The central bank of Ethiopia has doubled the minimum capital threshold for electronic money issuers, sending a pointed message to an exuberant fintech sector that the party may continue — just not without tighter security and a bigger entrance fee.
The National Bank of Ethiopia (NBE) quietly repealed its 2021 directive on Payment Instrument Issuers (PIIs) and issued a new framework on May 12. The headline change: a leap in the required paid-up capital from 50 million birr to 100 million birr (roughly $740,000). This revision takes immediate effect for any aspiring or existing non-bank digital wallet operators — a nudge, or perhaps a shove, toward capital solidity and regulatory order.
For a nation that only legalized non-bank mobile money services in 2021, the move represents a rapid maturation of policy.
Ethiopia’s mobile money market has boomed in the past three years, led by Telebirr — operated by the state-owned Ethio Telecom — which claims over 40 million users. But the growth has been uneven, with other operators either struggling to gain traction or simply boxed out by closed-loop ecosystems. Interoperability has been largely aspirational, and regulatory oversight patchy.
The revised directive seeks to fix this. In addition to the higher capital requirement, the NBE has declared interoperability non-negotiable. By November 2025, all mobile money transactions between different wallets must pass through the national switch, EthSwitch, or other NBE-licensed clearing houses. Any peer-to-peer or merchant payments skipping the sanctioned pipes will be deemed “non-compliant.”
Closed ecosystems — the digital equivalent of members-only clubs — are now effectively outlawed. Leading platforms must open access, however begrudgingly, and permit rivals to transact within their systems. Whether this results in fairer competition or just repositions monopoly power elsewhere in the payments infrastructure is still uncertain.
The capital hike, while framed as a measure to strengthen operational resilience, is also a filter — one that could screen out smaller, less capitalized fintechs. For Ethiopia’s budding innovators, 100 million birr is not just a number; it’s a moat.
Optimists say the requirement will professionalize the sector, ensuring only serious and solvent players survive. Skeptics see a barrier to entry that will consolidate the market around a few giants — especially those with telecom or banking muscle behind them.
To soften the blow, the NBE has given operators six months to comply with the technical and interoperability provisions. The capital requirement, however, is already active. No extensions, no grace period.
In parallel, the directive recalibrates the rules governing Level 2 digital wallets — the kinds that allow higher transaction volumes in exchange for stronger know-your-customer (KYC) protocols. These accounts now face new ceilings on daily balances, peer-to-peer transfers, and payments to merchants.
The central bank, displaying its usual flair for vague clarity, has yet to disclose the specific transaction caps, leaving operators and users to guess where the lines will be drawn. What is certain is that Ethiopia’s QR code-based P2M ecosystem — still in its infancy — will soon be playing with training wheels.
This directive does not emerge in isolation. It forms part of a broader effort to modernize Ethiopia’s financial system, which includes the landmark decision in December 2024 to allow foreign participation in the banking sector for the first time in modern history.
Under the new Banking Business Proclamation, strategic foreign investors may now own up to 40% of Ethiopian banks, while the aggregate foreign ownership cap is set at 49%. Foreign banks may enter the market — but only as either deposit-taking or non-deposit-taking institutions, not both. Ethiopia is liberalizing, yes, but with a distinctly East African caution.
Ethio Telecom, the state-owned behemoth that runs Telebirr service, enjoys an outsized share of the mobile money market. In the first half of the 2024 fiscal year, the company reported revenues of 61.9 billion birr ($1.1 billion and an EBITDA margin of 55.6%. Foreign exchange earnings topped $72.6 million, including $5.24 million from Telebirr’s international remittance services.