NBE to License Foreign Banks in Ethiopia Within 90 Days
The National Bank of Ethiopia (NBE) has confirmed that they are ready to process the applications of license foreign banks those interested in opening their branches in Ethiopia. The strategy of Ethiopia is to liberalise the financial sector. NBE shared that after submitting the complete application, the process of license foreign banks will be completed within 90 days. NBE is interested in speeding up the process to attract international players.
The initiative to license foreign banks is governed by NBE’s Directive No SBB/94/2025, effective June 2025. According to this directive, foreign banks can establish their branches, subsidiaries, or representative offices with limited control.
Foreign banks must meet the requirements (a minimum of 5 billion Birr for commercial banks). After getting approval from NBE, the new bank must commence its operations within 12 months. Moreover, there is a ownership cap as well. A foreign investor can hold up to 40% of a local bank, and total foreign ownership is capped at 49%.
Some foreign banks have already applied for the license. And National Bank is also actively taking action against unlicensed money transfer operators in Ethiopia. Moreover, NBE plans to inject $150 million into the banks in August 2025 to stabilize the rates.
However, this is a significant step to attract foreign investors and improve the economy, but there are some challenges. The market has high volatility as the Birr reached 170 against 1 USD in the parallel market.
Moreover, in the last foreign exchange auction of NBE, they offered $150 million to banks and the amount is allocated to the 28 commercial banks of Ethiopia.
Frequently Asked Questions
As per the NBE’s recent statements, approvals are anticipated within three months of submitting a complete application. This timeline assumes all requirements are met. However, the NBE may extend this if additional reviews are needed.
Applications should be submitted directly to the NBE. Foreign banks must meet high capital thresholds (a minimum of 5 billion Birr for commercial operations), demonstrate financial stability, and comply with local regulations. Moreover, options include setting up subsidiaries, branches, or representative offices.
It will introduce competition, potentially driving innovation and better services. But local banks are advised to brace for challenges. The NBE has urged domestic players to innovate under the revised banking framework. Moreover, this could lead to improved access to finance and forex stability.
Final Words About License Foreign Banks
The idea of NBE to license foreign banks is to align with broader macroeconomic reforms launched in 2024, and it’s a good initiative of Ethiopia. The Ethiopian government aims to boost innovation, increase foreign investment, and stabilize the forex market amid ongoing challenges. Although the overall impact could enhance financial services and economic growth in Ethiopia