EMEA

In what can be described as a significant step forward in Ethiopia’s financial services sector, the National Bank of Ethiopia (NBE) issued a directive that allows non-traditional financial institutions to engage in the business of issuing payment instruments. The directive titled “Licensing and Authorization of Payment Instrument Issuers Directive No. ONPS/01/2020” (Directive) was issued in April 2020.

Services that traditionally fell in the banking service, such as cash-in and cash-out; local money transfer including domestic remittance, load to the card or bank account, transfer to the card or bank account, inward international remittance; domestic payments including bill payment services; and micro-saving, micro-credit, micro-insurance, and pension products can now be provided by non-bank companies that fulfill the criteria under the Directive.

The Directive, subsidiary legislation to the National Payment System Proclamation No. 718/2011, repeals and replaces the 2012 Directive on Mobile and Agent Banking Services.
This legal update briefly discusses the Directive. The update focuses on issues of licensing and capital requirements, and the potential role of foreign investors in the issuance of payment instrument business.