Foreign banks and strategic investors can now formally enter Ethiopia’s banking market following the National Bank of Ethiopia’s (NBE) issuance of a landmark directive that sets the final regulatory framework for foreign participation in the sector.

The move, announced on June 25, 2025, through a press release by the central bank in Addis Ababa, brings to an end decades of restricted financial policy and signals a major policy shift aimed at modernising and deepening the country’s financial system.

“The National Bank of Ethiopia is today releasing a new Directive that marks the final regulatory milestone in opening up the Ethiopian financial sector to foreign participation,” read the NBE statement.

The new legal instrument, titled Directive No. SBB/94/2025: Requirements for Licensing and Renewal of Banking Business and Representative Office Directive, follows the recent enactment of the Banking Business Proclamation, which had laid the legislative foundation for this shift.

The directive is the product of a year-long consultative process that engaged a broad array of stakeholders.

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“The new Directive is the result of extensive consultations conducted over the past year with a wide range of stakeholders, whose inputs have been due consideration,” said the NBE.

In practical terms, the directive outlines several channels through which foreign entities may participate.

These include establishing local subsidiaries, opening branches of foreign banks, or setting up Representative Offices. For the first time, the supervision and licensing of Representative Offices will now fall under the jurisdiction of the NBE.

“The new Licensing Directive allows for the first time the participation of foreign investors, including banks or other strategic investors, in the Ethiopian banking system," the bank said.

"The Directive provides for several modalities through which foreign entrants make join the banking sector, including, among others—by setting up subsidiaries, foreign bank branches, or Representative Offices. In addition, the new Directive shifts the licensing and supervision of Representative Offices to the NBE for the first time.”

The NBE believes the reform will unlock vital capital flows and competition, ultimately strengthening banking services and accessibility for Ethiopians.

“The NBE expects that the opening up of the sector to foreign entrants will help bring increased capital, competition, service delivery, efficiency, and inclusivity to the sector—all of which should deepen Ethiopia's financial sector and contribute to improved growth.”

Concluding the announcement, the central bank extended an open invitation to international players. “The NBE is very pleased to declare that the Ethiopian banking sector is hereby open for foreign participation and that applications by foreign banks and investors can be submitted to NBE from today onwards.”

The directive is now publicly available on the official website of the National Bank of Ethiopia, paving the way for foreign applications to begin immediately.