@EthiopianChamberOfCommerce – Ethiopian Business Review

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The National Bank of Ethiopia (NBE) has introduced a new round of regulatory reforms aimed at easing access to hard currency and aligning market practices with international standards.

The central bank has capped all bank-related foreign currency transaction fees at 4%, effective May 26, 2025, and will require banks to publicly disclose FX-related charges starting next month. This measure is designed to promote transparency, rein in non-standard pricing practices, and protect businesses and individuals navigating the increasingly active FX market.

At the same time, NBE has lifted the long-standing import advance payment ceiling from USD 5,000 to USD 50,000 per transaction—a step aimed at relieving one of the most persistent bottlenecks faced by importers. The updated threshold reflects what the NBE describes as a necessary adjustment, considering how long the previous limit had been in place and the evolving nature of global trade norms.

The foreign exchange regulator has also revised the rules governing how much travelers can take abroad. Under the new guidelines, personal travelers will be permitted to purchase up to USD 10,000, while business travelers may access up to USD 15,000. Additionally, individuals holding foreign exchange accounts will now be allowed to spend up to 20% of their balance via debit card—doubling the previous 10% ceiling.

These changes follow nearly a year of progressive liberalization, launched in July 2024 when the NBE unveiled a more market-based exchange rate regime. Since then, the central bank reports that goods exports have more than doubled, while service exports, remittances, and both official and private capital inflows have shown marked improvement.

As a result, the country’s foreign currency reserves have reached record highs, with increased FX availability enabling firms to secure vital inputs and expand operations. Bi-weekly FX auctions, another cornerstone of the reform effort, have added liquidity to the banking system and contributed to narrowing the gap between official and parallel market rates.

The latest measures, according to NBE, are a direct response to the positive feedback loop generated by these reforms and are intended to further normalize the foreign exchange environment. By enforcing fairer pricing, relaxing outdated limitations, and encouraging transparent financial intermediation, the central bank aims to strengthen trust in Ethiopia’s FX system—one that remains critical to sustaining business confidence, investor participation, and broader macroeconomic recovery.

While challenges remain, NBE’s phased approach suggests a careful calibration between regulatory oversight and market flexibility, with a clear shift away from rigid controls that have long characterized the foreign currency regime.

The Ethiopian Enterprise Development (EED) has announced that it successfully disbursed over ETB 6 billion in operational loans to 1,209 small and medium-sized manufacturing enterprises (SMEs) during the first nine months of the 2024/25 fiscal year. The funds are part of the government’s ongoing efforts to strengthen and expand the country’s industrial base.

Abdulfatah Yusuf, Deputy Director General of EED, shared these figures at a press briefing, highlighting the positive impact these loans have had in enabling local enterprises to scale operations, improve efficiency, and create jobs. The loans are aimed at helping SMEs overcome financial barriers, particularly for those that are working to expand their production capacity or upgrade their technology.

Additionally, EED facilitated the distribution of machinery worth over ETB 4.3 billion to 889 enterprises through its lease financing services, further enabling the growth of manufacturing capabilities across Ethiopia.

This support comes at a time when the country’s manufacturing sector is experiencing a resurgence, with the creation of 151,726 new jobs and the establishment of 2,752 new enterprises in the first nine months of the fiscal year. The government’s industrial development agenda also emphasizes import substitution, with 1,451 enterprises producing 902,191 tons of proxy products, saving the country an estimated $1.6 billion in foreign exchange.

Ethiopia has harvested 1.6 million hectares of wheat from its summer irrigated farming program, with 98 million quintals expected to be produced in the ongoing fall season. The Ministry of Agriculture has already sown 3.5 million hectares of land this year, as part of its efforts to boost national wheat production.

Speaking to ENA, Isayas Lemma, the CEO of Crop Development at the Ministry, highlighted that the country is working to increase both production and productivity by enabling farmers to grow crops throughout the year in the summer, spring, and fall irrigated areas. This strategy is designed to ensure food security and reduce dependence on wheat imports.

The increase in production is attributed to expanding the area covered by seeds, utilizing previously uncultivated land, and applying modern agricultural technology and high-quality seeds. These factors have contributed to higher yields and improved productivity.

This year, Ethiopia plans to produce 172 million quintals of wheat from the summer irrigated cultivation alone, with harvesting already underway for the early-sown crops.

For the fall season, 2 million hectares have been sown out of the 3.7 million hectares planned. The target for fall production is 98 million quintals, in line with Ethiopia’s push for year-round food production and greater agricultural self-sufficiency.

The National Bank of Ethiopia (NBE) has drafted a new directive that emphasizes stricter data security, storage, and management for all banks in the country.The Requirements for Licensing and Renewal of Banking Business and Representative Office Directive No. SBB/Xx/2025 opens the door for foreign banks to establish subsidiaries or branches for the first time. However, foreign banks must meet stringent requirements, including a minimum capital of ETB 5 billion (approximately USD87 million) for subsidiaries, possess investment-grade credit ratings, and secure approval from their home-country regulators. This regulatory shift is a part of Ethiopia’s broader effort to modernize its financial sector, attract foreign investment, and align with global banking practices while safeguarding local stability.

Under the new directive, foreign banks must undergo thorough fit-and-proper checks, which include criminal and tax clearance, and submit detailed business plans demonstrating long-term viability. Non-lending representative offices are also allowed to facilitate market research and business liaisons, but they are prohibited from conducting banking activities. The directive further mandates that all foreign banks and their subsidiaries comply with strict data security requirements, ensuring that customer data is stored and processed within Ethiopia’s borders. This aligns with the Banking Business Proclamation No. 1360/2025 and the Personal Data Protection Proclamation No. 1321/2024, providing a legal framework for safeguarding banking and personal data.

Additionally, the directive imposes higher standards on domestic banks, including increased capital requirements, new data localization rules, and mandates for gender diversity on boards. Domestic banks applying for a new business license will be required to pay an investigation fee of ETB 100,000 and a licensing fee of ETB 300,000, with a renewal fee of ETB 200,000. Foreign banks face higher fees, including an investigation fee of ETB 200,000, a licensing fee of ETB 600,000, and a renewal fee of ETB 400,000. Representative offices of foreign banks will have to pay an investigation fee of ETB 50,000, a licensing fee of ETB 150,000, and a renewal fee of ETB 100,000.

The directive also provides clear rules for the licensing process, including annual renewals for all banks between July 1 and September 30. Banks must submit updated financial statements, capital information, and confirmation of legal reserves, while representative offices must demonstrate proof of a USD 100,000 cash deposit to cover their expenses. The NBE retains the authority to approve or reject applications based on an institution’s ability to operate according to Ethiopian banking laws and regulations.

One of the most significant aspects of the directive is the stringent data security provisions. All banks are now required to store and process customer data within Ethiopia, with foreign bank branches needing to store both primary and backup data locally. Banks transferring data abroad must notify the NBE, ensure robust encryption, access controls, and demonstrate that the jurisdiction receiving the data offers comparable protection.

Analysts view these reforms as a critical step in Ethiopia’s economic transition, following the partial privatization of the telecom sector. While the reforms aim to attract foreign investment and modernize the financial system, they also maintain cautious capital controls and impose limits on foreign ownership, capping foreign stakes in Ethiopian banks at 49%. The NBE is expected to process license applications within 90 days, with the first foreign banks anticipated to begin operations in the country in the coming year.

The directive replaces the previous Requirements for Licensing and Renewal of Banking Business Directive No. SBB/56/2013, marking a step forward in Ethiopia’s efforts to integrate more fully into the global financial system while safeguarding its national interests.

The trade relationship between Ethiopia and Kenya remains underdeveloped, with Ethiopia’s exports to Kenya in 2023 reaching only $58 million, far below the $112.4 million that Kenya exported to Ethiopia. The total annual trade volume between the two countries has yet to surpass $200 million, as reported by Sheger 102.1.

At the second Ethiopia-Kenya Trade Forum held in Addis Ababa, Ambassador Yohannes Fanta, Director General of Political Economy and Diplomacy at the Ministry of Foreign Affairs, acknowledged the slow trade growth between the two countries. He noted that Ethiopia primarily exports coffee, spices, leather products, and electrical inputs to Kenya, while Kenya supplies industrial goods to Ethiopia. Despite the potential for stronger economic collaboration, trade figures remain modest.

Kenyan Ambassador to Ethiopia, George Orina, emphasized that trade volumes do not reflect the strong relationship between the two nations. He pointed out Ethiopia’s ongoing macroeconomic reforms aimed at improving the business climate and encouraged Kenyan investors, particularly young entrepreneurs, to explore opportunities in Ethiopia.

Zekarias Assefa, Secretary of the Addis Ababa Chamber of Commerce and Industry, highlighted the need to shift from a historically diplomatic relationship to a more dynamic economic partnership.

NBE Caps Forex Fees at 4%, Raises Import Advance Limit to USD50,000

Ethiopia Disburses Over ETB 6 Billion in Loans to Manufacturing SMEs

Ethiopia Boosts Wheat Production with 1.6 Million Hectares Harvested and 3.5 Million Hectares Sown

Banks to Face Higher Licensing Fees and Stricter Data Security Requirements Under New NBE Directive

Ethiopia-Kenya Trade Gap of $54 Million Exposed