In January 2026 the National Bank of Ethiopia issued Directive No. SBB/99/2026, on the requirements for licensing a bank branch to operate in a special economic zone, a rule reported soon after by Addis Standard, which confirmed that a bank now needs a specific NBE-approved licence, not just a normal branch permit, before it can open inside one of Ethiopia's economic zones. The directive also requires that licensed branch to offer foreign exchange services to zone residents, ending the assumption that any existing branch or a simple relocation could serve a newly designated zone.
Who this is for: Risk Managers and Internal Auditors at Ethiopian banks weighing whether to follow a manufacturing or export client into a special economic zone, alongside the Company Secretaries who will have to prepare the licence application if the answer is yes.
Proximity to a zone is not the same as eligibility for one
The instinct inside a bank that already banks several exporters is to assume that opening a branch near their new factory floor is a real-estate decision, not a regulatory one. SBB/99/2026 closes that gap. A branch inside a special economic zone needs its own NBE licence, separate from the bank's general operating licence, and NBE will only grant it to a bank that clears a defined set of prudential tests first. A bank cannot simply badge an existing nearby branch as the zone branch, and it cannot open one and sort out the paperwork afterwards.
The eligibility bar a risk function should test before the board discusses it
The directive sets its qualification threshold in numbers a risk or audit function already tracks every month, which makes an eligibility checklist straightforward to run before anyone drafts an application:
- Total assets equal to at least one percent of the banking sector's combined assets, checked against NBE's own published sector figures rather than an internal estimate.
- A capital adequacy ratio at least two percentage points above the regulatory minimum, not merely compliant with it.
- Liquidity standards met with headroom, not at the floor.
- Non-performing loans held within the regulatory limit, on a clean trend rather than a number that happens to be under the line this quarter.
- For a newly licensed foreign bank subsidiary or branch, confirmation that the two-year exemption from the market-share test actually applies to the entity in question, since it is a transitional carve-out, not a general rule.
A bank that fails any one of these has its answer before a single conversation with a prospective zone tenant goes further. That is a more useful outcome than discovering the gap after a client relationship has already been promised a branch.
What the licence does and does not let a bank do once granted
Passing the eligibility bar only earns the right to apply, and the licence that follows is narrower than a normal branch permit. SBB/99/2026 restricts a zone-licensed branch to serving residents and registered operators of that specific zone, so it is not a general-purpose outlet a bank can also use to chase retail deposits from the surrounding town. NBE additionally reserves the right to cap how many banks it licenses inside any one zone, which means eligibility does not guarantee entry; a bank that qualifies on the numbers can still lose out to a competitor if the zone's quota fills first. Sequencing matters here. A bank that treats the application as a formality once its ratios clear will lose time to a competitor that started drafting the file the week the directive was published.
The banks the directive was already watching when it was written
SBB/99/2026 was not written for a blank slate. Some banks already operate branches in locations that Ethiopia's economic zone authorities have since designated, or may soon designate, as special economic zones, often because the branch predates the zone's formal boundary. Those incumbents have two years from the relevant designation to bring the branch into compliance with the new licensing requirement, and the directive is explicit that a branch which cannot or does not comply may have to relocate or close. Two years reads as generous until an institution maps what compliance actually requires: passing the eligibility test, filing the application, and, if the branch's current service mix does not include foreign exchange to zone residents, building that capability from scratch. Treating this as a distant deadline rather than a live filing project is the mistake this directive is best placed to catch early.
Why this lands differently around an industrial park than a shopping district
Ethiopia's special economic zones sit inside a deliberate industrialisation strategy, built around the same logic that put manufacturing parks in Hawassa, Bole Lemi, Dire Dawa and Adama: cluster export-oriented investors, mostly in textiles, garments and light manufacturing, around shared infrastructure and a simplified regulatory interface. A foreign or joint-venture manufacturer moving into one of these zones brings a currency need that looks nothing like a typical Ethiopian retail customer's, frequent import payments, export proceeds that may qualify for the retention treatment we set out when NBE eased foreign exchange rules for exporters, and a head office abroad that expects same-day answers, not a branch visit. A bank whose zone branch cannot process an urgent forex instruction on the spot will find that reputation travels fast inside a cluster of investors who talk to each other constantly. That FX-retention change, and the due-diligence habits it now requires of banks, is exactly the terrain we mapped in FXD/04/2026: when 100% FX retention doesn't mean zero questions, and a zone branch serving export manufacturers will meet that same account pattern on day one, not after eighteen months of growth.
It also sits alongside the wider competitive shift we described when foreign banks began entering Ethiopia's market under the Banking Business Proclamation: a foreign bank subsidiary chasing a multinational tenant into a special economic zone already expects licensing hurdles like this one, and an Ethiopian incumbent that treats SBB/99/2026 as paperwork rather than a genuine gate risks losing exactly the clients this zone strategy was built to attract.
Building the file a licence application will actually need
None of the groundwork has to wait for a specific zone tenant to ask for a branch. A risk or company secretarial function can, this quarter, confirm the bank's current standing against all four prudential thresholds and document the gap to each one in writing; identify which zones are within reach of the bank's existing corporate client base, rather than guessing; draft the foreign exchange service model a zone branch would need, since that capability may not exist in the bank's current branch network; and calendar the two-year clock separately for any existing branch that already sits inside a newly designated zone, rather than assuming it will be flagged automatically.
Turning prudential ratios into a licensing decision, on a timeline set by a regulator rather than by internal planning cycles, is precisely the kind of control discipline DaraCorp's Risk Management & Compliance course is built around, and it pairs naturally with the Competency Framework for mapping which roles, from the risk function to the company secretary's office, need to own a piece of the application before the clock runs out.
This article describes how Ethiopian banks might reasonably respond to Directive No. SBB/99/2026 and is not legal advice or a definitive interpretation of the directive or Ethiopia's special economic zone framework. Confirm your institution's specific licensing and timing obligations against the primary source at nbe.gov.et and take professional advice on your organisation's particular circumstances.
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