The Digital Transformation of Public Financial Administration in Ethiopia: Overview of Directive No. 1069-2025

The recent promulgation of Directive No. 1069/2025 by the Ministry of Finance of Ethiopia constitutes a legislative enactment of paramount significance in the ongoing advancement of public financial administration within the Federal Government. This Directive, issued in May 2025 (corresponding to 2017 E.C.), derives its foundational legal authority from Article 75 of the Federal Government Financial Administration Proclamation, thereby establishing a binding legal mandate universally applicable to all Federal Public Bodies. The central tenet of this directive rigorously necessitates the obligatory acceptance of payments through a diverse multiplicity of digital payment instruments. These instruments must, without exception, be issued by entities duly licensed and stringently regulated by the National Bank of Ethiopia, signifying a concerted governmental endeavor directed towards the modernization of extant revenue collection mechanisms.

The supervening objectives underpinning this aforementioned directive are multifaceted in scope, encompassing the enhancement of “open access, payment alternatives, financial inclusion, and competitive digital payments.” This strategic imperative patently reflects a deliberate governmental resolve to cultivate a more equitable and readily accessible financial ecosystem, one in which citizens are afforded manifold modalities for the remittance of payments to governmental entities. A core principle indelibly enshrined within the directive is the explicit proscription against discrimination; consequently, no legitimate payment instrument shall be denied acceptance or subjected to restriction predicated solely upon its issuing entity, provided always that such entity maintains proper licensure from the National Bank of Ethiopia and adheres scrupulously to all prevailing regulatory norms.

The implementation of this transformative mandate unequivocally requires Federal Public Bodies to effectuate the integration of their existing payment collection systems with authorized payment gateways and service providers, a critical operational prerequisite for facilitating the seamless receipt of payments from all licensed Payment Service Providers. A stringent temporal parameter of ninety (90) days from the directive’s date of issuance has been precisely prescribed for the completion of all requisite technical and administrative arrangements. The Inspection Department of the Ministry of Finance is formally vested with the comprehensive responsibility for monitoring compliance and ensuring the fidelity of the directive’s implementation.

The precise scope of application of Directive No. 1069/2025, as meticulously delineated in Article 3, extends comprehensively to “all payments received by Public Bodies in accordance with the provisions of the Federal Government Financial Administration Proclamation.” For purposes of definitional clarity, Article 2(6) formally establishes “Public Body” as “any organ of the Federal Government which is partly or wholly financed by Government allocated budget,” thereby encompassing a broad and inclusive spectrum of governmental entities. Correspondingly, Article 2(2) precisely defines “Payment Service Provider” as “any person or entity that is duly licensed or authorized by the National Bank of Ethiopia to issue one or more instruments or devices used for the initiation, routing or settlement of payments such as commercial banks, Microfinance institutes, Non-bank financial institutions, Payment system operators, Automatic Teller Machine Operators.”

Article 5 enumerates a non-exhaustive compilation of accepted payment instruments, which Federal Public Bodies are formally enjoined to accept. These categories comprise, though are not exclusively limited to, debit cards, credit cards, prepaid payment instruments (PPIs), mobile wallets, mobile and internet banking platforms, and fund transfers as formally articulated within the National Payment Systems Proclamation No. 718/2011. The fundamental principle of non-discriminatory access, formally articulated in Article 7, reiterates that public bodies are rigorously precluded from refusing a legitimate payment instrument based solely upon the issuer’s identity, this proscription being contingent upon the issuer’s demonstrably licensed and compliant status.

With regard to the pecuniary incidence of costs, Article 8 stipulates unequivocally that, “Irrespective of the choice of the instrument and the associated transaction costs, the public bodies shall receive the full amount set by the Government.” This provision thus signifies that any transaction-related charges are not to be borne by the governmental entity, nor are they to result in a diminution of the payment amount ultimately remitted to the public body.

The implementation timeline, as imperatively mandated by Article 9, requires Federal Public Bodies to complete “all necessary technical and administrative arrangements within 90 days from the date of issuance of this Directive.” Furthermore, continuous progress reports are formally required to be submitted to the Ministry of Finance “with 30-day intervals following the issuance of this directive, until full compliance is achieved,” thereby institutionalizing a robust and systematic reporting and oversight mechanism. Monitoring and compliance functions, comprehensively detailed in Article 10, are formally assigned to the “Inspection Department of the Ministry of Finance,” which is explicitly authorized to conduct inspections or request pertinent data for the express purpose of verifying adherence. Operational guidance and technical assistance for Public Bodies are to be sought from the “Treasury Department of the Ministry of Finance,” as formally stipulated in Article 11.

It is further stipulated in Article 12 that the “Federal Government Electronic Payment Directive No. 71/2020 shall continue to be applicable on payments to be made by Public Bodies,” thereby indicating a continuity of certain existing regulatory provisions within the evolving normative framework. Article 13, which addresses the non-applicability of conflicting directives, asserts that “No directives or practices inconsistent with this Directive shall have effect with respect to matters provided in this Directive,” consequently establishing the definitive supremacy of Directive 1069/2025 concerning the specific matters addressed therein. The effective date of the directive, as precisely specified in Article 14, is contingent upon “its publication on the Ministry of Finance’s official website following its registration with the Ministry of Justice.”

This directive undeniably represents a momentous and strategic stride towards the comprehensive digitization of governmental revenue collection mechanisms within the Federal Democratic Republic of Ethiopia. Its anticipated benefits are manifold, encompassing the streamlining of payment processes for both citizens and governmental agencies, thereby substantially enhancing efficiency in fiscal operations. Moreover, the inherent nature of digital payments offers demonstrably enhanced audit trails and a higher degree of transparency, contributing significantly to fiscal accountability.

By embracing a diverse array of digital payment modalities, the directive is poised to significantly bolster financial inclusion, particularly benefiting citizens who may presently lack access to conventional banking services but possess mobile wallets or analogous digital instruments, thereby facilitating their seamless engagement with governmental services. Furthermore, this initiative is posited to stimulate the broader digital economy, fostering demand for digital payment services and incentivizing innovation among licensed providers. Finally, a significant ancillary benefit manifests as the potential reduction in the reliance upon physical cash handling, a practice which inherently mitigates various risks associated with cash-based transactions. The stringent ninety-day implementation period and the diligent monitoring exercised by the Ministry of Finance unequivocally underscore the government’s steadfast commitment to the expeditious adoption of this innovative payment framework.