By Muluken Yewondwossen

The National Bank of Ethiopia (NBE) has made significant changes to the payment instrument issuer directive, including the allowance of full ownership, facilitation of payments on shares, and the establishment of a subsidiary.

The revised directive, which marks the third revision since its initial issuance in April 2020, has eliminated the previous requirement that limited a shareholder at a payment instrument issuer company from holding more than one fifth of the total capital.

In the 2020 directive no. ONPS/01/2020, article 4, sub-article 3.VIII, it was stated that no person, other than the government, could hold more than 20 percent of the shares of a licensed payment instrument issuer. Additionally, sub-article 3.IX stipulated that a non-government enterprise must have a minimum of 10 shareholders.

However, the latest directive, signed by Mamo Esmelealem, Governor of NBE, and effective as of October 6, does not include these articles.

The new directive allows for the formation of a subsidiary that can function as a payment instrument issuer. It specifies that the parent of the subsidiary must be a telecom operator, payment instrument issuer, payment system operator, or a bank.

Directive no. ONPS/09/2023, article 4.5, includes foreign nationals in the requirement to pay the minimum paid-up capital, which is 50 million birr, in foreign currency. Sub-article seven adds that a foreign national applicant must provide evidence of payment for the investment protection fee to the government. The National Bank will determine the amount of the investment protection fee periodically.

Regarding the CEO, the new directive states that the company’s leader should possess proven experience in the areas of digital financial services and products, mobile money operations, digital payments, and digital banking services. For senior executive officer positions in licensed government enterprises, relevant work experience in the field with a minimum of eight years of service is required, which was not mentioned in the previous directive.

The new directive also allows issuers to facilitate users’ investments in government and private securities through electronic money, as well as the facilitation of payments for principal, interest (coupon), dividends, or any other returns derived from the users’ investment activity.

In terms of accounts and limits, the maximum daily electronic account balance has been increased to 10,000 birr, with an aggregate daily transaction limit of 20,000 birr for level accounts. In the 2020 directive, these limits were set at 5,000 birr and 1,000 birr, respectively.

For level two accounts, the limits have been raised to 75,000 birr and 150,000 birr, respectively, compared to the previous directives’ limits of 30,000 birr and 5,000 birr.

NBE has stated that the revised directive aims to promote competition and innovation. It also anticipates that it will enable the expansion of mobile money services and digital payment solutions.