Payment Instrument Issuer and Payment System Operator Directive No. ONPS/04/2021

# NATIONAL BANK OF ETHIOPIA
ADDIS ABABA

## LICENSING AND AUTHORIZATION OF PAYMENT INSTRUMENT ISSUER AND PAYMENT SYSTEM OPERATOR

### Manner of Equity Investment by Foreign Nationals of Ethiopian Origin and Organizations in Payment Instrument Issuance & Payment System Operator Directive No.ONPS/04/2021

Whereas, Foreign Nationals of Ethiopian Origin or Organizations have been allowed to invest in the payment instrument issuance and payment system operator businesses in Ethiopia;

Whereas, there is a need to put in place implementation modality for investment by Foreign Nationals of Ethiopian Origin or Organizations in payment instrument issuance and payment system operator businesses in Ethiopia;

Now, therefore, in accordance with article 4/2a and article 37/2 of National Payment System Proclamation No.718/2011 and articles 9 (1&2) and 58 of Banking Business (as amended) Proclamation no.1159/2019 and articles 20 (2) and 27 (2) of the National Bank of Ethiopia Establishment (as Amended) Proclamation No. 591/2008, the National Bank of Ethiopia has issued this Directive.

## 1. Short Title

This Directive may be cited as “Manner of Equity Investment by Foreign Nationals of Ethiopian Origin or Organizations in Payment Instrument Issuer or Payment System Operator Business Directive No.ONPS/04/2021”.

## 2. Definitions

For the purpose of this Directive, unless the context requires otherwise, the term:

### 2.1. “Acceptable Foreign Currency”
means foreign currency which is declared to be acceptable for payment in Ethiopia by the National Bank and shall include United States Dollar, Great Britain Pound Sterling, Euro and other currencies that the National Bank may specify to be acceptable for this purpose from time to time.

### 2.2. “Foreign National of Ethiopian Origin”
means a person with a valid identification card obtained pursuant to Proclamation No. 270/2012 attesting that he/she is a Foreign National of Ethiopian Origin;

### 2.3. “Mid exchange rate”
means exchange rate between buying and selling rate of a day set by the National Bank;

### 2.4. “National Bank”
means the National Bank of Ethiopia;

### 2.5. “Organization”
means an entity that is fully owned by Foreign Nationals of Ethiopian origin or jointly by Foreign Nationals of Ethiopian Origin and Ethiopian Nationals, located within or outside Ethiopia.

### 2.6. “Payment Instrument Issuer”
means a Payment Instrument Issuer licensed by the National Bank to undertake payment instrument issuance business in Ethiopia;

### 2.7. “Payment Instrument Issuer (under formation)”
means a Payment Instrument Issuer that has applied for a payment instrument issuance business license from the National Bank;

### 2.8. “Payment System Operator”
means a Payment System Operator licensed by the National Bank to undertake payment system operator business in Ethiopia;

### 2.9. “Payment System Operator (under formation)”
means a Payment System Operator that has applied for a payment system operator business license from the National Bank.

## 3. Scope of Application

The provisions of this Directive shall be applicable to existing Payment System Operator and Payment Instrument Issuer and Payment System Operator (under formation) and Payment Instrument Issuer (under formation).

---

## 4. Share Subscription

### 4.1. Place of Share Subscription

#### 4.1.1
All subscriptions including initial and subsequent sales of shares to Foreign Nationals of Ethiopian Origin or Organizations shall take place only in the geographical territory of Ethiopia.

#### 4.1.2
Notwithstanding the provision stated under sub-article 4.1.1 of this article, a Payment Instrument Issuer or a Payment System Operator or a Payment Instrument Issuer (under formation) or a Payment System Operator (under formation) may conduct promotional and other related preliminary activities needed for share subscription outside Ethiopia.

### 4.2. Manner of Share Subscriptions and Surrender Requirement

#### 4.2.1
A Payment Instrument Issuer or a Payment System Operator or a Payment Instrument Issuer (under formation) or a Payment System Operator (under formation) shall submit a written application to the National Bank to open foreign currency escrow account for the purpose of accepting share payment indicating the name of the bank and branch (es) where the account is to be opened; and shall report the account number so opened to the National Bank.

#### 4.2.2
A bank instructed by the National Bank to surrender 30% (thirty percent) of the foreign currency that is maintained in line with sub-article 4.2.1 of this article shall surrender, to the National Bank, with in five working days from the receipt of the order.

#### 4.2.3
Upon receipt of the foreign currency surrendered as per sub-article 4.2.2 of this article and the summary of the share subscription as per Annex-I, the National Bank shall credit the payment and settlement account of the bank with the equivalent amount of Ethiopian Birr at the prevailing mid exchange rate.

#### 4.2.4
A bank instructed by the National Bank to unblock the foreign currency escrow account of a newly licensed Payment Instrument Issuer or Payment System Operator shall transfer the Birr equivalent of the full amount of the foreign currency collected and maintained in

---

the escrow account at a prevailing buying rate to the account of the newly licensed Payment Instrument Issuer or Payment System Operator.

#### 4.2.5
Notwithstanding the provisions stated under sub-article 4.2.1 herein above, a Payment Instrument Issuer or Payment System Operator shall open a foreign currency bank account with the National Bank’s approval for accepting share payment and share premium (if any) from Foreign Nationals of Ethiopian Origin or Organizations.

#### 4.2.6
The bank that maintained the foreign currency account as per sub-article 4.2.5 of this article, shall surrender 30% (thirty percent) of the foreign currency collected from subscription of shares to the National Bank in accordance with Foreign Exchange Surrender Requirements of Banks (as amended) Directives No. FXD/54/2018 and transfer the Birr equivalent of full amount of the bank to the credits the payment and settlement account of the bank with the equivalent amount of Ethiopian Birr at the2.1. “Acceptable Foreign Currency” means foreign currency which is declared to be acceptable for payment in Ethiopia by the ADDRESS: SUDAN STREET