The diagnostic covers key focus areas of Ethiopia’s formal remittance market. It also highlights the parallel foreign exchange market given its ever-present influence on Ethiopia’s financial environment. The causes of the parallel market constitute a far broader area than that of remittances, although remittances are significantly affected by it. The parallel market is fuelled by several factors, including strict trade regulations, foreign exchange (FX) shortages, and other financial policies that fall outside the scope of this report. This diagnosis demonstrates the parallel market’s impact on remittances while focusing its recommendations on areas related to the formal market. The impact of the recommendations within this diagnostic will be hindered by the presence of the parallel market, which needs continued attention from stakeholders.