The National Bank of Ethiopia has again warned that unlicensed remittance activity violates Ethiopian law, while diaspora families continue to move dollars through both formal channels and informal hawala-style networks that track what people believe foreign currency is actually worth. Foreign exchange means the buying and selling of one currency for another, such as trading US dollars for Ethiopian birr. The parallel market is the unofficial price people pay outside banks when the official rate does not match what dollars fetch on the street. Birr Metrics reported that the central bank’s latest notice urged individuals and businesses, including members of Ethiopia’s large diaspora, to route transfers only through licensed institutions and flagged legal risk for both providers and users of informal services.
As of March 31, 2026, the National Bank of Ethiopia published an updated list of approved remittance providers that included global firms such as Western Union, MoneyGram and PayPal, alongside domestic digital platforms such as telebirr and Yaya Wallet, according to Birr Metrics. The National Bank of Ethiopia’s own Money Remittance Transfer Agencies page later reminded the public that providing or using unlicensed money remittance and transfer services is illegal and punishable under Ethiopian law, and it pointed readers to an official list of licensed institutions. Those lists are useful consumer information. They do not by themselves prove that formal channels have closed the gap between an administered birr price and the price households can actually obtain.
Formal remittance numbers have risen. Birr Metrics said net private remittances rose 36.5 percent to 4.6 billion US dollars in the first half of the 2025/26 fiscal year, reflecting a shift toward official channels after foreign exchange measures introduced in July 2024. Those reforms moved the birr closer to a market-determined rate and narrowed the gap with the parallel market, Birr Metrics reported, which improved incentives for some formal transfers. A significant share of remittances still moves through informal networks that operate outside full regulatory oversight, the same outlet noted. Higher formal inflows are an important fact about the size of diaspora dollars entering recorded banking channels. They are not proof that every family now receives a birr amount that matches the market value of the dollars sent.
People use hawala and other informal dealers because the official birr rate still does not reliably reflect what dollars are worth in daily life. When a relative abroad sends one hundred dollars, the receiving family wants birr that can pay rent, school fees, medicine or business stock at real prices. If the bank rate leaves them short of what the street market would give, many will look for a trusted intermediary even when the central bank warns about fraud and legal exposure. That choice is not a moral failure by households trying to keep a budget together. It is a response to a price gap that policy still leaves open.
A managed exchange rate is convenient for official privilege and for connected access to scarce dollars. When the National Bank of Ethiopia and the government in Addis Ababa keep a strong hand on the rate and on who gets foreign currency first, ordinary recipients can face rationing, delay and paperwork while better-connected actors obtain harder currency on easier terms. Abiy Ahmed’s government can describe each intervention as reform, yet a rate that remains managed from the top still leaves an administrative price beside a parallel price that everyone in the remittance chain can observe. Enforcement campaigns that name unlicensed operators and threaten account restrictions for recipients, as Birr Metrics described in the late-2025 drive that continued into 2026, raise the cost and risk of informal transfers without creating a single new dollar.
Criminalizing market-value exchange treats the symptom as the disease. Hawala persists because it can be faster, more trusted in community networks, and closer to the price senders and receivers believe their dollars deserve. Pushing those transactions further underground can increase fraud risk and remittance costs for the same families the formal system says it wants to protect. Publishing licensed providers and warning about scams helps consumers avoid fraud. Using police power as exchange-rate policy does not close the price gap that keeps informal networks alive.
To shrink the parallel market, Ethiopia needs to float the birr for real, with transparent rules for any central-bank intervention, so licensed banks and remittance firms can compete for foreign currency at prices people recognize. A genuine float may show how weak the currency is, and that information is more useful than a subsidized official quote paired with a parallel market that remains real. Until Abiy Ahmed’s government and the National Bank of Ethiopia accept that households will keep chasing market value, every new hawala warning will sit beside the same incentive. Formal inflows of 4.6 billion dollars in half a year show how large diaspora money is for Ethiopia. They do not show that enforcement drives have defeated the parallel market or removed the reason families still use hawala.
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