NBE Orders Rationalization of LC Fees and Charges

Central Bank Amends FX Directive to Ease Trade Finance Procedures

The National Bank of Ethiopia (NBE) has announced new amendments to Ethiopia’s foreign exchange directive alongside fresh measures aimed at rationalizing fees and charges applied to Letter of Credit (LC) transactions.

In a public notice issued on May 25, 2026, the central bank said the reforms are part of its ongoing transition toward a market-based foreign exchange regime first introduced in July 2024.

According to the NBE, the reforms are intended to improve the efficiency, transparency, and competitiveness of Ethiopia’s foreign exchange market while reducing administrative bottlenecks that continue to affect businesses engaged in international trade.

Banks Granted Expanded Approval Authority

Under the amended directive, commercial banks are now authorized to approve Letters of Credit on acceptance for institutions holding foreign currency accounts and retention accounts without requiring prior approval from the central bank.

Banks are also permitted to approve Cash Against Documents (CAD) acceptance arrangements for eligible institutions without prior NBE authorization.

In addition, companies holding foreign currency accounts, including retention account holders, will now be allowed to initiate or order shipments under Cash Against Documents arrangements without prior bank approval, provided payment processing requirements and document verification procedures are fulfilled afterward.

The NBE said the amendments are designed to simplify foreign exchange administration procedures and improve the ease of doing business.

NBE Moves to Standardize LC Pricing

Alongside the FX directive amendment, the central bank also introduced measures targeting the pricing structure of Letter of Credit services provided by commercial banks.

According to the NBE, fees and charges related to LC transactions in Ethiopia have remained inconsistent with international norms, creating additional costs and inefficiencies for importers and exporters.

Under the new directive:

• LC fees and charges must now be calculated on an annualized basis
• Charges must be applied proportionally according to the tenor of each Letter of Credit
• Banks are prohibited from exceeding the maximum fee limits previously established by the NBE

The regulator stated that the measure aims to align Ethiopia’s trade finance pricing system with global standards while improving competitiveness within the country’s foreign exchange market.

Expected Impact on Businesses and Trade

The reforms are expected to reduce transaction costs for businesses engaged in import and export activities while improving access to trade finance services.

Importers and exporters have long raised concerns regarding lengthy approval procedures, inconsistent pricing structures, and administrative delays surrounding foreign exchange transactions and Letter of Credit processing.

By granting commercial banks greater authority and standardizing LC-related fees, the NBE hopes to accelerate trade-related transactions, improve operational efficiency, and strengthen confidence in Ethiopia’s evolving foreign exchange framework.

The announcement comes as Ethiopia continues broader economic reforms aimed at liberalizing the foreign exchange market, improving private sector competitiveness, and attracting greater international investment.