National Payment System Proclamation No. 718/2011 (Ethiopia)

The National Payment System Proclamation No. 718/2011 is Ethiopia's primary payment-systems statute and the legal foundation for the National Bank of Ethiopia's (NBE) oversight of payment, clearing and settlement systems. It established the NBE's mandate to license, regulate and oversee payment systems and the participants in them, and provided the statutory basis on which the NBE later opened Ethiopia's historically closed financial sector to non-bank digital-finance providers through subsidiary directives. Scope and applicability: the Proclamation applies to operators of, and participants in, payment, clearing and settlement systems in Ethiopia. It empowers the NBE to authorise and oversee systems, to issue directives governing payment instruments, payment instrument issuers and payment system operators, to designate systemically important systems, and to require information and conduct oversight. It provides for settlement finality and the enforceability of netting arrangements, protecting completed settlements from being reversed on a participant's insolvency. Core obligations: persons operating payment systems or issuing payment instruments must obtain NBE authorisation and comply with the prudential, operational and consumer-protection requirements set out in the Proclamation and its directives. The Proclamation underpins the NBE's directive-making power, exercised most significantly through the Licensing and Authorization of Payment Instrument Issuers Directive No. ONPS/01/2020 (which permitted non-bank mobile money issuers and enabled services such as Telebirr and M-PESA Ethiopia) and the Licensing and Authorization of Payment System Operators Directive No. ONPS/02/2020. Supervision, amendment and enforcement: the NBE supervises authorised entities and may impose sanctions for breach. The Proclamation was subsequently amended by Proclamation No. 1283/2023 to incorporate new developments in the national payment system, including changes facilitating broader participation and innovation. Operating without authorisation is an offence. As the umbrella legislation, Proclamation No. 718/2011 (as amended) sits above the NBE's payment-instrument-issuer and payment-system-operator directives and anchors Ethiopia's rapidly liberalising digital-finance framework.

1. 1Establishes the National Bank of Ethiopia as licensing authority and overseer of payment, clearing and settlement systems
2. 2Empowers the NBE to issue directives on payment instruments, payment instrument issuers and payment system operators
3. 3Provides for settlement finality and enforceability of netting arrangements, protected against insolvency
4. 4Requires authorisation to operate payment systems or issue payment instruments; NBE may require information and conduct oversight
5. 5Statutory basis for the 2020 directives that opened mobile money/e-money issuance to non-bank providers
6. 6Amended by Proclamation No. 1283/2023 to incorporate new payment-system developments and innovations