On December 17, 2024, the Ethiopian parliament ratified a new law that permits foreign banks to enter the previously restricted financial sector. This initiative, known as the Banking Business Proclamation, allows foreign banks to establish subsidiaries, open branches or representative offices, and acquire shares in local banks.

The liberalization of the financial sector, which includes the inception of a stock market, is part of the ongoing reforms by the Abiy Ahmed administration to privatize and deregulate vital segments of the Ethiopian economy.

In line with its Homegrown Economic Reform Agenda—which is overseen and financed by the International Monetary Fund (IMF) and the World Bank—the Abiy government has adopted various high-risk economic strategies, shifting the economy away from a developmental state model that prioritized manufacturing and industrial growth toward a neoliberal framework.

This transition accelerates the liberalization and privatization of significant sectors, with limited foreign exchange revenues being directed primarily towards tourism and mining.

Currently, the Abiy administration’s focus spans telecommunications, banking, energy, logistics, and transportation. Ongoing discussions are concerning the divestment of shares in Ethiopian Airlines, the country’s most profitable state-owned enterprise. Additionally, following a fresh IMF structural adjustment program signed in July 2024, the Abiy government reformed the exchange rate system and allowed the Ethiopian birr to float, resulting in an alarming 170% devaluation of the currency, leading to a rise