The National Bank of Ethiopia (NBE) has issued a new directive permitting foreign direct investors, embassies, and international organizations to import refined petroleum using their own foreign currency. The policy change is designed to ease severe pressure on the country’s domestic foreign exchange reserves.
Why It Matters
Fuel is Ethiopia’s largest import expense, costing roughly $4.2 billion annually and swallowing a quarter of the nation’s foreign currency. Amid global supply chain disruptions and acute domestic hard currency shortages, the state has recently struggled to finance timely fuel purchases, resulting in strict quotas and massive lines at gas stations for ordinary motorists.
The Big Picture: What is Franco-Valuta?
The Franco-Valuta system allows eligible entities to import goods by paying with foreign currency held abroad, completely bypassing Ethiopia’s domestic banking system. While the central bank previously permitted limited Franco-Valuta practices, officials say a lack of clear legal guidelines in the past led to customs misclassifications, capital control violations, and illicit financial flows.
Key Details of the Directive
- Strictly for Personal Use: Fuel imported under this scheme cannot be sold to the public, transferred to third parties, or mixed with the country’s commercial fuel supply.
- No Volume Limits: There is no official dollar ceiling on the imports; instead, permitted volumes will be determined by government assessments of an organization’s actual operational needs.
- Requirements: Importers must provide a valid diplomatic or investment license alongside a supporting letter from a relevant government institution.
- Digital Tracking: To prevent black-market diversion or false declarations, the Ethiopian Customs Commission will log and track every shipment using a new central bank digital monitoring platform.
Moving Away from a 50-Year Monopoly
For more than five decades, the state-owned Ethiopian Petroleum Supply Enterprise held an exclusive monopoly over all refined petroleum imports. While this centralized model allowed the government to strictly control retail prices, it left the landlocked nation highly vulnerable to external shocks, such as recent conflicts disrupting strategic Middle East shipping routes.
NBE Governor Eyob Tekalign signed the directive into effect on May 29, 2026. Officials emphasize that while this opens a new channel for foreign entities to secure their own fuel, it does not open the general domestic retail market to private traders.
