KCB Group is considering an acquisition in Ethiopia as it steps up its regional expansion. The banking group says it is mulling applying for an exemption from Ethiopia’s foreign ownership cap to pursue the local acquisition and it seeks to spread its footprint into Africa’s second-most populous nation.
“Whenever a market like that opens, getting an exemption is not difficult,” KCB Group CEO Paul Russo says, speaking to The Africa Report. He said the bank is still searching for a target willing to sell a larger share before petitioning the National Bank of Ethiopia (NBE).
With a population of more than 120 million — Africa’s second largest — Ethiopia offers untapped potential for retail and corporate banking. “We have to work it out, and, if it is going for an exemption, there must be a party ready to walk with us,” Russo says, adding that if need be, the group might seek diplomatic lobbying from the Kenyan government.
KCB Group is accelerating its regional growth strategy, bolstering its presence and capabilities across East Africa and now further towards the Horn. The latest moves signal a focused push into neighboring markets, propelled by both capital injections and tech-driven acquisitions. It is following Safaricom, which has already established itself in the market through a local subsidiary.
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Ethiopia’s banking sector, long characterized by tight state control and limited foreign involvement, is edging toward a historic transformation. For decades, the industry has been dominated by state-owned Commercial Bank of Ethiopia, alongside a growing number of local private banks. Together, these institutions have navigated a closed market where foreign banks were locked out, and technology adoption lagged behind regional peers like Kenya and Nigeria.
That landscape is now shifting. The government has signaled openness to liberalizing the financial sector, with a new banking proclamation expected to allow foreign players a foothold. Analysts say the move is designed to inject competition, improve efficiency, and unlock new sources of capital. “Ethiopia cannot achieve its economic ambitions with an insulated banking sector,” notes an Addis Ababa-based economist.
Technology is another driver. The rise of mobile money platforms, particularly Safaricom’s M-Pesa — which recently launched in Ethiopia — has forced banks to rethink customer engagement. Digital finance is becoming a lifeline in a country where millions remain unbanked. Local banks are racing to introduce mobile applications, agency banking, and partnerships to keep pace.
KCB recent foray in Tanzania, which Russo identifies as a major growth frontier, is paying off. In 2024, KCB Tanzania posted revenue of approximately $48.6 million and a net profit of around KSh 2.6 billion (≈ $20 million), placing it third in profitability among its external subsidiaries.
KCB is expanding its digital footprint. In March 2025, the group announced a pending acquisition of a 75% stake in Riverbank Solutions — a fintech firm powering agency banking and payment systems across Kenya, Uganda, and Rwanda — worth roughly KSh 2 billion (≈ $15.4 million).
This move enables KCB to offer a comprehensive digital banking suite — from revenue collection systems to SME management tools — strengthening its competitive edge in a rapidly evolving financial landscape.
KCB’s regional subsidiaries continue to contribute a meaningful share of group revenues and assets. As of the nine months ended September 2024, subsidiaries outside Kenya accounted for 36.6% of profit after tax and 34% of total assets, reflecting a significant leap in diversification.
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In Uganda, KCB injected an additional equity of KSh 1.2 billion in 2022, raising the investment value to KSh 4.34 billion. This contributed to net profit growth from KSh 270 million in 2021 to KSh 1.04 billion, thanks to enhanced interest and non-interest income streams, digital innovations, and improved efficiency.
Part of KCB’s regional success stems from restructuring and localization. A decade ago, subsidiaries contributed only about 5% to group profits. Through deliberate governance reforms — creating the holding company structure, deploying regional business directors, and installing local MDs and board chairs — KCB has enabled stronger performance across markets.
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