The National Bank of Ethiopia is mandated to issue foreign exchange directives to control the transactions and allocation of foreign exchange resource. The foreign exchange regime governs transactions requiring international payment by commercial banks and insurance companies, foreign exchange requirements for importers and exporters, foreign exchange dealers and individuals.
This article presents a summary of the foreign exchange directives which are currently in force.
From Consolidated Foreign Exchange Directives, National Bank of Ethiopia
- The current regulations allow payments for all imports of goods, except goods that are believed to be detrimental to the health of the public and security of the nation. Payments for imports can be made by letter of credit, cash against documents, advance payment, etc.
- Export of goods and services are allowed through letter of credit, cash against document, advance payment, consignment, etc., and payments for services associated with these exports are also permitted. Small items of limited value and quantity are also allowed to be exported without foreign exchange repatriation requirements.
- Allows exporters to open a retention account to hold a specified amount of their export earnings for a defined period and use their forex holdings for their export business promotion.
- The exchange regulations permit transfers for various services, including money drawn from Non-Transferable Accounts, Non-Resident Foreign Currency NR Fcy, Non-Resident Transferable Birr (NRT), and Non-Resident Non-Transferable (NRNT). Exchange transactions also allow salary remittance by foreign employees, insurance payment, re-transfer of un-utilized foreign currency holdings, etc.
- Non-resident Ethiopians and non-resident foreign nationals of Ethiopian origin are permitted to open a foreign currency account at any authorized commercial bank in four major international currencies with a limited amount that shall be deposited in current account. The deposits shall earn interest based on the arrangements made with commercial banks.
- No Ethiopian national resident in Ethiopia or resident Ethiopian company is allowed to maintain a bank account abroad without National Bank of Ethiopia authorization. But, government offices, organizations and companies which have branches or offices abroad and which are permitted by a competent authority to operate these offices abroad are admitted to open the account they deem necessary. On winding up the business, they are, however, required to close the account and report to the National Bank of Ethiopia.
- Payments through credit cards can be made for catering services and purchase of goods by travelers and tourists, and credit card holders can also obtain local currency from banks by making use of their credit cards. Foreign cash notes and travelers cheques are also acceptable for payments at hotels certified by the Ethiopian Tourism Commission, duty free shop operators, Immigration Office, Civil Aviation Authority and airline ticket offices.
- Forex bureaus established at commercial banks are allowed to engage in the buying and selling of major convertible currencies, operate in spot transactions with immediate delivery of currencies bought or sold, sell and/or buy cash notes and travelers cheques at displayed exchange rates before any subsequent change.
- Any capital inflow by foreign investors is recognized and registered at National Bank of Ethiopia at the initial stage of investment, including investments made through a concessionary or a partnership agreement with the government or with an autonomous institution and similar treatment is accorded to ploughed back profits.
- Capital gain on asset revaluation of a business enterprise maybe repatriated by fulfilling the necessary requirements; Loan and suppliers credit obtained by foreign investors are registered as capital inflows by National Bank of Ethiopia. Foreign investors who earn profits or dividends from recognized investments and services are allowed to remit abroad by presenting the required documents or statements.
- In addition, firms, companies, and business entities engaged in manufacturing or business activity whose products are sold to external markets generating foreign exchange income are allowed to have access to external financing and suppliers’ credit from abroad to finance imports of input or auxiliary materials essential for their export product.
- The Birr holding limit for travellers exiting Ethiopia is a maximum of Birr 200.
- No Ethiopian resident is allowed to hold foreign exchange for more than 45 days from the date of acquisition and has a duty to covert the currency in an authorized bank.
- The cash note payment limit for holiday travel allowance, business and government travel allowances, medical travel expense and educational expenses are USD 1,000 (USD One Thousand).
Violation of the provisions of these directives is liable to confiscation of the property with which the offence is committed and punishable in accordance with the provisions of the Criminal Code.
Source: National Bank of Ethiopia
National Bank of Ethiopia, Sudan Avenue
Tel: +251 11 5517438
Fax: +251 11 5514588