INTRODUCTION
The National Bank of Ethiopia (NBE) has recently implemented a new directive, the Limit on Birr and Foreign Currency Holding in the Territory of Ethiopia Directive (hereinafter referred to as the “New Directive”), which is enclosed herewith. Effective as of February 22, 2024, this Directive replaces the previous Directive (Directive FXD/81/2022) and introduces important changes worth noting. In this update, we will delve into the key modifications brought about by the New Directive.
1. Notable Change: Exemption for Transit Passengers
Perhaps the most significant change introduced by the New Directive is the exemption for transit passengers, who are no longer required to declare their foreign currency holdings. This exemption applies to individuals staying in Ethiopia for a maximum of 24 hours before continuing their journey on the same or a different aircraft.
2. Maximum Limits and Timelines for Incoming Individuals
Residents of Ethiopia entering the country must convert all their foreign currency at authorized forex bureaus or deposit it into their foreign currency accounts, if applicable, within one month of entry. If the amount exceeds USD 4,000 (four thousand), a customs declaration is required.
Diasporas and non-resident Ethiopians planning to stay in Ethiopia for more than 3 (three) months must transfer their foreign currency holdings to non-resident foreign currency accounts or foreign exchange savings accounts within 3 (three) months of entry. For amounts exceeding USD 10,000 (ten thousand), a customs declaration is necessary.
Foreigners who are not residents of Ethiopia can hold their foreign currency without any explicit restrictions until their visa expires. Although the New Directive does not expressly state that their foreign currency holdings are unlimited or uncontrolled, it can be reasonably interpreted as allowing foreigners to hold an unlimited amount of foreign currency.
3. Maximum Limits and Timelines for Outgoing Individuals
Residents of Ethiopia, as well as non-resident diasporas and Ethiopian nationals not residing in Ethiopia, can travel abroad with foreign currency purchased from a bank within 30 (thirty) days of a bank advice or if they enter and leave the country within 90 (ninety) days. If the amount exceeds USD 10,000 (ten thousand), a customs declaration is required.
Employees of embassies, international institutions, trainers, and workshop participants entering the country can hold more than USD 10,000 (ten thousand) if they provide a bank advice, employer’s letter, or supporting letter justifying the legal source of the foreign currency acquisition.
4. Permissible Amount of Foreign Currency for Inland Transportation
Individuals entering Ethiopia through inland transportation must provide a customs declaration at the border if they possess other foreign currency equivalent to or exceeding USD 500 (five hundred).
5. Birr Holding Limits for Incoming and Outgoing Individuals
For individuals entering or departing from Ethiopia, the maximum amount of Birr that can be held per trip is ETB 3,000 (three thousand). However, for travel to and from Djibouti, the maximum amount allowed per trip is ETB 10,000 (ten thousand).
6. Prohibited Transactions
The New Directive prohibits transactions in foreign currency unless specifically allowed by the New Directive, other laws, or with prior authorization from the NBE. Payment of foreign currency in cash to fulfill contractual obligations, make gifts or donations, unless permitted by the New Directive or other laws, is strictly prohibited. Individuals who received foreign currency through donation or gift before the implementation of the New Directive must convert the currency to Ethiopian Birr within 1 (one) month from February 22, 2024.
Disclaimer: This legal update is for informational purposes only and does not constitute legal advice. Million Alemu and partners Legal Services assumes no responsibility for any actions taken based on the information contained herein. Should you need any legal advice in this regard, please contact Million Alemu and partners Legal Services llp. We are your trusted legal partners and can guide you through the legal process. Feel free to reach out to us at info@millionlegalservices.com
Compiled by Yideg Sale-Legal Associate at Million Alemu Law Office
