ADDIS ABABA — In a major move to streamline international trade and enhance business community confidence, the National Bank of Ethiopia (NBE) has officially decentralized key foreign exchange (FX) administration powers.
The central bank has issued Directive No. FXD/05/2026, which amends the landmark Foreign Exchange Directive No. FXD/01/2024. Signed by the newly appointed NBE Governor, Eyob Tekalign (PhD), the new directive officially entered into force on May 25, 2026.
Key Regulatory Shifts
The amendment specifically targets operational bottlenecks for importers by removing the requirement for prior central bank approval on several key trade mechanics. The core changes include:
- Letter of Credit (LC) on Acceptance: Commercial banks are now fully authorized to approve deferred-payment letters of credit for any institution holding a foreign currency account, including holders of forex retention accounts, without seeking prior approval from the NBE.
- Cash Against Documents (CAD) on Acceptance: Commercial banks can now independently approve CAD on acceptance transactions for foreign currency and retention account holders.
- Pre-Approval Shipments: Importers holding foreign currency or retention accounts are now permitted to order or initiate goods for shipment prior to securing bank approval. Payment processing will be handled retroactively, subject to standard document submission and verification.
Driving Efficiency and Market Confidence
According to the directive, the NBE’s primary objective is to “relax foreign exchange administration for ease of doing business and to enhance the business community’s confidence in the FX reform.”
By delegating the approval of LCs, CADs, and shipment openings directly to commercial banks, the NBE is effectively cutting bureaucratic red tape. This operational decentralization is expected to significantly reduce lead times for importers, optimize supply chains, and support smoother international trade flows into Ethiopia.
The issuance of this directive is grounded in the legislative powers granted to the central bank under Articles 6 and 39 of the recently updated National Bank of Ethiopia Establishment (Amended) Proclamation No. 1359/2025.
