By DMLF
The National Bank of Ethiopia (NBE) introduced a historical major change in the administration and regulation of foreign exchange by a new directive namely Foreign Exchange Directive Number FXD/01/2024, effective as of July 29/2024.
Key foreign exchange reforms elaborated by televised address by NBE Governor Mr.Mamo Mehertu and summarized by the NBE press release as follows:
1. A shift to a market-based exchange regime, whereby banks are henceforth allowed to buy and sell foreign currencies from/to their clients and among themselves at freely negotiated rates, and with the NBE making only limited interventions to support the market in its early days and if justified by disorderly market conditions.
2. The end of surrender requirements to the NBE, allowing foreign exchange to be retained by exporters and commercial banks and thus substantially boosting FX supplies to the private sector.
3. The removal of import restrictions that previously prohibited 38 product categories and the broader liberalization of the foreign exchange market for the imports of goods and services, while capital account outflows remain restricted as before.
4. The improvement of retention rules allowing exporters to retain 50 percent of their foreign exchange proceeds vs 40 percent previously.
5. The complete removal of rules governing banks’ allocation of foreign exchange that was based on a waiting list system for different categories of imports.
6. The introduction of non-bank foreign exchange bureaus that are henceforth free to engage in the buying and selling of foreign currency cash notes at market rates.
7. The removal of restrictions on franco valuta imports, to be implemented shortly through an upcoming regulation.
8. The simplification of rules governing foreign currency accounts, especially those currently held by foreign institutions, FDI companies, and the Diaspora.
9. The allowance for residents to open foreign currency accounts, based on remittance inflows, transfers from abroad, FX-based salary or rental income, and for other specified cases, as well as the ability to use such foreign currency accounts for foreign service payments.
10. The removal of interest rate ceilings that previously applied to private sector companies or banks when borrowing from abroad.
11. The opening of Ethiopia’s securities market to foreign investors, with the terms and conditions to be specified further in the near future.
12. The granting of special foreign exchange privileges to companies within Special Economic Zones, including the ability to retain 100 percent of their foreign exchange earnings.
13. The relaxation of various rules on the amount of foreign currency cash notes travelers may carry when traveling into or out of Ethiopia.
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By Mahlet Mesganaw, Partner at DMLF
The Ethiopian Environmental Protection Authority, with its power generated from Article 20 of the Environmental Impact Assessment Proclamation No 299/2002, issued a Directive on Issuance of Competency for Consulting Services in Environmental and Social Impact Assessment Number 1005/2024 (hereafter the Directive). The Directive is done in June 2024 and shall be effective from the date of registration in the website of the FDRE Ministry of Justice. The Directive repealed the previous Directive on Environmental and Social Impact Assessment Competency Certification Directive Number 03/2018.
The aim of the Directive is to indicate standardized criteria that enables consistent and accountable competency issuance system by developing competency criteria to recognize and regulate experts and firms engaging in environmental and social impact assessment, strategic environmental assessment and environmental audit consulting services. Hence professionals and consulting firms that were registered and given a certificate of competence before the issuance of this Directive shall register in accordance with this Directive within 6 months of approval of the Directive.
Foreign experts and foreign consulting firms are no different from their Ethiopian counterparts. Any foreign expert or foreign consultancy firm can engage in environmental and social impact assessment, strategic environmental assessment and environmental audit consulting services.
The foreign expert or foreign consultancy firm should produce the necessary licenses and permits to engage in consultancy services from relevant government authorities. When it is a foreign consulting firm, the latter can engage in consultancy services only when the foreign firm creates an alliance/contract agreement with a domestic consulting firm. The foreign consulting firm should first notify the Authority before entering into a contract to work in alliance with consulting firms in the country.
The requirement of alliance with a domestic consultancy firm may create legal issues. In the Investment Regulation Number 474/2020, foreign firms are required to partner with a domestic investor in sectors of freight forwarding and shipping agency, domestic air transport, cross country public transport, urban mass transport, advertisement and promotion, audiovisual, motion picture, video recording, production and distribution and accounting and auditing services. Environmental and social impact assessment, strategic environmental assessment and environmental audit consulting services are outside of the partnership sector the Regulation envisages. Environmental and social impact assessment services are services that are neither reserved for government nor for domestic investors. Hence the service is open for foreigners to engage in as per Article 6 of the Investment Regulation Number 474/2020. A foreign consulting firm, duly registered and invested as per the investment laws of the country, having obtained relevant licenses, may challenge the need for the requirement of alliance with domestic consulting firms.
In principle, ratification of Directives takes a few crucial steps before coming to force under Federal Administrative Procedure Proclamation Number 1183/2020. Prior to ratification of a Directive, the Authority should consult with the public and send the draft to the Ministry of Justice for its opinion. The main reason behind this is to check whether or not a certain directive provision contradicts with higher laws or not.
Therefore, the new Directive on Issuance of Competency for Consulting Services in Environmental and Social Impact Assessment No. 1005/2024 has incorporated standardized criterias that assist in issuance of certificate of competence in environmental and social impact assessment, strategic environmental assessment and environmental audit consulting services. Foreign firms or foreign professionals can also obtain such competency certification having fulfilled the necessary registration licenses and permits and when it comes to foreign consulting firms by forging an alliance with domestic consulting firms.
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Congratulations for Mahlet Mesganaw, Partner at DMLF, for her achievement of Certificate on Mediation for Trainers from VU Amsterdam.
By Dagnachew Tesfaye, Managing Partner at DMLF
The Ethiopian Digital Identification Proclamation No.1284/2023 done on 18th day of April 2023, governs the national id issuance and regulation. This brief article will cover a few points on the purpose of the Proclamation, eligible parties, what information is collected, unique number and digital identification credential, authentication and relying parties and data protection. Then a brief conclusion shall follow.
Objective
The objective of the Proclamation can be found both on the Preamble and Article 4 of the Proclamation. The establishment of a reliable Digital Identification system in Ethiopia aims to ensure the Resident’s right to be identified, enhances the ability to exercise other rights, improves trust between service providers and residents, and creates a nationwide enabling environment to ensure transparency, accountability and efficiency. The ID helps to plan national development effectively, create economic transformation, ensure good governance, reduce wastage of resources or eliminate redundancy and ensure inclusiveness when policies are designed and development plans are executed.
Eligible Parties
The eligible parties are all residents. Residents are natural persons living in Ethiopia fulfilling the requirements of residence place ( sojourn ) provided in Article 174 and 175 of the Ethiopian Civil Code or living in Ethiopia by obtaining residence permit from relevant authority. Article 174 of the Civil Code of Ethiopia provides residence of a person as the place where he normally resides. Article 175 states that the mere fact that a person is for a time in a certain place shall not be sufficient to constitute for him a residence in such place. However, a residence is acquired wherever the sojourn is to last or has lasted in fact, more than three months. Those residents who are issued a residence permit by Immigration and Citizenship Services ( ICS) are also eligible for the national ID. In addition to the above, minors can be registered upon giving the demographic data by a registered parent, caretaker, legal guardian or any legal body who can take responsibility to the minor and such person may take Digital Identification.
What Information is Collected
Digital Identification consists of demographic and biometric data. The Demographic data shall consist but not limited to full name, nationality, date of birth, gender, domicile address, mother’s name, phone number, email address, and postal address. Whereas the biometric data consist of fingerprints, iris and facial photo.
Unique Number and DIC
The registered resident shall be given a unique number which is a non-repeating number issued to a registrant after successful registration of both biometric and demographic data. Then the Digital Identification Credential (DIC) can be issued for the resident to use. The DIC shall be in the working language of the Federal government or the Regional government and in English.
Authentication and Relying Parties
Digital Identification may be taken as legal and sufficient evidence to prove or authenticate a resident’s identity. Any relying party that wants to put Digital Identification as a mandatory requirement to provide service shall get approval from the concerned regulator.
Personal Data Protection
The regulatory institution shall ensure that the confidentiality of personal data is maintained in the course of collecting, registering, authenticating, storing and processing of the same. The protection of data rests on criminal liability whenever violations are there in transferring data or collecting more data than needed.
Conclusion
The Ethiopian Digital Identification system aims to easily identify individuals who want to receive services and prevent illegal activities. Hence it is punishable to refuse to receive digital identification as a legal identity. Therefore, Ethiopia is aiming to register all citizens in a robust digital system to assist the country adopt policies that squarely fit to the needs of its citizens.
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By DMLF
Immigration and Citizenship Services (ICS) requires the following documents when applying for a Business Visa:
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