Key Takeaways:
• May 25, 2026 directive lets banks approve LCs and CAD without prior NBE approval.
• National Bank of Ethiopia revised foreign-exchange rules for foreign-currency and retention account holders.
• Commercial banks may approve LCs on acceptance for eligible clients.
• CAD transactions can proceed without prior central bank approval under the revised directive.
• Account holders may initiate shipments before bank approval, subject to document verification for payment.
• LC-related fees must be standardized annually on a pro-rata basis within NBE’s maximum limit.
• NBE said the reform aims to reduce bottlenecks and improve trade finance efficiency.
Market Impact:
The directive reduces central bank approval requirements for trade finance transactions involving foreign-currency and retention accounts. For importers and exporters, this could shorten LC and CAD processing timelines while keeping payment dependent on verified documentation.
The fee cap and standardization rule also targets banking costs in trade finance. By forcing LC charges onto an annualized, pro-rata basis, NBE is seeking more competitive pricing and closer alignment with international practices.
The reform fits the central bank’s broader market-based foreign-exchange framework launched in July 2024. NBE said it will continue monitoring the FX market and take further steps if needed to support stability and efficiency.
Key Numbers:
May 25, 2026 — directive announcement — latest FX reform measure
July 2024 — market-based FX regime launch — reform framework reference
LCs — bank approval allowed — reduces central bank bottlenecks
CAD — bank approval allowed — expands trade finance flexibility
Annualized pro-rata fees — LC charge basis — standardizes bank pricing
Business Signal:
NBE is shifting more trade finance approval authority to commercial banks while using fee controls to reduce transaction costs and support FX market reform.