The National Bank of Ethiopia (NBE) has officially enacted a comprehensive new legal framework governing “Franco Valuta” import arrangements, significantly shifting how foreign investors, diaspora traders, and domestic economic zones utilize alternative foreign exchange channels.
Signed into law by NBE Governor Eyob Tekalign, the Import on Franco Valuta Directive No. FVD/01/2026 officially took effect on May 29, 2026.

This policy effectively repeals the previous, broad provision under Article 8 of the 2024 Foreign Exchange Directive, replacing it with a heavily regulated, centralized framework designed to boost investment while aggressively curbing illicit financial flows.

The Franco Valuta arrangement allows entities to import goods into Ethiopia without drawing foreign exchange from the country’s heavily constrained domestic banking system. Under the new directive, the NBE has explicitly designated specific “Eligible Users” permitted to leverage this system to stimulate economic growth.

These include licensed domestic economic zones, diaspora investors, foreign investors, manufacturing and industrial enterprises owned by foreign investors, development projects of strategic national importance, as well as the diplomatic corps, regional or international non-governmental organizations (NGOs), and religious institutions.

For medium and large-scale manufacturing, as well as investment sectors, the directive permits the import of critical capital goods, industrial machinery, raw materials, agricultural inputs, and renewable energy equipment.

Crucially, the policy opens doors for trading purposes, explicitly allowing the wholesale or retail import of commercial goods by eligible Foreign Direct Investment (FDI) and diaspora traders, alongside specialized clearances for free trade zones.

While the NBE acknowledged that Franco Valuta is vital for facilitating trade without depleting national foreign currency reserves, bank officials emphasized that the previous regulatory vacuum posed substantial economic threats.

To eliminate risks like misreporting and the circumvention of foreign exchange regulations, the Ethiopian Customs Commission has been ordered to integrate all transactions into the digital system known as the Foreign Exchange Monitoring and Orchestration Unified System (FEMoUS).

The directive features strict provisions capping Free-on-Board (FOB) dollar values across 24 distinct categories of goods. For instance, diaspora investors or returning nationals holding an investment license can import raw materials for pilot production and personal effects capped at a value of $10,000 FOB.

Meanwhile, individual personal effects for first-time movers to the country are capped at $5,000 FOB. The National Bank has warned that any attempt to circumvent these digital controls or make false customs declarations will result in severe administrative and legal consequences.

The government’s latest move to liberalize the freight forwarding sector has drawn mixed reactions from industry experts. While some players fear that a handful of investors may take over the business,others believe the decision creates opportunities for the sector and brings several economic advantages, including a smoother market system and help in tackling inflation.

The Ethiopian government has moved to fully liberalize the country’s freight forwarding sector, allowing foreign investors to operate without local partnership requirements for the first time. The decision, approved by the Ethiopian Investment Board chaired by Ambassador Girma Biru, economic advisor to the Prime Minister, takes immediate effect.

The move overturns Investment Regulation No. 474/2020, issued six years ago, which restricted foreign participation to joint ventures with domestic investors and capped foreign shareholding at 49 percent. According to a statement from the Ethiopian Investment Commission (EIC), the previous framework failed to attract the desired level of new investment, and the Board’s new decision is expected to address those shortcomings.However, logistics experts remain sharply divided over the timing and potential impact of the liberalization.

Some industry insiders argue that Ethiopia’s logistics market is too small and underdeveloped to attract significant interest from major international players.
One veteran expert, speaking on condition of anonymity, suggested the government may have acted partly to regularize existing practices.

“Some local freight forwarders have already sold all or a majority stake of their companies to international operators informally, against the 2020 regulation,” he said. “I think the government pushed this decision to ease that situation.”

He also echoed concerns that foreign interest will be limited given the modest scale of Ethiopia’s logistics market.“Very few big players can be accommodated. I suspect companies will enter mainly by acquiring major shares in existing local firms,” he added.

For small freight forwarders, the decision could spell trouble, while those that have already structured back-to-back deals, such as 90–10 percent arrangements with foreign partners, stand to benefit.
Dawit Woubeshet, CEO of Cosmos and president of the Ethiopian Freight Forwarders and Shipping Agents Association, also believes international interest will be constrained.

“The market can only accommodate a limited number of large operators,” he said.
One expert drew parallels with Ethiopia’s recent telecom and financial sector liberalizations, noting that Safaricom Ethiopia’s entry did not unfold entirely as expected, while foreign financial firms have shown only muted interest in taking stakes in local banks.

“The logistics sector will likely follow a similar pattern,” the expert predicted.
But Worku Lemma, Director of the National Logistics Transformation Office (LTO) and a key architect of the reform, rejects that comparison.

“The telecom case involved a new operator competing with a dominant incumbent and needing to use existing infrastructure — a far more complex situation. The financial sector has just opened, and foreign firms are already exploring entry, but that takes time because of the detailed reworking required,” he told Capital.Worku, who prepared the Board document, is optimistic that foreign logistics firms will enter and intensify competition.“The sector needs knowledge, cross-border expertise, technology and resources. We believe this decision will help reduce logistics costs, cut delays and improve predictability and market trust,” he said.

He noted that weaknesses in the logistics system have contributed to inefficiency, domestic inflation and a lack of price competitiveness for Ethiopian exports.
“Higher costs are a sign of limited competition,” he added.
Maritime lawyer and logistics expert Yared Shiferaw called the decision timely.

The Ministry of Finance (MoF) has released a major statement regarding its ongoing efforts to restructure the $1 billion bond (carrying a 6.625% interest rate) that matured in 2024. According to the official statement issued on May 27, 2026, the restricted dialogue session held from May 6 to May 27, 2026, with the primary bondholders’ group known as the “Ad Hoc Committee,” ended without any agreement, officially concluding the designated negotiation period.

A major focus of the discussions was to ensure that any potential agreement would meet the strict Comparability of Treatment (CoT) principle established by the co-chairs of the Official Creditor Committee (OCC).

MoF recalled that, according to the agreement in principle initially reached on January 12, 2024, the debt restructuring included the use of a Value Recovery Instrument (VRI). This VRI mechanism was designed to allow additional payments to creditors based on Ethiopia’s future macroeconomic performance.

However, the OCC indicated that the country’s broader macroeconomic conditions were not conducive to such a complex mechanism and pointed out that the structure failed to comply with the CoT principle.

Following this development, Ethiopia prepared an alternative “revised proposal” that completely eliminated the VRI mechanism. This new alternative was reviewed by the OCC co-chairs and was successfully verified to meet the CoT principle.

As detailed in the document, the commercial terms approved by the OCC co-chairs and offered for the issuance of the new bond involved issuing $880 million in new bonds, which represents a 12% haircut on the original $1 billion principal debt. The maturity date was set for July 15, 2029, with an annual interest rate of 4.25%, payable semi-annually every January 15 and July 15 until the debt is fully settled.

The debt amortization schedule was arranged for the principal to be paid in four consecutive installments: $180 million on July 15, 2026; $180 million on July 15, 2027; $260 million on July 15, 2028; and $260 million on July 15, 2029.

Additionally, along with offering a consent fee of 0.5% of the original 2024 bond value, the proposal included a provision to fully clear Past Due Interest (PDI) totaling $99.375 million at the time of settlement, which accumulated from three missed coupon payments between December 2023 and December 2024.

When this revised proposal was presented to the private bondholders’ “Ad Hoc Committee” within the designated negotiation timeframe, the committee rejected the terms. Consequently, the negotiation period concluded without reaching an agreement between the government and private creditors.

While the Ministry of Finance expressed its disappointment with the committee’s decision, it reaffirmed that Ethiopia remains committed to honoring its obligations. The government reiterated its firm resolve to find a market-based solution for the 2024 bond that complies with the OCC’s CoT principle and upholds the commitments made under the International Monetary Fund (IMF) program.