On February 9, 2024, His Excellency Mamo Mihretu, the Governor of the National Bank of Ethiopia (NBE), welcomed EuroCham Board members to his office for a pivotal technical meeting. This meeting served as a platform forfruitful discussions on a wide array of fiscal policies and mattersfalling underthe jurisdiction of the NBE.
During the engagement, challenges faced by the European Foreign Direct Investment (FDI) community were candidly addressed. These challenges included hurdles in the clearance process from the delinquency list, lack of forex priority allotment for importing raw materials and capital expenditure (CAPEX) investments to substitute imports, transparency in foreign exchange (FX) allocation, and the exploitation of export commodities especially coffee for generating FX, alongside issues related to dividends repatriation and the potential offsetting of receivables versus payables.
Governor Mihretu acknowledged these challenges and highlighted ongoing efforts by NBE to address them. He emphasized NBE’s commitment to ensuring strict adherence to directives issued for managing FX allotment, while also stressing the need for fundamental solutions to address forex allocation challenges comprehensively.
In response to concerns about importers engaged in coffee exports, participants proposed reviewing certain business pathways, such as treating import and export performances separately. This proposal aims to prevent sustained losses from export activities leading to business liquidation or bankruptcy, thereby promoting sustainable export practices.
Regarding dividends repatriation, NBE recognized the longstanding challenges faced by FDI entities and proposed to look into backlogs as will be compiled by the European Chamber in a bid to allocate a certain percentage of dividends to signal commitment the Ethiopian Government in supporting FDI and enhance
investor confidence.
Discussions also explored the possibility of offsetting receivables versus payables, with NBE citing precedents like local currency swaps as potential solutions to explore further. NBE welcomed innovative proposals for intra-company arrangements, promising thorough examination on a case-by-case basis.
Finally, Governor Mihretu touched upon broader macroeconomic challenges and upcoming policy revisions in the forex regime aimed at ensuring price stability and the soundness of financial institutions.
The technical meeting between EuroChamber and NBE underscored the commitment of both parties to fostering a conducive investment environment in Ethiopia while addressing the concerns of the European FDI community