The National Bank of Ethiopia has lifted the annual credit‑growth ceiling for banks operating on a fully Sharia‑compliant basis, creating a new growth window for the country’s Islamic‑finance sector.

Under the new framework, four fully Sharia‑compliant lenders, ZamZam Bank, Hijra Bank, Ramis Bank and Shebele Bank, will no longer be subject to the 24 percent growth cap applied to conventional banks. The move responds to longstanding concerns that uniform lending limits constrained the expansion of interest‑free banking models.

Central Bank officials stressed the waiver is temporary, designed to support the segment while Sharia‑compliant instruments are developed, allowing these banks to trade government securities and tap wholesale funding without interest, according to Addis Fortune.

The exemption affects a small slice of the market, Islamic‑finance banks account for less than one percent of total credit, and regulators argued it will not compromise ongoing efforts to curb inflation. Islamic banks said the ceiling was a double burden: they lack profitable, low‑risk assets, cannot hedge liquidity shocks, and their profit‑sharing model, which involves buying goods for clients rather than disbursing cash, was never intended to inject credit into the economy at the pace of conventional lending.

Industry sources say the decision is expected to accelerate lending under profit‑sharing (musharakah) and leasing (ijarah) arrangements, particularly to small and medium enterprises and agricultural ventures.

The broader banking sector continues to operate under the 24 percent ceiling, reflecting the NBE’s cautious approach to credit growth amid ongoing inflationary pressures. Regulators emphasised that Sharia‑compliant banks will still be monitored under the same prudential and liquidity standards as conventional banks.