Overseas and E-commerce Payments to be Made Easier in Ethiopia
On February 11, 2026, the National Bank of Ethiopia (NBE) announced significant reforms aimed at liberalizing the country’s foreign exchange regime. This move is part of Ethiopia’s ongoing efforts to enhance its economic landscape and promote market liberalization.
Key Reforms in Foreign Exchange Regulations
The recent changes allow exporters to retain 100% of their foreign currency earnings indefinitely in designated “retention accounts.” This reform is expected to facilitate easier overseas payments and e-commerce transactions for consumers in Ethiopia.
Additionally, banks will now be permitted to issue payment cards linked to foreign currency accounts, further simplifying the process for individuals engaging in international transactions.
Broader Access to Foreign Exchange Services
Another significant change is the abolition of the minimum $100 requirement to open a foreign exchange savings account. This adjustment is designed to broaden access to foreign exchange services, allowing more Ethiopians to participate in the global economy.
Moreover, Ethiopians will now be allowed to make outbound remittances up to $3,000 for family support. This change is particularly important for families relying on remittances from abroad.
Encouraging Foreign Investment
Investors looking to repatriate their dividends will also benefit from the new regulations. They are now entitled to remit their net profits or dividends abroad, provided they submit the necessary documentation to their banks. This reform is expected to remove a significant barrier to foreign investment, encouraging more investors to engage with the Ethiopian market.
Background on Currency Free Float
The recent reforms follow Ethiopia’s decision to freely float its currency, the Ethiopian birr, which was announced in July 2024. This shift introduced a market-based determination of the exchange rate, aimed at addressing long-standing economic distortions.
The decision to float the currency was influenced by negotiations with international financial institutions such as the International Monetary Fund (IMF) and the World Bank. These institutions offered a financial package worth approximately $10.7 billion, contingent upon Ethiopia moving towards a market-based currency regime.
Market Reactions and Currency Performance
In the first trading session following the NBE’s announcement on February 11, the birr’s value against the US dollar dipped slightly by less than 1%, before partially recovering. In contrast, after the July 2024 announcement to float the currency, the birr lost about 30% of its value against the dollar, and it has since depreciated over 60%.
The NBE stated that the reforms are part of a broader strategy to remove current account restrictions and develop the foreign exchange market, enhancing its overall functionality.
Reducing Procedural Bottlenecks
Experts from Mekdes & Associates, a law firm based in Addis Ababa, have described these reforms as significant. They believe that by eliminating approval layers and expanding the permissible users of foreign currency accounts, the new directives will reduce procedural bottlenecks and shorten transaction timelines.
While there is optimism regarding the potential for increased foreign investment flows, the success of these reforms will largely depend on the ability of commercial banks to meet the rising financing demands and facilitate cross-border payment flows.
A Shift in Central Bank Mindset
Bernard Laurendeau, managing partner at Laurendeau & Associates, commented that these reforms indicate a significant shift in the central bank’s approach. He noted that the NBE’s directives signify the end of foreign exchange rationing and administrative bottlenecks, moving towards a more enabling role for the central bank.
This transition reflects a broader effort to restore the agency of the private sector. For the first time in decades, the forex crunch is being addressed not as a scarcity to be managed, but as a structural inefficiency to be resolved through transparency and capital mobility.
Conclusion
The recent reforms by the National Bank of Ethiopia represent a pivotal moment in the country’s economic development. By liberalizing foreign exchange regulations and facilitating easier access to international payments, Ethiopia is taking significant steps toward integrating itself into the global economy. These changes not only empower exporters and investors but also enhance the overall financial landscape for ordinary citizens.
Frequently Asked Questions
The new reforms allow exporters to retain 100% of their foreign currency earnings in retention accounts, abolish the $100 minimum requirement for foreign exchange savings accounts, and enable outbound remittances up to $3,000 for family support.
The reforms are expected to encourage foreign investment by allowing investors to repatriate their dividends and profits more easily, thereby removing significant barriers that previously hindered investment.
Floating the Ethiopian birr allows for a market-based determination of its value, addressing long-standing economic distortions and aligning Ethiopia’s currency management with international standards.
Note: The information provided in this article is based on the latest announcements from the National Bank of Ethiopia and may be subject to change as further developments occur.
