The National Bank of Ethiopia (NBE) has announced that foreign investors can now fully repatriate dividends and other payments, eliminating a significant barrier to Foreign Direct Investment (FDI) in the country.
Historically, the repatriation of profits and investment capital has presented considerable challenges for FDI in Ethiopia.
However, during a recent parliamentary session, NBE Governor Eyob Tekalegn confirmed that this issue has been effectively resolved, thanks to a series of economic reforms, particularly a comprehensive overhaul of the foreign exchange regime implemented in mid-2024.
“Foreign investors have often expressed concerns about Ethiopia’s foreign currency policy,” he noted. “Despite the country’s significant investment potential, the existing environment was not conducive to their needs.”
The Governor explained that investors previously faced difficulties in repatriating capital and earnings due to restrictive foreign exchange measures, which hindered further investment.
“The landscape has changed dramatically with the new reforms,” Eyob stated. “During a recent meeting with the American Chamber of Commerce in Ethiopia, I asked if any investor was currently facing repatriation issues—and none reported any challenges.”
He emphasized that both the NBE and commercial banks no longer view repatriation as a barrier, highlighting that “the new foreign exchange regime has strengthened confidence in the system.”
Analysts believe that if the Governor’s assessment is correct, easing foreign exchange repayment restrictions could lead to a significant increase in FDI.
The reforms introduced eighteen months ago are already credited with boosting the nation’s foreign currency revenue, particularly from exports.
The International Monetary Fund reports that the NBE has provided banks with guidance on settling dividends that accumulated prior to the foreign exchange reform, to be resolved over an 18-month period starting at the end of September 2024, with most issues already addressed.
Eyob indicated that the balance of payments has improved, shifting from a deficit of $1.3 billion two years ago to a current surplus of $2.8 billion.
In terms of international trade, while the deficit was $6.2 billion in the 2023/24 fiscal year, it has significantly narrowed to $189 million by the end of the first half of the 2025/26 fiscal year.
He noted substantial improvements in both commodity and service trade since the implementation of economic reforms.
New foreign investment registrations have reached $2.4 billion, reflecting a 26 percent year-on-year increase.
Two months ago, Eyob met with leading exporters’ associations to issue a final warning to those who have not repatriated foreign exchange earnings from commodity trade.
While presenting the NBE’s semi-annual performance to the Planning, Budget, and Finance Standing Committee of Parliament, he indicated that the central bank is employing a “carrot-and-stick” approach with exporters delaying the repatriation of foreign currency from exports.
“Some are complying; for others, we have provided an additional grace period. If they still fail to comply, we will implement strict measures,” he stated.
He acknowledged that there are challenges related to repatriation under the “cash against documents” export scheme, which the government is addressing through the Ministry of Foreign Affairs. However, he stressed that most of the unrepatriated foreign currency issues stem from internal problems within the exporting firms themselves.
