Foreign Banks Can Now Enter Ethiopia—But It’ll Cost 5 Billion Birr











Foreign Banks Welcome, But on Strict Terms: Ethiopia’s Central Bank Issues Landmark Directive Reshaping Banking Sector

Addis Ababa, Ethiopia — March 31, 2025

The National Bank of Ethiopia (NBE) has unveiled a sweeping new directive titled “Requirements for Licensing and Renewal of Banking Business and Representative Office Directive No. SBB/XX/2025”, marking a historic shift in the country’s financial landscape. The directive, which replaces the 2013 regulations, lays the groundwork for opening Ethiopia’s banking sector to foreign banks under tightly controlled and highly regulated conditions.

“This isn’t just about opening the doors to foreign banks,” said a senior official from NBE. “It’s about opening the right doors, with the right locks, and only for those who come with the right credentials.”

Three Doors to Entry: Subsidiaries, Branches, and Representative Offices

The directive categorizes foreign participation into three entry channels:

Foreign Bank Subsidiaries – locally incorporated entities under full Ethiopian laws.

Foreign Bank Branches – extensions of international banks without separate legal identity.

Representative Offices – non-transactional liaison offices limited to market research and promotion.

Key Provisions and Capital Requirements

Tight Vetting and Multi-Layered Licensing Process

Applicants must undergo a three-phase approval process:

Pre-Application: Business summary, financial soundness, and board resolution.

Application: Full documentation including plans, capital proof, and structure.

Commencement: Security, staffing, policies, and physical readiness checks.

Limits on Foreign Ownership

To avoid dominance, ownership is capped as follows:

Strategic investors: max 40%

Total foreign shareholding in a bank: 49%

Individuals: 7%, Institutions: 10% unless qualified

Support for Interest-Free Banking

The directive allows interest-free banking models, both full-fledged and as “windows” in conventional banks. It mandates internal Shariah governance structures and product compliance.

Data Localization: A Red Line

Foreign banks must store and process customer data within Ethiopia. Non-customer data transfers require strict encryption, disclosure, and approval from the NBE.



This directive positions Ethiopia to benefit from global financial integration without compromising national sovereignty. By balancing opportunity with caution, the NBE is ensuring that only the most credible players will enter Ethiopia’s banking market of over 120 million people.

Bottom Line: Ethiopia is opening its banking sector—but only on its own carefully set terms.