Ethiopia plans to open up its banking industry to foreign competition as soon as parliament passes policies permitting it, Prime Minister Abiy Ahmed said, flagging reforms of one of the last major sectors of the economy still to be liberalised.

When Abiy took office in 2018, he pledged to overhaul sectors like telecoms and financial services.

Measures to open up the telecoms sector are underway, with a consortium comprising Kenya's Safaricom, South Africa's Vodacom, Britain's Vodafone and Japan's Sumitomo building a network after obtaining an operating licence last year.

The fact that Ethiopia has closed its doors to foreign banks has benefited the sector until now, Abiy told lawmakers. "But after this, banks need to prepare themselves with modern ways and information technologies," he added.

"Regarding this, the government is now preparing... a policy amendment. Once preconditions are met and banks are prepared, we will (implement) that."

At present Ethiopia has 18 commercial lenders, two of which are State-owned, according to the central bank.