Waktole Abdulahi, a long-time resident of Norway, was relieved when he was able to secure 260 dollars at one of Addis Abeba’s newly opened independent forex bureaus. For his travels and securing a yellow card, the timing was urgent.

"Such small amount was hard to come by previously," he said.

While the transaction was smooth, he noted the highly volatile exchange rates—a consequence of the recently liberalised forex system that has introduced more private players into the market.

"It’s a price worth paying to get the desired amount," he told Fortune.

A new phenomenon is taking root in the capital as four independent forex bureaus establish their presence. While still testing the waters, these bureaus offer a welcome shift from the traditional method of foreign exchange services, which were constantly marred by long waits and scarcity. As Ethiopia steers the evolving space of foreign exchange, these independent bureaus stand at the forefront of an ongoing economic transformation, though much remains to be seen about their long-term impact on the market.

For decades, the National Bank of Ethiopia (NBE) tightly controlled the forex market, providing limited access to foreign currencies. This left individuals and businesses facing long waits and uncertainty. The introduction of the central bank’s "green book" paved the way for non-bank businesses to open independent foreign exchange shops, marking a substantial step toward liberalising the market. The policy aims to curb the parallel market, which had long operated at a steep premium, offering dollars at rates double those of the official market. Since the Birr was floated in July, that disparity has narrowed to a single digit.

This move aims to modernise the currency exchange process and reduce the dominance of the parallel market, where rates had soared due to scarcity. Transactions that were once the exclusive domain of government-approved banks are now becoming commonplace at the 12 newly licensed bureaus. These bureaus are equipped with machines that detect counterfeit notes, insurance certificates guaranteeing the highest amounts, and employees screened for criminal records, all part of the licensing criteria.

Ethio Independent Forex Bureau, located on the ground floor of the Ethiopia Hotel, is one such player, with six shareholders and a capital of 180 million Br. The Bureau allows travellers to exchange up to 10,000 dollars with a buying rate of around 134.14 Br to the dollar, and a selling rate of 139.92 Br on November 13, 2024. It was 10pc higher than the central bank's daily indicative rate, including a five percent service charge.

However, this new system is far from flawless. Exchange rates fluctuate rapidly, driven by supply and demand dynamics in a market still stabilising. Customers are required to present documentation such as a passport, visa, and airline ticket to complete transactions.

For Ephraim Tesfaye, CEO of Ethio Forex Bureau, the key value offered by independent bureaus is speed and accessibility. He pointed out that they have capitalised on the sluggish Real-Time Gross Settlement (RTGS) system in conventional banks, which has been a bottleneck in money transfers.

"I expect competition to intensify in the coming years," he told Fortune.

The NBE's green book outlines the rules and regulations for independent forex bureaus. Applicants must meet a minimum capital requirement of 15 million Birr and provide a security deposit of double that amount, placed in a blocked, interest-bearing account. Eligible applicants include Ethiopian nationals, non-resident Ethiopians, and foreign citizens of Ethiopian descent. Foreign nationals and corporations, however, remain excluded from this space.