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October 24, 2023

Ethiopia issues a Directive to regulate the opening and operations of offshore foreign-exchange accounts

  • The National Bank of Ethiopia enacted Directive No. FXD/86/2023, effective 8 September 2023, providing guidelines for offshore account operations.
  • The Directive is intended to attract strategic investors to Ethiopia across multiple sectors.

Executive summary

The National Bank of Ethiopia (NBE) enacted Directive No. FXD/86/2023 (the Directive), which became effective on 8 September 2023. The Directive provides guidelines for offshore account operations for Strategic Foreign Direct Investment Projects in Ethiopia.

The Directive is intended to attract strategic investors across multiple sectors to provide much-needed public goods (i.e., goods a government provides to its citizens), generate new foreign-exchange inflows, and create a preferential and flexible environment in certain limited cases for (i) the opening of offshore accounts, (ii) currency convertibility guarantees and (iii) modified debt-to-equity ratios in the case of strategic foreign investors.

Detailed discussion

Eligible projects

The following projects are eligible to operate an offshore account to deposit the proceeds from their equity and loan financing sources as per the NBE Directive:

  • A Public Private Partnerships (PPP) project in the power generation and infrastructure sector that has large capital investment needs
  • A large mining project with substantial export-earning potential
  • Any other Foreign Direct Investment (FDI) project deemed eligible by the NBE Executive Management

Eligible payments

The following payments can be made from the offshore account:

  • External debt service including any debt service reserve accounts
  • Insurance, contractor and other warranty claims in foreign exchange
  • Capital or investment expenses
  • Maintenance and operation expenses

Debt-to-equity ratio

The debt-to-equity ratio may not exceed 80:20 of the foreign capital. However, the NBE board may give special approval if it finds a ratio acceptable.

Foreign Currency Convertibility Guarantee

After the project owner has exhausted all means of purchasing foreign exchange from banks, the foreign currency convertibility applies at the prevailing official rate on Strategic PPP energy and mining sector projects for the following purposes:

  • Loan repayment
  • Dividend repatriation

Notably, the guarantee does not take precedence over the servicing of sovereign external debt.

Reporting requirements

The NBE mandates that the strategic FDI project owner provide financial statements on a quarterly basis, clearly showing the inflows and outflows of the offshore account as well as the annual projections of expected foreign exchange inflows and outflows for monitoring purposes.

Applicability of other directives

Relevant provisions of the External Loan and Supplier's Credit Directive No. FXD/82/2022 (as amended) will apply for matters not covered in this directive.

Next steps

The Directive is expected to make it easier for eligible projects to invest in Ethiopia and to repatriate their income in foreign currency.


For additional information with respect to this Alert, please contact the following:

Ernst & Young (Kenya), Nairobi

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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