National Bank Clamps Down on CAD Payments to African Countries

National Bank Clamps Down on CAD Payments to African Countries

Jan 10 , 2026. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

The National Bank has banned exporters from using the cash against documents (CAD) system for shipments to Chad, Niger, the Central African Republic, South Sudan, and Guinea-Bissau. The restriction, signed by Shambel Teshome, deputy director of Foreign Exchange Reserve Management & Inspection, seeks to ensure foreign currency receipts arrive within 30 days. In 2023, Ethiopia shipped 198,000 dollars worth of goods to Chad and 492,000 dollars to Niger, a modest trade volume.

The National Bank of Ethiopia (NBE) has restricted the use of Cash Against Documents (CAD) payment terms for exports to a select group of African countries, citing persistent failures to repatriate foreign exchange within the mandated 30-day window.

The measure, instituted in mid-December 2025, reveals mounting concern over dwindling hard-currency reserves and the broader economic instability triggered by non-compliance with export payment protocols.

While CAD has been favoured by exporters for its speed and relative flexibility compared to Letters of Credit (LCs) or advance payments, its inherent vulnerability, particularly in markets where enforcement is weak, has left the country exposed to increasing instances of non-payment and delayed remittances. The latest directive targets exports to Chad, Niger, the Central African Republic, South Sudan, and Guinea-Bissau, countries that collectively account for a negligible share of Ethiopia’s export portfolio of over eight billion dollars in volume and value.

The restriction on these countries was signed by Shambel Teshome, deputy director of Foreign Exchange Reserve Management & Inspection.

The National Bank’s clampdown comes as Ethiopia’s merchandise exports remain under pressure, with competition increasing in key markets and the country’s foreign exchange reserves under stress. While the new rules close a door on CAD for certain African countries, the risks they target are present across a broader range of destinations. Exporters and banks alike are being pushed to adapt to a stricter environment as regulators begin enforcing timely payments and shore up reserves.

A Central Bank veteran of nearly 20 years, Shambel believes the decision is meant to ensure timely foreign currency inflows, which he described as vital for economic stability.

“Non-compliance with the submission deadlines undermines our economic stability,” he wrote in official communication to commercial banks and regulators.

Exporters from Ethiopia have been allowed to use CAD for most overseas sales, except for a small group of products such as khat, injera, and livestock, under rules adopted in January 2024.

The latest NBE letter instructs all exports to the affected countries to shift exclusively to advance payment or Letters of Credit (LC) arrangements, closing the door on CAD. The Central Bank expects this shift to reduce the risks associated with delayed or incomplete remittances and, in turn, support the management of the country’s reserves. The Ethiopian Customs Commission was urged to step up enforcement and report violations or signs of non-compliance immediately.

However, these countries are minor destinations for Ethiopian exports, with total annual values typically in the low thousands or tens of thousands of dollars a country, far below Ethiopia’s major markets. The export composition to them mostly mirrors Ethiopia’s overall pattern, such as agricultural commodities and small shipments of light manufactures and equipment.

In 2023, Ethiopia exported 198,000 dollars worth of goods to Chad, almost all vaccines, with a small portion in iron structures. Shipments to Niger totalled 492,000 dollars, led by 419,000 dollars in vaccines, with the rest in pharmaceuticals. Trade with the Central African Republic was 3,400 dollars, mainly edible vegetables valued at 2,290 dollars.

South Sudan, the largest among the group, imported 2.6 million dollars from Ethiopia in 2023, with 2.03 million dollars in hard liquor and 131,000 dollars in rolled tobacco. Guinea-Bissau imported 2,210 dollars, including 858 dollars in furniture and 287 dollars in copper items. These numbers, based on 2023 data, are the most recent available from official and commercial sources. Ethiopian pharmaceutical exports to all destinations reached 1.68 billion dollars in 2024.

NBE officials asserted that even limited foreign exchange losses matter in the current environment. Nonetheless, the crackdown is not confined to these markets. Earlier, NBE also targeted Kenya, barring CAD for all exports there, where exports to Kenya in 2023 grew from 64.9 million dollars to 93.7 million dollars. Kenyan customs reports show Ethiopian imports reached 99.57 million dollars in 2024. While the NBE’s circulars singled out countries for the ban, officials have also signalled that they do not encourage CAD elsewhere.

Major markets such as India, China, and Sudan are considered risky by exporters, who have reported heavy losses from non-payment.

According to Edao Abdi, chairperson of the Ethiopian Oilseed & Pulses Association, three of its member companies reported 20 million dollars in unpaid goods to India and China. He blamed weak awareness among traders and exporters, which he believes increased exposure to risk.

“This situation is high-risk, not only in the countries mentioned in the letters but also in major destinations where companies are defaulting massively, causing exporters to lose money,” Edao told Fortune.

Once goods arrive, importers often use payment delays to renegotiate prices, putting pressure on exporters who should surrender documents to collect payment. Edao noted that many exporters "don't fully understand" CAD terms and end up vulnerable to price renegotiations, which can cost up to 200 dollars a ton. If goods remain uncollected for three months, customs authorities may seize the shipment, and demurrage costs would add to the losses.

“From time to time, the Association notifies members to be cautious of companies reported repeatedly,” he said. "Such problems also appear with LCs and advance payments, not only CAD."

Edao identified a pattern in which importing companies force price renegotiations or abandon products, especially when commodity prices fall after contracts are signed.

“The exporters should be taking responsibility,” he said.

Soreti International Trading Co. (SITCO), a company involved in trade, agriculture, and manufacturing, faces similar challenges. According to Bulbula Tule, its CEO, defaults are common in Asia, where “extreme price sensitivity” leads to routine renegotiation or non-payment. But he does not believe defaults are only the result of bad actors overseas.

“Low-income countries like Ethiopia experience higher default rates due to technological gaps affecting production estimates and quality, leaving exporters exposed,” he said.

Bulbula also noted that delays in logistics and failure to meet contract deadlines compound the risk. He sees NBE's latest ban as a warning for the future, as these markets remain underdeveloped.

Experts say exporters and banks share responsibility for risk. Sani Tuke, CEO of Saniya Business & Investment Consulting and owner of Optimum Logistics Plc, who also has over a decade of experience as an international trade advisor, argued that banks facilitating CAD deals should require guarantees to cover potential payment gaps. He observed that some exporters exploit CAD for commission-based exports or to move money to their overseas companies while retaining funds locally.

"These practices, as well as parallel market transactions, contribute to broader problems in the economy," Sani told Fortune.

However, Sani cautioned against blanket restrictions, urging that the NBE should instead increase oversight of bank practices.

“Importing companies prefer CAD for operational and logistical cost reasons, while a lack of real accountability encourages this practice,” he said.

PUBLISHED ON Jan 10,2026 [ VOL 26 , NO 1341]