Addis Abeba Orders Its Big Spenders Off Paper

The Addis Ababa City Administration, in alignment with broader national reforms, is spearheading a significant shift towards digital transactions, compelling its "big spenders" – government bureaus and their suppliers – off paper-based systems. This move is underpinned by the Ministry of Finance's Directive No. 1069/2025, which mandates all federal public institutions to accept payments from any licensed digital service provider, and a parallel initiative by the city's Finance Bureau to enforce electronic public procurement (e-procurement). These directives aim to enhance transparency, improve efficiency, combat corruption, and foster financial inclusion within Ethiopia's public financial management landscape, marking a critical phase in the country's digital transformation agenda.

Ethiopia is undergoing a profound digital transformation, with its capital, Addis Ababa, at the forefront of efforts to modernize public finance and procurement. A pivotal development in this journey is the directive compelling government entities to transition from traditional paper-based transactions to digital platforms. This initiative, encapsulated by the Ministry of Finance's Directive No. 1069/2025 and the Addis Ababa City Administration's push for e-procurement, signals a decisive move towards a cashless and more transparent government operation.

This article delves into the legal and operational implications of these directives for practicing attorneys and legal professionals. It will examine the statutory underpinnings, the scope of the mandates, and the practical challenges and opportunities arising from this digital pivot. The overarching thesis is that these reforms represent a critical legal and operational paradigm shift, demanding careful attention to compliance, technological integration, and the evolving regulatory landscape in Ethiopia's pursuit of a digital-first economy.

The drive towards digital public finance in Ethiopia is rooted in the government's ambitious "Digital Ethiopia 2025" strategy, which prioritizes the digitization of over 130 public services and the expansion of financial inclusion. This strategy is further supported by the National Digital Payments Strategy (NDPS), initially for 2021-2024 and now extended to 2026-2030, which aims to modernize the retail payment system and foster a cash-lite economy. Historically, Ethiopia's economy has been heavily reliant on cash-based transactions, leading to inefficiencies, limited traceability, and vulnerabilities to corruption.

To address these challenges, the National Bank of Ethiopia (NBE) has been instrumental in shaping the regulatory framework for digital payments. Directives such as the Electronic Payment Directive No. 71/2020 and the Licensing and Authorization of Payment Instrument Issuer (Amendment) Directive No. ONPS/10/2025 have laid the groundwork for the introduction of mobile money, digital wallets, and other digital financial services, while also tightening oversight and promoting interoperability. These foundational legal instruments provide the context for the current mandates, which seek to operationalize the broader digital transformation goals within the public sector, particularly concerning public finance and procurement.

The core legal development driving this shift is the Ministry of Finance's Directive No. 1069/2025, titled “A Directive on Mandatory Acceptance of Payments from All Licensed Payment Service Providers by Federal Public Bodies.” This directive, grounded in Article 75 of the Federal Financial Administration Proclamation, legally compels all federal public institutions to accept payments through any payment instrument issued by entities licensed and regulated by the National Bank of Ethiopia. This includes, but is not limited to, debit cards, mobile wallets, prepaid instruments, and internet banking services. A crucial provision is the non-discrimination clause, which prohibits public institutions from rejecting legitimate payment methods based on the identity of the service provider, thereby fostering a competitive environment and ending the de facto monopoly previously enjoyed by state-affiliated platforms like Telebirr.

Federal agencies are mandated to integrate their payment systems with approved digital payment providers within 90 days of the directive's issuance (by late August 2025) and must submit monthly compliance reports to the Ministry of Finance's Inspection Department. This aggressive timeline underscores the government's commitment to rapid implementation. While the directive aims to enhance transparency and reduce cash handling costs, it also stipulates that public institutions must collect the full value of government-set fees, irrespective of transaction costs, potentially shifting these costs to citizens.

In parallel, the Addis Ababa City Administration is advancing its own e-procurement initiative. The city's Finance Bureau has drafted a directive to make electronic public procurement mandatory for its 45 bureaus. This aligns with the federal Public Procurement and Property Authority's successful rollout of an e-procurement system to 169 federal budgetary institutions and 93 branch offices, which facilitated over 308 billion Birr in procurement in the 2017 Ethiopian fiscal year. The e-procurement system is lauded for its potential to streamline processes, reduce bureaucracy, enhance transparency, and eliminate corruption by creating auditable trails and preventing document fraud.

While these directives present significant opportunities for increased efficiency and accountability, challenges remain. Issues such as unreliable internet connectivity, limited point-of-sale (PoS) infrastructure, and low digital literacy, particularly in underserved communities, could impede seamless adoption. Moreover, ensuring interoperability among diverse payment platforms, as mandated by the NBE's standardized QR code directive, is critical for the success of a truly integrated digital payment ecosystem. Legal practitioners must advise clients on navigating these technical and regulatory hurdles, ensuring compliance while leveraging the benefits of the digital shift.

The directives from the Ministry of Finance and the Addis Ababa City Administration represent a watershed moment in Ethiopia's public financial management and procurement landscape. By mandating digital payments and e-procurement, the government is not merely adopting new technologies but fundamentally reshaping its operational ethos towards greater transparency, efficiency, and accountability. This shift is poised to significantly impact government entities, private sector suppliers, and citizens alike, fostering a more robust and inclusive digital economy.

For legal practitioners, understanding the nuances of Directive No. 1069/2025, the Federal Financial Administration Proclamation, and the evolving NBE regulations is paramount. Advising clients on compliance, managing the transition to digital systems, addressing data security and privacy concerns, and navigating potential disputes arising from transaction costs or system failures will be crucial. As Ethiopia continues its journey towards a digital-first future, practitioners must remain vigilant to further regulatory developments and actively guide stakeholders through this transformative period, ensuring that the promise of a more efficient and transparent public sector is fully realized.