The National Bank of Ethiopia (NBE) has commenced coordinated actions, in collaboration with relevant legal authorities, to crack down on individuals and entities involved in unlicensed foreign remittance activities.
From October, the bank began pursuing legal action against unlicensed operators while urging users to stick to officially licensed transfer firms, in efforts to ensure that remittance flows back into the country’s formal banking system.
In a press release by the NBE, it noted that this step reflects its ongoing commitment to protect the integrity of the financial system and ensure that foreign exchange inflows are managed through legitimate, transparent, and regulated channels. The bank further noted that the use of formal financial system to carry out such unauthorized activities undermines confidence in the market and poses risks to the country’s monetary stability.
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Part of the statement reads,
“The NBE reaffirms that these actions form part of a continued effort to address and prevent illegal remittance practices. The National Bank of Ethiopia will persist in working with relevant institutions to identify and take appropriate measures against those who attempt to misuse Ethiopia’s financial system for unlawful purposes.
“At the same time, the National Bank is advancing measures to promote the formalization of remittance flows and ensure an adequate and sustainable supply of foreign currency through banks and licensed operators. These efforts aim to enhance accessibility, efficiency, and transparency in the remittance process, thereby supporting the country’s economic stability and development goals.”
To further support the public in identifying legitimate service providers, the bank has provided a full list of all duly licensed money transfer service providers authorized to operate in the country under relevant laws.
The move to stop the unlicensed foreign remittance activities in Ethiopia, comes as the National Bank of Ethiopia Governor H.E. Dr. Eyob Tekalign, who began his tenure on 19 September 2025, aims to stabilise the volatile currency and curb underground money movement which negatively impacts the country’s economy.
Ethiopia’s diaspora, estimated at over three million, remits approximately $5.6 billion annually, according to World Bank data. While remittances remain one of the country’s largest sources of foreign exchange, a significant portion of these funds bypass official banking systems, undermining efforts to stabilize the economy and strengthen foreign reserves. Most remittance to Ethiopia is sent through informal channels known as “hawala,” which means the National Bank of Ethiopia “loses” access to a vital source of foreign currency.
Studies indicate that up to 78 percent of remittances are transmitted through unofficial or informal channels. These channels often used to avoid exchange rate discrepancies or bureaucratic delays, pose a major challenge to the country’s financial stability.
A report from Ethiopian Business Review further reveals that the loss from illegal remittances could be at least twice the official figure, implying that Ethiopia may be losing over US$8 billion annuallythrough unrecorded remittance transactions. This estimation, while not officially verified, highlights the scale of capital flight and the widespread use of informal money transfer systems among members of the Ethiopian diaspora.
Beyond remittances, illicit financial flows (IFFs) more broadly also remain a critical issue. Studies by organizations such as Global Financial Integrity (GFI) estimate that Ethiopia loses between US$1.3 billion and US$3.2 billion every year through illicit outflows, including trade misinvoicing and unrecorded capital transfers. In 2009 alone, GFI reported that Ethiopia lost US$3.26 billion to such illegal financial movements.
The growing use of parallel markets for foreign currency, coupled with a widening gap between official and black-market exchange rates, has exacerbated the problem. Many Ethiopians abroad find it easier and more profitable to send money through informal brokers rather than the official banking system.
In response, the National Bank of Ethiopia, under the leadership of Governor H.E. Dr. Eyob Tekalign, has pledged to tighten regulatory oversight and incentivize the use of formal remittance channels. Experts suggest that reducing illegal remittances will require a combination of policy reforms, improved financial literacy, and stronger collaboration between the government, commercial banks, and diaspora communities.
Unless addressed, the continued leakage through informal channels threatens to deprive Ethiopia of much-needed foreign exchange, hampering economic growth and development efforts.