Five firms licensed in October

Regulators at the National Bank of Ethiopia (NBE) are no longer processing license requests for new applicants seeking to get involved in the forex trading business.

In early October 2024, the central bank announced it had issued licenses to five independent foreign exchange bureaus in a bid to undercut the parallel market following the floating of the currency a few months prior.

Dugda Fidelity Investment PLC, Ethio Independent Foreign Exchange Bureau, Global Independent Foreign Exchange Bureau, Robust Independent Foreign Exchange Bureau, and Yoga Forex Bureau were the recipients.

Regulators are evaluating how the five firms are performing before proceeding to process applications for new licenses, according to Yenehassab Tadesse, director of forex monitoring and reserve management at NBE.

“We have to evaluate the performances of the five licensees before issuing additional licenses,” she told The Reporter. “Licensing will continue. But, since the market is a new trend, we have to evaluate the trend before flooding the market with more licenses.”

October’s licenses marked the first time in decades that non-bank entities were allowed to get involved in forex. Analysts see the prior limitations as a factor for the proliferation of parallel market operators.

The bureaus are now buying and selling forex based on market prices determined against a basket of foreign currencies.

Yenehassab did not indicate when the central bank would begin accommodating requests for new licenses.

The NBE directive governing the licensing process obliges applicants to have at least 15 million birr in capital and to provide a security deposit of 30 million birr to be held in a blocked account, which can be interest-earning.

An established business entity, set up in whatever legal form and owned by an Ethiopian national, non-resident Ethiopian, or a foreign citizen of Ethiopian origin is eligible for the license.