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The National Bank of Ethiopia has made a decision to allow foreign currency guarantees for foreign companies engaged in joint ventures with government or private companies on key or strategic projects. This will enable these companies to repatriate their profits in foreign currency and easily pay off loans taken from foreign financial institutions for their projects in Ethiopia.
Deputy Governor of the National Bank, Ato Fqadu Degfe, explained that the government will provide foreign currency to foreign companies investing in areas considered to be of strategic importance. Currently, foreign companies operating in various sectors in Ethiopia can repatriate their profits in foreign currency, but they are treated like any other foreign currency trader when converting their profits into foreign currency.
According to the recent decision of the National Bank Board, only foreign companies operating in Ethiopia who agree to develop a framework for government-to-government or public-private partnership will be allowed to obtain foreign currency guarantees on key developments identified by the government as being of national interest.
Mr. Faqadu explained that the government will provide foreign currency to these companies so that they do not face difficulties in paying off loans taken from foreign financial institutions for investment in Ethiopia, including their annual profits. Key projects include power generation, mining, and infrastructure projects.
The Minister of Finance, Ahmed Shide, stated in his report to the House of Representatives that there are foreign companies that have openly submitted requests for foreign currency guarantees. One such company is MASDAR, an Abu Dhabi company that will enter Ethiopia to generate 500 megawatts of electricity from solar energy. Another company intending to enter Ethiopia with a similar agreement is AMEA Power. Both companies have asked the government for a foreign currency guarantee to repatriate their profits and pay off their loans. According to the decision of the National Bank Board, they are expected to be the first companies to receive foreign currency guarantees from the government.
