Foreign Banks, Local Drama

Welcome to the 62nd edition of ፍራንክ Digest!

Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.

Here’s what’s coming your way:

• 💷 Now Serving Foreign Banks at Window 4

• 💯 Ethiopia Attempts to Join the 21st Century

• 🗝️ The Key Takeaways

Thanks for reading!

NBE Shares The Key To Foreign Banks

Banking

📢 Big News for Foreign Banks

If you’re a foreign bank with dreams of doing business in Ethiopia, the National Bank of Ethiopia (NBE) has just published your roadmap. On June 25, 2025, it rolled out Directive No. SBB/94/2025, setting out the rules of engagement for foreign banks wanting to set up shop locally.

Spoiler: It’s thorough, but not impossible. Let’s break it down—one logical (and slightly bureaucratic) step at a time.

🏦 Who’s Who in Foreign Banking

NBE makes clear distinctions:

• Foreign Bank: A bank incorporated in another country, no jurisdiction in Ethiopia.

• Foreign Bank Branch: An extension of the foreign bank—no separate legal identity but with a license to operate in Ethiopia.

• Foreign Representative Office: A liaison hub—handles marketing, research, and relationship-building but no banking activities. Just a foot in the door and waving hello.

Let’s dive into what it takes to open a Foreign Bank Branch.

✅ Step 1: The “Get to Know You” Phase

Before your first formal chat with NBE, you’ll need to come bearing documents:

• A clear statement of intent

• Your business plan and strategy

• The source of your funds

• A look at your governance and organizational setup

Basically, show that you’ve done your homework.

💼 Step 2: Proving You’re The Real Deal

If NBE gives you the initial green light, the real vetting begins:

• Open a non-interest-bearing blocked account at NBE

• Get a No Objection Letter from your home country’s banking supervisor, confirming:

• You’re legally incorporated

• Your financial health checks out

• You comply with risk and prudential standards

• You’ll be supported in times of distress

• You haven’t been banned or rejected elsewhere

Now, here’s the curveball: NBE expects your bank to be listed on your country’s stock exchange and either widely held or government-majority owned. (Non-listed banks can apply under “exceptional circumstances”, but it will take some lobbying)

💸 Step 3: Application Time – And Yes, There’s a Fee

Once your paperwork is in order, you’re ready to apply—after paying a USD 2,500 investigation fee.

To proceed, you'll need to:

• Deposit ETB 5 Billion (yes, roughly USD 37 Million) in an acceptable foreign currency

• Assign a senior officer who resides in Ethiopia (raise your hand if you’re up for the job)

• Submit a 3-year financial projections proving you’ll meet capital & liquidity requirements

• Share your IT infrastructure plan (all data must live in Ethiopia + top-notch cybersecurity)

• Promise to stay financially sound and prompt on liabilities

🎉 Step 4: The Grand Finale

You’ve checked all the boxes? Time to pay the USD 150,000 licensing fee, followed by an annual renewal fee of ETB 200,000 (approx. USD 1,500).

Once approved, your foreign bank branch can operate like any other local bank—yes, even taking public deposits—under Proclamation No. 1360/2025.

Bottom Line?

NBE is open to foreign banks—but only if you come prepared, capitalized, and committed. It’s less “open for business” and more “serious inquiries only”.

It’s bound to bring a lot of BUZZ in boardroom discussions at NBE and domestic banks.

Catch us next week as we do a similar dive on how Foreign Banks can buy into a domestic bank, essentially partnering up to hit the ground running.

Key Takeaways

1. Directives: A clear guide for foreign banks eyeing to have a piece of the Ethiopian banking sector

2. Dating NBE: the equivalent of setting up your Tinder profile. Foreign Banks need to highlight their ጥሩ ጎን

3. Fees: Deposit ETB 5 Billion as capital in blocked account; USD 2,500 for the application; and USD 150,000 for licensing.

ፍራንክ Picks 

🚶🏽 Event: Addis Cake & Bake Expo [Convention Center, Jul 18-20]

🗞️ In the news: Nigerian Fintech Enters the Ethiopian Scene

♟️ Innovation: If Tinder & TikTok Had an Ethiopian Baby… 👀 

Financial Reform is Here…Please Hold

Economy

You ever feel like nothing changes for decades—and then suddenly everything happens all at once? 

Like that one parent who didn’t know how to navigate a smartphone for 10 years beyond making calls…then one day pulls up with an Instagram friend request, gets into arguments on Twitter and spends their free time scrolling on TikTok.

That’s Ethiopia’s financial system right now.

One minute, our banking sector was a polite little fortress guarded by paper forms, approval stamps, and suspicious looks when you mentioned ATM cards or asked “Mobile App አለ?”

The next, we’re inviting foreign banks, forcing government offices to accept digital payments, and watching the IMF smile at us like a proud uncle who finally sees you wearing a tie.

Yet, does any of it actually work for us?

Let’s uncover what’s behind all the noise.

Banking Liberalization – Now Serving Foreign Capital

In 1974, Abebe Bikila was still a national hero.

Castelli was already well established in the dining scene. Banco di Roma and Banco di Napoli had local headquarters nearby in Piassa, along the road to Enrico pastry shop.

Then, Haile Selassie’s reign came to a somewhat abrupt end. And in 1975, Ethiopia slammed the door on foreign banks.

Now, 50 years later, we’ve cracked it open again.

Yep. Foreign banks are now officially welcome to actually open branches, subsidiaries, or take up to 40% ownership in local banks.

We’ve already covered the rules of entry. A nod to national interest.

What to expect from the sector:

• Local banks, used to being the only kids in class, suddenly have competition.

• You, the customer, might finally get lower interest rates, better service, and—dare we dream—banking apps that actually work on a Friday.

• Diaspora savings might finally find a real home in local banks with better risk controls.

• It puts pressure on our financial sector to upgrade its tech, talent, and treatment of customers from “be grateful we’re here at all” to “please rate us 5 stars.”

Of course, local banks are nervous—some of them haven’t even finished digitizing yet, and the pressure to modernize just became very, very real.

It’s not just a policy change. It’s a mindset shift, from ‘control everything’ to ‘let’s compete and maybe even collaborate.’

Thankfully, this mindset isn’t stopping at the banks.

The Death of “Cash or Telebirr Only”

In parallel, the government has declared war on… cash.

Indeed, they told government bureaus something along the lines of “stop messing about and move your prehistoric bureaucratic behinds into the digital age!”— Using more politically correct terms, according to our sources with insider knowledge of the matter 😉 .

Specifically, they’ve issued a directive that mandates every public office in Ethiopia—from federal ministries to your local woreda office—to accept digital payments from any licensed provider.

Not just Telebirr or CBE Birr. Any payment provider. Phew!

No more 40-minute line for a paper receipt. No more bouncing between windows 4 and 12 like a ping pong ball. Actual, real-time, phone-based, press-send-and-it’s-done digital payments.

The deadline? 90 days. The impact? Potentially massive.

This means:

• Fintechs can now compete for real volume by plugging into government payments, including utilities.

• Banks can expand beyond “pay your DSTV bill” and start offering tax and license payments inside their apps.

• Safaricom will no longer face the shame of paying their taxes on Telebirr.

• Citizens can skip the endless back-and-forth between banks, printing shops, and the cashier window with the broken printer.

Of course, we’re not naive.

Some offices will still say “ኔትዎርክ የለም” and yes, we’ll probably still have to deal with someone asking you to "bring the original and two photocopies of your email” but let’s take our wins where we can.

The signal is clear: soon, cash will no longer be king in government offices. And that’s a huge step for inclusion, transparency….and our collective sanity.

So Why Now? Why All at Once?

Glad you asked.

These changes are part of a bigger story—the one where Ethiopia tries to pull itself out of macroeconomic crisis mode and into a normal country economy.

One where:

• Official figures note inflation has dropped from 30%+ to a relatively sane 15% and apparently might dip into single digits soon. Know that phrase about taking things with a pinch of salt? It applies here.

• The federal budget just got a 31% bump—showing we’re investing or catching up with inflation (some might say overspending) our way out of a slowdown.

• The IMF is still on board, tossing us a mix of applause, encouragement, checklists, and just enough funding to keep things moving.

• And the Ethiopian Securities Exchange is open—finally giving us a local place to invest in something other than land and livestock. Granted, we can only trade shares of Wegagen Bank and, as of last week, Gadaa Bank as well.

Final Thoughts

It’s still early days. Foreign banks haven’t landed yet. Government offices still need to plug in. And the road from press release to real life is, well, famously bumpy around here.

But you can feel it. Something’s shifting. Slowly but surely, we’re flipping the switch.

At ፍራንክ Digest, we’re paying attention.

 Key Takeaways

1. Foreign banks are officially invited to the party: International banks can now apply for licenses, invest in local institutions, and bring competition that has local banks sweating.

2. Digital payments or else: Government offices have 90 days to accept payments from any licensed provider—not just Telebirr. Say goodbye (hopefully) to long lines, and the dreaded “ኔትዎርክ የለም”.

3. We’re stumbling towards a real economy: Inflation’s down (allegedly), the IMF’s impressed, and yes—you can now invest in something other than Wegagen Bank.

Thanks for sticking with us, ፍራንክ family! Keep those wallets smart and your inbox open - we’ll be sliding in next week!