s Untapped Potential: With a population of 130 million and only half of them having access to formal banking, it’s a bit of a treasure chest of banking opportunities. And FirstBank is ready to swoop in. 

3. It’s Not All Smooth Sailing: Before foreign banks start popping champagne, they’ll have to dodge some regulatory red tape.

4. What’s in it for You?: More competition means better services, lower fees, and new products. This could bring some much-needed spice to the banking scene.

ፍራንክ Picks 

🚶🏽 Event: DigiBank Summit 2025 [Jan 29, 2025]

🗞️ In the news: IMF DIsburses Another USD 248 Million to Ethiopia 

♟️ Innovation: Dashen Bank Has a Super App

Allure of Narrow Banking

Banking Finance

So, let’s talk about a banking concept that might sound like a financial wizard’s dream but could actually be the future—Narrow Banking. If you're scratching your head wondering what exactly that means, don’t worry, we’ll break it down for you.