In a landmark move to modernize its financial sector, the National Bank of Ethiopia (NBE) has mandated the dematerialization of all government and NBE securities, transitioning from paper-based certificates to an electronic book-entry system. The new directive, No. MFAD/001/2025, aims to enhance market efficiency, transparency, and investor confidence while mitigating systemic risks.

As per the new directive all government and NBE securities must now be held electronically in a Central Securities Depository (CSD).The shift eliminates the need for physical documents, reducing fraud risks and streamlining transactions and the electronic records in the CSD will serve as the sole legal proof of ownership.

According to the directive NBE & Ministry of Finance oversee the transition, verify securities, and ensure data accuracy.

It added that CSD operator shall maintains digital records, assigns unique security codes (NSIN/ISIN), and enforces compliance.

The new directive indicated that banks and financial institutions, who are potential CSD members, would assist investors in converting physical certificates, conduct KYC checks, and submit documents to the CSD.

Investors who fail to convert their securities within five years will have them transferred to a special government account, with forfeited benefits unless valid justification is provided.The move positions Ethiopia’s securities market among modern, digitally driven economies, improving liquidity, reducing paperwork, and attracting more investors.