Council Advances Bill Approving Ethiopia’s Entry BRICS New Development Bank

The Ethiopian Council of Ministers has advanced a bill to the House of Peoples' Representatives, ratifying the treaty for Ethiopia's accession to the New Development Bank (NDB). This move marks a significant step in Ethiopia's strategy to diversify its development financing sources, reduce reliance on traditional lenders, and bolster its macroeconomic stability. As a multilateral financial institution established by the BRICS nations, the NDB focuses on infrastructure and sustainable development projects. Ethiopia's full membership, pending parliamentary approval and deposit of its instrument of accession, is expected to unlock new avenues for funding critical national development initiatives and deepen its engagement in South-South cooperation.

Ethiopia's Council of Ministers recently took a pivotal step towards integrating the nation into a new global financial architecture by advancing a bill to ratify the treaty for its entry into the New Development Bank (NDB). This decision, announced following a cabinet meeting chaired by Prime Minister Abiy Ahmed, signifies a strategic shift in Ethiopia's approach to securing development finance and underscores its commitment to strengthening ties with emerging economies. The NDB, a multilateral financial institution founded by the BRICS countries, aims to mobilize resources for infrastructure and sustainable development projects in emerging markets and developing countries.

The New Development Bank (NDB) was established in 2014 by Brazil, Russia, India, China, and South Africa (BRICS) with the primary purpose of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries. Headquartered in Shanghai, the NDB commenced operations with an initial authorized capital of US$100 billion and an initial subscribed capital of US$50 billion, equally distributed among its founding members. Since its inception, the NDB has expanded its membership beyond the founding five, admitting countries such as Bangladesh, the United Arab Emirates, Egypt, Algeria, and Uzbekistan, with Ethiopia, Uruguay, and Colombia also approved as prospective members.

In Ethiopia, the ratification of international agreements is governed by a well-defined constitutional and legislative framework. Article 9(4) of the Constitution of the Federal Democratic Republic of Ethiopia (FDRE) stipulates that all international agreements ratified by Ethiopia are an integral part of the law of the land. The process typically involves negotiation by the executive, followed by authentication and signing of the final text. Subsequently, the Council of Ministers reviews and approves the draft agreement, which is then forwarded to the House of Peoples' Representatives (HoPR) for legislative ratification. Proclamation No. 1024/2017, the International Agreement Making and Ratification Proclamation, further harmonizes the procedure for the negotiation, conclusion, ratification, suspension, and termination of international agreements with the FDRE Constitution and other relevant laws.

Ethiopia's journey towards NDB membership has progressed through several key stages. The country initially submitted its application for membership to the NDB management in October 2023, preceding its formal accession to the BRICS mechanism in January 2024. In 2025, the NDB Board of Governors formally approved Ethiopia's admission as a prospective member. The most recent development saw the Ethiopian Council of Ministers, on June 26, 2026, unanimously endorse a Draft Proclamation on the Ratification of Ethiopia's Accession to the Agreement Establishing the New Development Bank. This bill has now been transmitted to the House of Peoples' Representatives (HoPR) for consideration and final approval.

Upon ratification by the HoPR, Ethiopia will complete its domestic legal requirements. The final step for attaining full membership will involve depositing its Instrument of Accession with the Government of Brazil, which serves as the designated depository of the Agreement Establishing the New Development Bank, in accordance with Article 9(b) and (d) of the Terms, Conditions and Procedures for the Admission of New Members to the NDB. This formal act will grant the NDB legal recognition and the right to enter agreements, own property, and engage in legal affairs within Ethiopia's jurisdiction.

The benefits for Ethiopia are multifaceted. Membership in the NDB is expected to provide access to diversified and alternative sources of financing for national development projects, particularly in critical areas such as infrastructure, industrialization, energy expansion, climate resilience, and agricultural transformation. This diversification is crucial for enhancing macroeconomic stability by reducing excessive reliance on traditional lending sources and broadening external financing options. Furthermore, it will deepen Ethiopia's engagement in South-South cooperation and emerging development finance frameworks, fostering greater economic collaboration, investment opportunities, technology transfer, and policy dialogue among developing countries.

Ethiopia's financial commitment involves purchasing 2,945 shares in the NDB, each with a par value of US$100,000, totaling approximately US$294.5 million. The proposal outlines an upfront payment of 20% (US$58.9 million), with the remainder to be paid in 14 installments over 13.5 years. Accession will also grant Ethiopia a seat on the NDB board, where voting power is not subject to veto laws and is linked to subscribed shares. While the NDB offers significant opportunities, particularly with its focus on financing in local currencies and non-sovereign operations, practitioners must also consider the quality of borrowing and ensure prudent debt management, especially as Ethiopia is currently undergoing a debt restructuring process.

Ethiopia's impending full membership in the New Development Bank represents a strategic pivot in its development financing strategy, moving towards greater diversification and enhanced South-South cooperation. This move, following the Council of Ministers' endorsement and anticipated parliamentary ratification, is poised to unlock substantial financial resources for critical infrastructure and sustainable development projects across the nation. It underscores Ethiopia's proactive engagement with the evolving global economic order and its commitment to fostering resilient economic growth.

For legal practitioners advising clients in Ethiopia, this development signals new opportunities in project finance, particularly in sectors aligned with the NDB's mandate such as clean energy, transport, water, and digital infrastructure. It also highlights the increasing importance of understanding the legal frameworks governing multilateral development bank engagements and the implications for project structuring, risk assessment, and compliance. Moving forward, careful attention will be required to ensure that the new financing avenues are utilized effectively and transparently, contributing to sustainable economic transformation while prudently managing the nation's debt obligations.