Directives

FX Directive FXD 01 2024

Foreign Exchange Freedom for Investors in Ethiopia

The Foreign Exchange Directive FXD/01/2024 empowers foreign and domestic investors with clearer, more predictable rules for currency use, trade, and capital management—ensuring smoother operations and international competitiveness.

Key Highlights for Investors and Businesses:

• Liberalized Foreign Exchange Market
  Investors can transact foreign exchange at freely negotiated market rates. Banks and authorized dealers report exchange activity daily, and the National Bank of Ethiopia (NBE) publishes a market-based Indicative Exchange Rate for reference.
• Foreign Currency Retention Rights
  Exporters may retain 50% of their forex earnings in retention accounts for up to 30 days for their own operational use (e.g., imports, debt service, dividend payments). The other 50% must be converted into local currency at market rates.
• Unrestricted Repatriation for FDI
  Foreign investors may repatriate profits, dividends, capital gains, liquidation proceeds, and share transfers, subject to documented approval from the NBE. This ensures full capital mobility and protection.
• Flexible Capital Account Management
  FDI projects and foreign loans are permitted under clearly defined terms. External loans require NBE approval and must meet debt-to-equity ratios (maximum 60:40). Supplier credits and loans in-kind are also accommodated.
• Forex Accounts for Foreign Entities
  FDI companies, embassies, international organizations, and NGOs may open foreign currency accounts in Ethiopia. These can be used freely for all authorized foreign payments without additional permits.
• Remittance and Card Payment Modernization
  Licensed providers can offer international remittance services through banks, telecoms, and other channels. International credit/debit card use and online payments are now more accessible for tourists and e-commerce.
• Travel and Trade Allowances
  Travelers are eligible for prepaid forex cards and cash notes. Businesses such as hotels, airlines, and duty-free shops may accept and retain foreign currency, subject to licensing and reporting requirements.