As Ethiopia’s currency, the birr, plummets to a record low on the parallel market, the country’s central bank is fighting a desperate two-front war. With one hand, it’s launching a charm offensive to lure diaspora dollars into its struggling formal banking system. With the other, it’s playing whack-a-mole with a growing number of US-based “black-market fintechs” that it blames for undermining the nation’s financial stability.
The situation is stark. The Ethiopian birr has cratered to 174 to the US dollar on the street, while the official rate from the Commercial Bank of Ethiopia sits stubbornly at 137 — a nearly 40% premium that makes a mockery of official policy. Amid this chaos, the National Bank of Ethiopia (NBE) is doing what any cornered central bank would do: pointing fingers and promising prizes.
The Fintech Bogeymen
The NBE has publicly named and shamed several US-based remittance operators, accusing them of operating without a license and siphoning off precious foreign currency. It seems that while Ethiopia’s government has been slow to liberalise its own financial sector, entrepreneurs abroad haven’t been waiting for permission.
The central bank’s list includes Maryland-based Shgey Money Transfer and Adulis Money Transfer, alongside Ramada Pay. The NBE insists these platforms, despite their often professional-looking websites, operate in the shadows, outside the regulatory frameworks designed to prevent money laundering and other illicit activities.
The star of this regulatory crackdown, however, is TAAJ Money Transfer. In a case that the NBE is eagerly highlighting, the Minneapolis-based company pleaded guilty in a US court on June 26, 2024, to violating the Bank Secrecy Act. Prosecutors revealed TAAJ had illegally wired over $66 million overseas without proper licensing or reporting. The company agreed to forfeit $700,000, giving the NBE a potent “I told you so” moment to wave at the diaspora.
The underlying message from the central bank is clear: these pesky unregulated companies are the problem. Of course, they also happen to offer a service that, inconveniently for regulators, people actually want to use, often because it’s faster and bypasses the forex-starved local banks.
The “DEBO” Charm Offensive
To counter the allure of the black market, the NBE, last year, rolled out its DEBO initiative, a six-month campaign whose name evokes a sense of community-driven effort. It’s a classic move to woo back the diaspora with the promise of mortgages, car loans, and SME financing — if only they’ll send their money through the official channels.
Ethiopian banks have dutifully pooled together 100 billion ETB (around $900M) to back these loan products. The government also launched Unite.et, a platform allowing Ethiopians abroad to open bank accounts virtually. It’s a digital welcome mat laid out in front of a banking system that many find inefficient, with just 19 commercial banks serving over 115 million people. The NBE is betting that the long-term dream of a mortgage can compete with the short-term magic of an instant, high-rate transfer from an unlicensed app. It’s a bold wager.
The irony in this battle is that the formal banking system’s biggest competitor is a state-owned enterprise. Telebirr, the mobile money service launched by Ethio Telecom in 2021, has become a runaway success. Integrated with eight banks and boasting a vast agent network, Telebirr offers the speed and convenience that traditional banks lack, especially in rural areas.
An Economy on the Brink
This fintech tug-of-war is happening against a backdrop of severe economic distress. The government’s Homegrown Economic Reform Agenda, which secured a deal with the IMF, was supposed to fix the chronic forex shortages by floating the currency. A year on, the gap between the official and parallel markets is wider than ever.
For businesses, the situation is becoming unmanageable. Importers are forced to source dollars on the black market at inflated rates to pay for everything from raw materials to software subscriptions, squeezing their margins to breaking point. Banks ration dollars, prioritising state-linked firms and leaving smaller private companies to fend for themselves. The IMF itself has warned that the resurgent parallel market could derail the entire reform effort.
Adding to the pressure, record-high remittances of over $6 billion in the 2023/24 fiscal year show that the money is there; it’s just not going where the government wants it to.
And just to add another layer of spice to this financial stew, a new US law — the whimsically named One Big Beautiful Bill Act (OBBBA) — is set to impose a 1% tax on remittances starting January 1, 2026. This could inadvertently push even more people toward undocumented channels to avoid the tax, further complicating the NBE’s mission.
Ultimately, Ethiopia’s battle for control over its currency is a fight against not just a few unlicensed operators in America, but against market logic itself. With a failing official exchange rate, the NBE’s DEBO campaign feels less like a strategic masterstroke and more like a hopeful prayer.