Could Ethiopia’s Banking Upgrade Set a New Standard for Africa?

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The National Bank of Ethiopia (NBE) has rolled out an upgraded version of its Ethiopian Automated Transfer System (EATS), now running on the ISO 20022 messaging standard. The move is aimed at improving the way high-value payments are processed between banks across the country.

This upgrade is part of a wider push to modernize Ethiopia’s financial infrastructure and comes as the government continues opening up the economy.

Recent changes include the liberalization of the foreign exchange market in July 2024 and the introduction of foreign investors into the banking sector under Banking Business Proclamation No. 1360/2024.

Why ISO 20022 Matters

ISO 20022 is a globally recognized format for financial messaging. It allows banks to exchange more detailed and structured data using XML, making transactions faster, more accurate, and easier to monitor.

Compared to older systems like SWIFT’s MT messages, ISO 20022 is better equipped to handle today’s demands for data transparency, cross-border payments, and real-time compliance.

Read: M-PESA Safaricom, LakiPay Partner to Enhance Digital Payment Services in Ethiopia

The ISO 20022 standard brings in a more advanced messaging system along with a host of new features aimed at improving how banks operate and manage their cash.

The upgrade introduces stronger tools for liquidity management, tighter security protocols, and better safeguards to ensure that interbank payments are processed accurately and securely.

It also enables automated, real-time checks for regulatory compliance, especially on reserve requirements, helping to boost financial stability and build greater confidence in the banking system. For banks, this means fewer manual interventions, improved automation, and stronger alignment with international payment networks.

What’s New in the Upgraded EATS?

EATS now functions as a Real-Time Gross Settlement (RTGS) system, allowing real-time settlement among 35 participating financial institutions, including commercial banks and microfinance entities.

It operates 10 hours a day, six days a week, including Saturdays, processing over 3.5 million transactions annually, with an aggregate value exceeding 5 trillion Birr.

What It Means for Ethiopia’s Financial Sector

The changes are expected to make Ethiopia’s payment systems more reliable and easier to integrate with regional and global financial networks. That’s increasingly important as the country works to attract foreign direct investment and ease pressure on its foreign exchange reserves.

The Ripple Effect

In October 2024, the Central Bank of Kenya (CBK) also upgraded its Kenya Electronic Payment and Settlement System (KEPSS) to the ISO 20022 standard.

Read: Safaricom Ethiopia Launches New International Remittance Service

This upgrade was part of Kenya’s National Payments Strategy 2022–2025 and was aimed at improving the speed, security, and transparency of the country’s payment systems. Between August 2023 and August 2024, KEPSS processed over Sh 45 trillion (approximately USD 348.7 billion) in transactions.

The ISO 20022 transition in Kenya has improved cross-border payments, allowed for faster transaction processing, and enhanced fraud detection through richer transaction data.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.