An Initiative by the National Bank of Ethiopia

DEBO | ደቦ

The National Bank of Ethiopia has launched Debo, an awareness initiative aligned with the new Foreign Exchange Directive 01/2024. The initiative aims to educate the Ethiopian Global Community on the reforms, offering clear guidelines and benefits for using Foreign Currency Accounts (FCY) and legal remittance systems. By promoting understanding and adoption of these policies, Debo seeks to strengthen Ethiopia’s economic growth.

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National Bank of Ethiopia

FOREIGN EXCHANGE DIRECTIVE NO. FXD/01/2024

JULY 2024

FREQUENTLY ASKED QUESTIONS

on Foreign Exchange Regulations

EXCHANGE RATE LEVEL AND DETERMINATION

No, Banks and authorized dealers are free to set their own exchange rate. In addition, Banks and authorized foreign exchange dealers are allowed to buy and sell foreign currency from/to their clients and among themselves at freely negotiated rate

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This is a weighted average exchange rate computed from all banks’ FX transactions on the prior business day. The calculation is weighted by the volume of foreign exchange(FX) bought or sold so that larger transactions are given a larger weight in computing the average across all banks and all FX transactions. This rate is meant to provide the market with information on the average exchange rate applied for FX transactions on the prior business day.

No. This rate is posted by the NBE on a daily basis simply to provide transparency to the market about the average exchange rate used by all banks on the prior business day.

There is no strict limit on the spread between the buying and selling rate; however, the NBE has indicated to banks that—in line with international practice—this spread should generally not exceed 2 percent.

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Yes. For the purposes of transparency and customer awareness, all banks are required to post their buying and selling rates on a daily basis at their branches and online portals.

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Yes, customers can undertake such negotiations with their banks. Banks are also free to offer rates other than their posted rates, as long as this is done through objective criteria and in line with the procedural steps laid out by each bank.

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EXPORTER RETENTION ACCOUNTS

  • 50 % of export proceed is credited into the exporter’s Retention Account and the remaining 50 % converted to birr immediately at freely negotiated rate.
  • However, exporters in Special Economic Zones or SEZs (whose designation as SEZ is approved by the relevant authorities) are entitled to hold 100% of their export proceeds.

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FX funds in retention accounts can only be utilized for own use by the same legal entity that generated the FX and for all current account payments. Current account payments refer to payments for import of goods and services as well as for dividends and external debt service repayments.

No. Only the same legal entity that generated the export proceeds can utilize the FX funds in a retention account.

Following changes to the FX Directive in November 2024, and through revised FX/02/2004 Directive, FX funds in a retention account can now be held indefinitely if so chosen by the exporter. Such FX funds may also be converted to Birr at any time at the discretion of the exporter.

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Yes, all exporters are required to repatriate all FX proceeds from their export proceeds.

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EXPORT AND IMPORT PERMITS

The National Bank of Ethiopia provides export permits only for gold exports. Export permits for all other products are now provided and handled by banks.

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No, the issuance of import permits is fully handled by commercial banks.

EXPORT AND IMPORT PERMITS

The application is handled by the National Bank of Ethiopia, Foreign Exchange Monitoring and Reserve Management Directorate located at Building No.3.

The requirements for the application are:

    • Trade License issued by the Ministry of Trade and Regional Integration for this particular business,
    • Evidence for 15 million capital,
    • Written application,
    • Security capital of 30 million birr in the name of the forex bureau in blocked account at the chosen bank by the applicant,
    • Evidence for having the necessary device to protect counterfeit foreign currency notes and others like CCTV camera,
    • Office equipment,
    • Evidence for insurance purchased to cover the maximum cash holding in the forex bureau at any given time,
    • Undertaking that staff including head of the forex bureau are people of integrity, credibility and competence with no record of fraud,
    • Name plate of the forex bureau indicating the physical address of the forex bureau.

The NBE may, at any time, place a limit to the number of licenses that can be issued within a given year in order to ensure appropriate regulatory oversight and compliance.

  • Independent FX Bureau can be opened by Ethiopian nationals, Non-Resident Ethiopians, and/or Foreign Citizen of Ethiopian Origin.
  • Business form: Any legal form may be used to open independent FX bureaus.

No, NBE does not provide FX sales for regular travelers, except in the special cases for the staff of Government Organizations which have FX accounts at NBE.

No, such FX are provided by commercial banks and applicants should make such fx requests at commercial banks.

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  • Air ticket and Passport with its entry visa of destination country (if an entry visa is not required by the destination country, then the visa is not required).
  • If the trip is for business purpose and the traveler is a representative of the business organization, the requirements include business license, air ticket and Passport with its entry visa of destination country (if an entry visa is not required by the destination country, then the visa is not required).

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  • Banks can provide up to USD 5,000 or its equivalent in other convertible currencies in cash notes or debit card for personal travelers who travel outside Ethiopia for holiday, education, medical, or other personal reasons.
  • Banks can provide up to USD 10,000 or its equivalent in other convertible currencies in cash notes or debit card for business travel.
  • In addition, if the traveller has FX account, he/she can take up to USD 10,000 or its equivalent in other convertible currencies in cash or a debit card. Moreover, he/she can take up to 10% of the outstanding balance in foreign currency account can be taken in debit card per travel for all account holders regardless for purpose of travel(personal or business).
  • Unless authorized by NBE, Ethiopian resident may not carry FCY cash notes more than USD 10,000 or its equivalent in other convertible currencies per travel.
  • For Government travelers as per Council of Ministers Directive, the maximum limit is USD 10,000 or its equivalent in other convertible currencies
  • Embassies, International Organizations, and Regional Organizations can withdraw FCY cash from their FCY accounts for purpose of covering outlays for conferences, workshops, meetings and per-diem payments.

FOREIGN CURRENCY
ACCOUNTS

Foreign Currency Accounts for Foreign Entities (Non- Resident Foreign Currency Accounts):

  • FDI Companies, International Organizations, Foreign Embassies and Consulates, Foreign Non- Government Organizations are eligible for this type of account.

 Foreign Currency Accounts for Resident Ethiopians, Non-Resident Ethiopians, Non–Resident Foreign Nationals of Ethiopian Origin:

  • Residents of Ethiopia (Individuals, Not–for–Profit organizations), Non–Resident Ethiopian Individuals, Persons of Ethiopian Origin: Non –Resident Foreign Nationals of Ethiopian Origin are eligible to open this type of FCY Account.

Retention Accounts

USD 100 or equivalent other acceptable currencies.

Resident Ethiopians who can open a FCY account are those who meet the conditions laid out in Section 14.5 of the FX Directive. These conditions include resident Ethiopians who: (1) receive transfers from accounts abroad effected via the banking system; (2) receive remittances from abroad and choose to retain the remittances in foreign currency terms; (3) earn salary, rental, or other income in foreign currency terms; (4) receive a transfer from a FCY account within Ethiopia; and (5) possess and present to their bank foreign currency cash notes.

Only Authorized Representatives in Ethiopia (Banks, Ethiopian Postal Service, Telecom Companies, Payment System Operators, Payment Instrument Issuers, other similar entities approved by NBE) can engage in the provision of remittance services after receiving approval from NBE for their remittance service agreement with International Remittance Service Providers (IRSPs).

No, only licensed entities by NBE can accept foreign currency cash notes or foreign currency debit and credit card for goods and services provided in Ethiopia.

A person entering in to or departing from Ethiopia may hold a maximum of Birr 3,000. However, if the travel is to or from Djibouti or other neighboring countries, then the maximum amount that may be held is Birr 10,000.

  • A person residing in Ethiopia and entering into Ethiopia carrying foreign currency should convert such foreign currency within 30 days from the date of entry (shown on entry stamp) within which he has to convert to local currency at forex bureau, or deposit in foreign currency account (if he has or opened such an account);
  • If the person who entering with foreign currency is an Ethiopian National Residing Abroad or a Foreign National of Ethiopia Origin, then the foreign currency must be converted or deposited into a FCY account within 90 days from the date of entry.
  • A foreigner not residing in Ethiopia and entering the country while carrying foreign currency may hold the foreign currency up to the validity period of his/her visa.
  • A person residing in Ethiopia who purchased foreign currency from banks can hold it for a period of only 30 days (from the date of bank advice), after which it should be converted into Birr at a forex bureau within 30 days.
  • Travelers carrying FCY exceeding USD 10,000 or equivalent other convertible currency need to complete and make a customs declaration.
  • Transit passengers are exempted from declaring the FX at entry point.
  • Public-Private-Partnership(PPP) projects in power projects and infrastructure sector
  • Large mining project with substantial export-earning

No, only financing from equity and loan is allowed is to be deposited in the Offshore account.

  • Exporters,
  • Foreign investors,
  • Domestic manufacturers,
  • Agricultural Machines/Inputs Imports and LPG Gas Importers and
  • Construction sector companies

Yes, USD 5,000 is the maximum limit. However, higher amounts are allowed if backed by an equivalent foreign bank guarantee.

No. However, such organizations may transfer FX funds directly to beneficiary’s FX account if the beneficiary has a FX account.

Exporters are considered delinquent if they have not repatriated FX funds after 90 days and importers are considered delinquent if they have not processed their imports after 120 days.

No. Payments for medical services require only the presentation of a bona fide invoice from a foreign hospital for the patient who is traveling for medical treatment.