Ethiopia Banking & Financial Services Q4 2019
Ethiopia's banking and financial services industry sits in a strong position, especially in the more developed banking andinsurance sector. In the former, both assets and client loans are forecast to enjoy double-digit growth across our forecast period,while in the latter, both the larger non-life and smaller life markets are predicted to enjoy growth over the next decade, but with thenon-life market accelerating faster and gaining a greater share of gross premiums. With penetration rates still low, however, thisoffers plenty of upside for growth in all four markets we track - including in the underdeveloped asset management and stockexchange arenas. The ongoing liberalisation of the financial services sector remains a potentially strong tailwind, as the government,as part of continuing business environment reforms, explores the possibility of allowing foreign investment in Ethiopia’s bankingsector across our short-term outlook. The presence of foreign banks would boost the sector, and possibly economic growth. Moreforeign investment could mean increasing competition between lenders, challenging the dominance of domestic playersand possibly bringing down interest rates for borrowers. In the meantime, we expect both asset quality and capital adequacy toremain relatively robust. This is all supported by a strong macroeconomic backdrop which positions Ethiopia as the engine ofeconomic growth in East Africa across our ten-year forecast period.
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