The National Bank of Ethiopia (NBE) has announced the successful completion of the licensing process for Independent Forex Bureaus, expanding the landscape of foreign exchange operations in the country. This significant move allows more individuals and companies to engage legally in the foreign exchange market, a sector that was previously dominated solely by banks.
In July, the NBE introduced Foreign Exchange Directive No. FXD/01/2024, which outlines the requirements for businesses wishing to operate as forex bureaus. According to the directive, eligible entities must be legally established, owned by Ethiopian nationals, non-resident Ethiopians, or foreign citizens of Ethiopian origin. Additionally, they must meet a minimum capital requirement of 15 million birr and provide a security deposit of 30 million birr, which will be held in a blocked account at any bank.
Abebayehu Dufera, the NBE’s Deputy Director of Foreign Exchange Monitoring and Reserve Management, expressed enthusiasm about the new opportunities for forex bureau operations. “We have welcomed those who have expressed interest in opening a forex bureau, and once we resolve the issue with the Minister of Commerce, we will start issuing licenses immediately,” he stated during a panel discussion in Addis Ababa titled “The Significance of the New Foreign Exchange System Change for the National Economy.”
The introduction of forex bureaus comes as Ethiopia seeks to liberalize its foreign exchange market, which has faced challenges due to restrictions on capital flows and imports. Mesenbet Shenkute, President of the Addis Chamber, highlighted that access to loans and foreign exchange reserves remains a pressing concern for the private sector.
The NBE’s decision follows a broader restructuring of the foreign currency system, which includes lifting the ban on 38 imported commodities. This move aims to enhance the flow of capital into the foreign exchange market, allowing for increased exports and improved economic performance.
As Ethiopia navigates this transition, the establishment of forex bureaus is expected to provide more accessible foreign exchange services, thereby supporting the country’s economic growth and stability. The NBE’s commitment to expanding the forex market reflects its ongoing efforts to create a more competitive and efficient financial environment in Ethiopia.
