Ethiopia Sets Rules for Banks Operating in Special Economic Zones

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The National Bank of Ethiopia (NBE) has issued a new directive outlining licensing and operational requirements for banks intending to operate branches within the country’s Special Economic Zones (SEZs).

The directive, effective January 6, 2026, sets minimum prudential, operational, and compliance standards for both domestic and foreign banks.

Directive No. SBB/99/2026, titled Requirements for Licensing a Bank Branch to Operate in Special Economic Zone, formalizes the framework under which banks can provide financial services within SEZs.

It mandates licensing for all bank branches operating in the zones and details minimum capital, liquidity, and operational criteria.

Key Requirements

Banks seeking to open branches in Ethiopia’s SEZs must comply with the following financial and operational standards:

Hold at least 1% of total banking sector assets (exempted for new foreign bank subsidiaries and branches during their first two years).
Maintain a capital adequacy ratio two percentage points above regulatory minimums for the past four quarters.
Meet statutory liquidity requirements over the three months preceding the application.
Keep non-performing loan ratios within regulatory limits for the past four quarters.
Demonstrate timely settlement of foreign exchange and international banking obligations.

Additionally, banks must provide full banking services, including foreign exchange, to all individuals and companies in the zone and submit signed provisional lease agreements during licensing.

Restrictions and Compliance

Branches licensed for SEZ operations are limited to serving residents of the zone. The NBE may restrict the number of branches in each zone and can require corrective measures if banks fail to meet ongoing standards.

Existing branches in areas designated as SEZs have two years to comply or face relocation and closure.

Licensing Fees and Transitory Provisions

Fees for licensing SEZ branches are as stipulated under existing NBE directives. The directive also clarifies that development finance institutions and newly licensed foreign subsidiaries have specific exemptions or adjusted requirements.

The directive references Article 34(2) of the Special Economic Zone Proclamation No. 1322/2024 and Article 91(2) of the Banking Business Proclamation No. 1360/2025.

Banks seeking to operate in SEZs must submit applications meeting all criteria and maintain compliance on an ongoing basis. The NBE retains authority to enforce rectification measures and limit branch expansion within the zones.

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