Understanding Ethiopia’s New Directive on Off-shore Account Operations for Strategic FDI Projects


Ethiopia’s National Bank has recently issued Directive No. FXD/86/2023 aimed at promoting Strategic Foreign Direct Investment (FDI) in key sectors of the economy. In simpler terms, this is Ethiopia extending a welcoming hand to big-time foreign investors, a strategic move aimed at boosting foreign investments in key sectors. This initiative comes at a time when Ethiopia is looking to modernize its infrastructure, energy sector, and other critical areas that can benefit from foreign capital. Below, we break down the key elements of this directive and what it means for potential foreign investors.

The Rationale

The directive is founded on the premise that attracting strategic investors in various sectors is critical for Ethiopia’s economic growth and development. In an increasingly globalized world, nations often compete to attract foreign investment, much like businesses compete for customers. The directive aims to offer a more streamlined and flexible framework to make Ethiopia an attractive investment destination.

Key Terms Explained

  • Off-shore Account: Typically held in a foreign bank, this account allows investors to manage their funds more efficiently, particularly when dealing with multiple currencies.
  • Convertibility Guarantee: This is a promise from Ethiopia that investors can convert their local currency earnings back into their home currency. This offers a safety net against foreign exchange risks.
  • Debt-to-Equity Ratio: The directive stipulates a maximum debt-to-equity ratio of 80:20, ensuring that projects have a balanced financial structure, thus reducing the risk of financial instability.

Who Qualifies?

  1. Public-Private Partnership (PPP) projects in power generation and infrastructure that require large capital investments.
  2. Large mining projects with substantial potential to earn foreign exchange.
  3. Special Cases that contribute significantly in terms of job creation, technological transfer, or other key metrics.

Usage Parameters for Offshore Accounts

The directive lays out permissible expenses that can be covered through the offshore account:

  • Debt servicing
  • Insurance and warranty claims
  • Capital expenses like purchasing machinery
  • Operational expenses, which include day-to-day running costs

Special Cases & Guarantees

  1. The directive allows for case-by-case exceptions to the debt-to-equity ratio, subject to approval. This provides flexibility for projects that may have unique financial needs.
  2. For strategic projects in energy and mining, there’s a convertibility guarantee for loan repayment and dividend repatriation, further lowering the financial risks involved in such large-scale projects.

Transparency Requirements

To ensure ethical conduct, the National Bank of Ethiopia reserves the right to monitor these offshore accounts, thus preventing potential misuse or malpractices.


Ethiopia’s new offshore account directive aims to foster a climate that is favorable for strategic foreign investments. By providing financial flexibility, currency convertibility guarantees, and clearly outlining the eligibility criteria, Ethiopia is positioning itself as an attractive destination for foreign capital, particularly in sectors that are vital for its economic development. This is a win-win situation for both Ethiopia and investors, as it aids the country’s development goals while offering foreign investors a conducive environment for profitable ventures.

Business Consultant in Ethiopia | Investment Firm in Ethiopia