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Paper No More: NBE to Replace Government Bond Certificates with Electronic Records

Addis Ababa, Ethiopia — July 1, 2025 – In a landmark move to modernize the country’s financial market infrastructure, the National Bank of Ethiopia (NBE) has announced that all Government and NBE securities will be fully dematerialized — transitioning from paper-based certificates to secure electronic records — effective June 30, 2025.

The announcement, made through Directive No. MFAD/001/2025, signals a major leap toward a more efficient, transparent, and secure securities market in Ethiopia.

What Is Dematerialization?

Dematerialization refers to the process of converting physical certificates of government bonds and NBE-issued securities into electronic book-entry form. These records will be centrally stored and managed by the Central Securities Depository (CSD) under the oversight of the NBE.

Why This Matters for Investors

Under the new directive:

  • Physical bond certificates will no longer be recognized as valid proof of ownership.
  • All ownership, transfers, and transactions will be handled electronically through the CSD system.
  • Investors must open a Government Securities Account and complete Know Your Customer (KYC) verification to continue trading or holding government bonds.

Key Dates and Deadlines

  • The official dematerialization date is set for June 30, 2025.
  • Investors must submit physical certificates and complete registration before this date.
  • After a five-year grace period, any untendered securities will be moved to a special account, and associated benefits may be forfeited unless justified.

What Investors Should Do Now

To stay compliant and protect their investments, bondholders should:

  1. Contact a licensed CSD member (such as a bank or broker) to initiate the dematerialization process.
  2. Submit their physical bond certificates, along with identification and tax information.
  3. Verify that their dematerialized holdings are reflected accurately in their electronic accounts.

Legal and Market Implications

The directive grants legal recognition to electronic securities and introduces penalties for:

  • Refusing to submit physical certificates
  • Submitting false documents
  • Unauthorized transfers or errors during the dematerialization process

Violators may face fines of up to 5% of the face value of affected securities.

Investor Protection Measures

The CSD will use advanced encryption, data privacy protocols, and account segregation to ensure secure and confidential management of investor assets.

Modernizing Ethiopia’s Capital Market

This initiative aligns with Ethiopia’s broader goal of building a transparent, inclusive, and technology-driven capital market. It also opens new opportunities for investors by enhancing market liquidity, ease of trading, and regulatory oversight.

“The dematerialization of government securities marks a critical turning point for Ethiopia’s financial future,” the NBE stated in its public notice.

Read the full document from here

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