External loan means a loan acquired from an eligible foreign lender and approved and registered by the National Bank of Ethiopia. External loan in kind means acquisition of capital goods from an eligible foreign lender in the form of sale with deferred payments, lease agreement, or any other legal arrangement that may be approved by the National Bank of Ethiopia. An eligible lender is determined by the National Bank of Ethiopia. Development Finance Institutions, foreign banks, shareholders, and other related parties are commonly considered as eligible lenders.
External Loan in Cash
- Approval requirements:
- All borrowers other than the government need to secure prior approval of National Bank of Ethiopia (NBE).
- For Government-guaranteed external loans, only consultation and registration with NBE is required.
- Any form of guarantee will not be issued by government and bank for private loan.
- Eligible FX Borrowers under FX/01/2024-External Loan in Cash
- Exporters -financing an export-oriented investment that generates foreign currency
- Domestic investors engaged in projects that generate foreign currency
- Foreign investors
- Domestic manufacturers (non-exporters)
- Domestic Manufacturers (non-exporters)
- Valid manufacturing business license
- Capital registration certificate
- Registration
Once the funds are transferred to the borrower, the loan shall be registered by NBE. NBE shall register external loan up on presentation of the following documents:
- Application letter
- Bank advise
- Copy of external loan approval letter
- Repayment
The National Bank will approve the repayment of an external loan only if it is approved and registered according to the requirements under FXD/01/2024. To approve repayment, NBE requires an application letter, a copy of the external loan registration letter, and a loan repayment schedule that details the computation of principal, interest, and any other charges deemed necessary.
External Loan in Kind
- Approval
- All borrowers other than the government need to secure prior approval of NBE.
- For Government-guaranteed external loans, registration with NBE is required
- All-in-cost ceilings will be approved by NBE
- Eligible FX Borrowers-External Loan in Kind
- Exporters: the capital is going to be used for export-oriented business that generates foreign currency
- Domestic investors engaged in projects that generate foreign currency
- Foreign investors
- Foreign Investors
- Investment permit/business license
- Foreign capital registration certificate debt to equity ratio not to exceed 60:40 of draft loan agreement proforma invoice
- Supporting letter from relevant government body to attest the capital goods shall have used for the initial intended purpose of acquiring external loan in kind
- Exporters
- Valid export license
- Draft loan agreement
- Proforma invoice
- Supporting letter from relevant government body to attest the capital goods shall have used for the initial intended purpose of acquiring external loan in kind
- Document justifying repayment capacity to be determined in practice by NBE
- Registration
Once the loan in kind is transferred to the borrower, it shall be registered by NBE. NBE shall register external loan up on presentation of the following documents:
- Application letter
- Customs declaration and all relevant shipping documents
- Copy of external loan approval letter
- Repayment
NBE will approve the repayment of an external loan in kind only if it is approved and registered according to the requirements under FXD/01/2024.
To approve repayment, NBE requires an application letter, a copy of the external loan registration letter, and a loan repayment schedule that details the computation of principal, interest, and any other charges deemed necessary.
Supplier’s Credit
Eligible FX Borrowers under FX/01/2024- Ex-Supplier’s Credit
- Exporters financing an export-oriented investment that generates foreign currency
- Foreign investors
- Domestic manufacturers (non-exporters)
- Agricultural machines/inputs imports and LPG gas importers
- Construction sector companies
- Exporters
- Valid export license
- Pro forma invoice with repayment period and term of payment
- Document justifying the capacity to repay the loan
- Domestic Manufacturer (non-exporters)
- Valid manufacturing business license
- Capital registration certificate
- Pro-forma invoice with a minimum 1 year for external loan repayment period
- The debt-to-equity ratio may not exceed 60:40 of registered capital
- Foreign Investors
- Valid investment permit/business license
- Foreign capital registration certificate
- At least 180 days pro-forma invoice with repayment period and term
- The debt-to-equity ratio may not exceed 60:40 of registered capital
- Agricultural Machines/inputs imports and LPG Gas importers
- Valid business license for importing agricultural machines/inputs and LPG Gas, issued by the pertinent licensing authority
- Pro-forma invoice with a minimum 1-year credit period
- The debt-to-equity ratio may not exceed 60:40 of registered capital
- Construction Sector Companies
Specific Items Eligible for Financing:
- Construction machinery (eg, graders, loaders, excavators)
- Bitumen for construction projects
For supplier’s credit: pro-forma invoice with a minimum 1-year credit period. The debt-to-equity ratio may not exceed 60:40 of registered capital.
- Approval
- All borrowers need to secure prior approval of NBE