Critical Legal Update: Directive No. FXD/86/2023 – Off-shore Account Operations for Strategic Foreign Direct Investment Projects

The National Bank of Ethiopia (NBE) has issued a directive to attract foreign direct investment by allowing eligible projects to open offshore accounts and guaranteeing currency convertibility.

The eligible projects to open an offshore account are:

• Public-private partnership (PPP) projects in the power generation and infrastructure sectors with large capital investment needs.
• Large mining projects with substantial export-earning potential.
• Other strategic FDI projects deemed eligible by the NBE's executive management.

These FDI projects can cover payments from the offshore account to make payments for external debt service, insurance, contractors, warranty claims in foreign exchange, capital or investment expenses, and maintenance and operation expenses. However, the debt-to-equity ratio may not exceed 80:20 of the foreign capital.

Regarding the Foreign Currency Convertibility Guarantee, it only applies to PPP energy and mining sectors for loan repayment and dividend repatriation after exhausting all means to purchase foreign exchange.

The “Off-shore Account Operations for Strategic Foreign Direct Investment Projects Directive No. FXD/86/2023” is effective as of September 8, 2023.