The National Bank of Ethiopia (NBE) has taken a bold step to attract strategic investors and bolster foreign currency reserves with Directive No. FXD/86/2023. This groundbreaking move aims to lure investments across vital sectors, promoting public goods and fostering foreign currency inflows.
Under the directive, strategic foreign direct investment projects encompass power generation, infrastructure, and export-oriented large-scale mining ventures. Executive Management will designate other FDI projects based on criteria such as investment size, job creation, import substitution, and technology transfer.
The directive grants preferential treatment in three key areas:
- Off-shore Account Opening: Strategic investors can establish offshore accounts for managing external debts, insurance payments, and financial obligations to foreign contractors.
- Currency Convertibility Guarantees: Ensuring ease of loan repayments and dividend repatriation, this feature places FDI investments on a superior convertibility guarantee.
- Enhanced Debt-to-Equity Ratios: The debt-to-equity ratio is raised from 60:40 to 80:20, enabling FDI projects to secure substantial debt capital relative to equity.
This directive’s impact is poised to reignite investor confidence and stimulate interest in stalled PPP projects and large-scale mining initiatives, ultimately propelling Ethiopia’s economic growth.
