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Month: March 2024

BANKING’S GLASS CEILING INTACT

Posted on by Tizita S.

In the banking industry, an indefensible gender imbalance persists at the leadership level. Among the country’s 28 commercial banks, only Melika Bedri, president of ZamZam Bank, holds a position at the apex, making her a rare example in an industry where only four women have historically ascended to such heights. The leadership discrepancy reflects broader financial inclusion issues for women in Ethiopia, who are less likely than men to own bank accounts, access credit, or adopt new payment methods.

The disparity extends beyond individual access to financial services, touching on wider economic empowerment and equality issues. The World Bank’s Africa Gender Innovation Lab, through its “Innovations in Financing Women Entrepreneurs” initiative, is teaming with banks and microfinance institutions to create financial products that cater specifically to women entrepreneurs. However, a significant gap remains. A recent gathering of industry leaders — including Abie Sano (left) of the Commercial Bank of Ethiopia (CBE), Mamo Mihretu, governor of the Central Bank, Asfaw Alemu of Dashen Bank, and Teferi Mekonnen of Oromia Bank (right) — at the Sheraton Addis pledged commitment to addressing gender disparities. Yet, the irony of a predominantly male leadership discussing women’s financial inclusion exposed the systemic nature of the issue.

Central Bank Tries Monetary Gymnastic Dodging Pitfalls, with the IMF as Its Reluctant Coach

Posted on by Tizita S.

Ethiopian authorities find themselves at a crossroads in the shadow of a global economic malaise characterised by sluggish growth and persistently high inflation. Much like several other countries, the economy they are in charge of is not insulated from the intertwining traps of the current era. They face a formidable choice to steer clear of an economic landscape riddled with domestic and international pressure.

Among the most pressing is the daunting task of securing adequate financing immediately to fix current account imbalances, particularly the disparity between imports and exports. It is a scenario further complicated by the need to deal with an entrenched black-market premium for the Birr against a basket of major currencies and the looming obligation of a one-billion Eurobond repayment.

The International Monetary Fund (IMF), traditionally seen as a financial lifeline in such predicaments, has its team of experts in town, currently engaging with the administration’s macroeconomic team: Girma Birru, Teklewold Atnafu, Mamo Mehiretu, Festume Assefa (PhD), Ahmed Shedie and Eyob Tekalegn (PhD). The much-anticipated engagement, supposedly conducted with the gravitas of negotiations with an entity known for its stringent conditions, hopes to forge a path through the economic hurricane.

However, both parties could be aware that any agreement will not serve as a silver bullet. While aimed at stabilising economies, the anticipated “shock therapy” proposed by the IMF team often comes with its own set of aftershocks, as evidenced by its implementation in other countries. If successful, Ethiopia will join no less than 35 countries, such as Egypt, Zambia, Ghana, and Pakistan, which have received 200 billion dollars in loans.

The IMF’s intervention is predicated on a cocktail of measures designed to combat entrenched inflation, cut budget deficit, and sail the choppy waters of climate change, geopolitical tensions, and a sluggish global economy. The lack of fiscal space and a precarious debt situation only add to the troubling waters of Ethiopia’s predicament. Despite these crises, or perhaps because of them, Governor Mamo of the Central Bank has been proactive lately, appearing determined to address them head-on. His recent unusual moves, such as the publication of two distinct sets of data on inflation and the impacts of recent monetary policy measures, could signal him being in action, clinching his fist to stabilise the economy.

The first data paints a picture of an inflation trajectory that has seen its fair share of fluctuations over the past year, starting with a modest increase and peaking significantly before taking a volatile descent. The inflationary rates trend reflects the impact of tighter monetary policies over recent months, pointing towards a potential easing of inflationary pressures if these trends continue. Concurrently, the Central Bank’s adjustments to monetary policy have begun to show their intended effect, decelerating the growth of key monetary indicators.

This may imply the effectiveness of these measures, although the broader economic implications remain to be seen. The struggle to control inflation and nurture economic growth encapsulates the delicate dance of macroeconomic management. However, the path forward will not be any easier for the Governor and his team of monetary policy advisors.

While welcome, the reduction in inflation rates belies underlying supply-side constraints that must be navigated carefully to avoid unintended consequences. The challenge lies in managing these constraints without stifling the private sector’s expansion ambitions, particularly in industries reliant on credit. Last year, the Central Bank’s accommodative monetary stance led to significant growth in the money supply, driven by an expansion in domestic credit and significant public borrowing.

The expansion, while necessary, carries the risk of exacerbating inflationary pressures if not managed prudently.

The banking industry, a mix of state-owned and private entities, has also seen significant growth over the years, perhaps reflecting a broader trend of financial deepening. Its growth, however, is accompanied by risks, particularly in managing the cost of capital and ensuring that investment remains viable in a high-interest environment. The recent policy shift towards tighter monetary conditions appears to have targeted these risks, balancing the need for economic stability with the imperative of growth. Governor Mamo’s policy of capping lending growth to 14pc of the banks’ aggregate loans might have brought relief by taming the inflationary rate.

The cost, however, is a sector-wide slowdown and potentially affecting macroeconomic growth.

A perennial challenge for Ethiopia continues to be the widening trade deficit, driven by a mix of factors, including rising imports and structural constraints in the economy. This is further exacerbated by a significant allocation of resources to defence and debt servicing sectors, at the expense of social spending. The erosion of the social safety net amidst these fiscal pressures unearthed the difficult trade-offs facing policymakers in a constrained economic environment.

The adverse impact of these combined shocks on poverty cannot be overstated. Ethiopia’s progress in poverty reduction, a noteworthy achievement in the decades leading up to 2020, has been reversed by a confluence of shocks that have eroded household purchasing power and deepened disparities across regional states and demographics. It should be regrettable, considering that the task ahead is not only to stabilise the national economy but also to make a turnaround on the deepening crisis of poverty and food insecurity. The United Nations estimated that nearly four billion dollars is required to support 21.4 million people in need, of whom close to 40 percent are children.

Responding to these myriad problems demands a multi-pronged strategy and an overriding philosophy of political economy. Where there is a vacuum in a guiding conviction, the triumph from the judiciously managed monetary policy to keep inflation in check can only be fleeting. The political-economy beacon should guide a fiscal discipline to prioritise high-impact public investments that generate jobs. It should serve as a lighthouse for enhancing domestic savings, diversifying the economy, investing in human capital, and improving domestic revenue mobilisation. No less, it is crucial to engage the private sector, which can complement public investments and spur growth.

Prime Minister Abiy Ahmed’s (PhD) administration appears to be at a defining moment. The choices made now – not painless by any measure – will have far-reaching implications for the country’s economic future, its ability to overcome the twin challenges of growth and stability, and the fate of its people.

A Bumpy Ride on the Road to Green

Posted on by Tizita S.

Yohannes Dereje recently sold his Volkswagen ID 4 pro electric vehicle for 4.1 million Br after a year and a half use. It was imported from the Middle East for around 3.8 million Br, hoping to stave off the inflationary headwinds and make passive income. The businessman quickly learned that most buyers turn away from buying an EV after observing that it has some mileage on it.

“The car was great, but the resale value is dismal,” Yohannes told Fortune. “There is little faith in the battery life.”

Yohannes’ experience exemplifies the dilemma. While he enjoyed the environmental benefits, the low resale value due to buyer anxieties about battery life served as a wake-up call. This concern extends to the insurance industry, reflected in significantly higher annual premiums (≈ 2.1pc) for EVs compared to traditional internal combustion engine (ICE) vehicles.

Ethiopia is rapidly embracing  EVs as part of a national push for a greener future. Imports have nearly doubled from three years prior, with 72 million dollars worth entering the country last year. Recent policy shifts underscore the government’s commitment to environmental stewardship. Import tariffs plummet to near-zero levels and bans on internal combustion engines for personal use took effect last month by the Ministry of Transport & Logistics.

However, the road to widespread adoption is riddled with the cautious insurance industry that relies nearly half of its non-life business on motor insurance premiums.

Insurance industry experts such as Assegid Gebremedhin are observing complexities emerge with the widespread importation. Central to the concern is batteries, previously considered accessories in traditional motor vehicles, now play a crucial role in assessing claims and determining the causes of accidents. Assegid said that new risk dynamics have emerged, and it is premature to gather sufficient data to accurately assess the risk exposure of EVs and establish appropriate premium prices that would ensure economically viable claim payments.

He anticipates an increase in claims and underscores the need for nuanced evaluations in determining total loss for EVs, especially in cases where battery failure may lead to accidents. He notes that insurers globally classify a vehicle as a total loss if repair costs exceed 75pc of the car’s insured declared value, resulting in cash payouts.

“Insurers are worried since they can’t estimate the battery life which is understandable,” Assegid told Fortune.

Industry players concur.

Solomon Assefa, head of Underwriting at Tsehay Insurance, looks into this through the lens of the “law of large numbers” — as the number of policyholders increases, the more the insurance company can be confident of its prediction. He said with limited data on EV repairs and claims, insurers struggle to accurately assess risks. The lack of readily available spare parts, according to Solomon, qualified mechanics, and established battery lifespans complicates the picture, with insurers resorting to higher premiums to mitigate potential losses.

“We are continuously conducting analyses,” Solomon told Fortune.

While premiums for EVs may vary depending on factors such as customer discounts, vehicle purpose, and prior claims history, most insurance companies have settled on premiums ranging from as low as 1.4pc to as high as 3.5pc. The industry’s net claims experienced a significant increase of 15.7pc, reaching a total of 5.7 billion Br last year. This surge pushed the net claims ratio to 61.3pc, a slight uptick from the previous year, driven in part by inflated imports and vehicle maintenance costs.

The cautious approach taken by insurers, driven by the lack of data and the unknowns surrounding EVs, created a ripple effect throughout the industry. They are imposing higher premiums to mitigate the uncertainty associated with the cost structure of EVs. A study conducted by Allied Market Research reveals that the global EV insurance market was valued at 51.4 billion dollars in 2021. It is projected to grow substantially, reaching 210.4 billion dollars by 2031, with a compound annual growth rate (CAGR) of 15.5pc during the forecast period.

Industry veterans note that low-hanging batteries and bumpy road infrastructure increase the likelihood of damage and, consequently, claim ratios. Yared Molla, CEO of Nyala Insurance, observes the vicious cycle created by these high premiums.

He said unprofitable EV policies due to expensive battery repairs discourage insurers from offering competitive rates, hindering the very market they are supposed to serve. Yared stresses the need for a supportive ecosystem – duty-free battery imports, readily available spare parts, and widespread charging stations – to realise wider adoption.

“Importers also need to provide some form of aftercare services,” he said. “Many cars are sitting around waiting for battery imports.”

While the call for a supportive ecosystem is championed by some insurers, brokers step in with a historical perspective. Eyuel Ewnetu recalls similar initial anxieties when new vehicle types emerged, like the Isuzu NPR trucks. He believes insurers can adapt by introducing terms and conditions to manage risk, rather than resorting solely to higher premiums. Eyuel also suggests that regulators at the central bank could play a role by establishing specific premium ranges for EVs.

Last year, the National Bank of Ethiopia introduced minimum motor insurance premiums as part of an initiative to curb “unwarranted premium undercutting”. Premium rates for private vehicles were set at 1.01pc. However, the regulators are taking a hands-off approach, allowing market competition to determine EV insurance premiums.

Belay Tulu, head of the insurance directorate, acknowledges the higher global premiums due to potential battery repair costs. However, he believes the market will eventually find an equilibrium as data becomes more readily available.

“We expect the rates to be settled through competition,” he told Fortune.

The industry’s contribution to GDP is about one percent, with a measly penetration rate of around 0.7pc. The 18 insurance companies in the country, with a total capital of around 17 billion Br, generate most of their revenue from compulsory insurance segments, of which third-party motor insurance plays a dominant role.

Zufan Abebe, CEO of Nib Insurance, says they plan to shift from high premiums to a strategy focused on volume, anticipating a future with more competitive pricing as the EV market matures. Zufan foresees a future ecosystem of service providers catering specifically to EVs, streamlining the entire ownership experience. This optimistic outlook hinges on the development of a comprehensive ecosystem – a point echoed by Zufan and others.

“We’re going to focus on volume after now,” she told Fortune.

However, for this ecosystem to flourish, a crucial gap needs to be addressed – the lack of skilled mechanics to service EVs.

Ethiopia’s current automotive workforce is not equipped to handle the complications of EVs. While industry insiders believe an opportunity to upskill as the market expands, the current state creates a major hurdle for potential owners. They are left wondering who will fix their car if it breaks down.

Endale Atsbaha, a garage owner, admits the current lack of training and expertise for servicing EVs. He is limited to working on the body of the car, leaving the rest.

“I leave the batteries untouched,” Endale told Fortune.

This lack of qualified mechanics feeds back into the insurance industry’s anxieties. The absence of readily available specialists makes it difficult to assess repair costs. This uncertainty translates into higher premiums.

Fortunately, there are reasons to be optimistic. Consultants like Omer Bomba Mohammed believe the insurance industry’s cautious approach is understandable and insurance companies’ timidity primarily arises from their nature as actuaries, who must exercise great caution when manipulating numbers. He sees the higher premiums as a temporary hurdle. As more data accumulates on EV repairs and maintenance needs, Omer believes insurers will adjust their pricing models.

“If anything, EVs break down less,” he said.

Omar is more concerned about the lack of an accommodative space attractive enough for private sector participants to invest in the necessary infrastructure to encourage more eco-friendly growth.

According to Moges Negash, an automotive engineer, Ethiopian car ownership is traditionally viewed as an investment, a way to generate returns over time. He believes this mindset might need to adapt for EVs to be fully embraced.

“There is scarcity mindset,” he told Fortune.

In the long run, he believes it could be less taxing on both car owners and insurers, comparing the nearly 200 moving parts in ICE to the five systems in EVs. Moges suggests that profit will ultimately be the motivator – as the number of EVs on the road increases, it will become more lucrative for businesses to invest in training programs for mechanics and establish specialised service centres.

“Familiarisation will be a long process,” he said.

Gas Pumps Dry in Addis as Floods Block Vital Import Route

Posted on by Tizita S.

A major fuel shortage, caused by a series of heavy rains that have flooded the critical import route from the ports in Djibouti, has disrupted the regular flow of fuel into the country. The logistical logjam resulted in long queues at gas stations in Addis Abeba and other towns.

The disruption began last week when heavy rainfall damaged the 143Km road from Dikhil to Galafi, a crucial stretch for fuel trucks travelling from Djibouti to Ethiopia. The damage caused by the rainfall has created hazardous conditions for the drivers and their vehicles, leading to long delays. Approximately 300 trucks transporting 2.5 million litres of benzene and 8.5 million litres of diesel daily have been immobilized, exacerbating the nationwide shortage.

The Ethiopian Petroleum Supply Enterprise (EPSE), the state-owned Enterprise charged with ensuring sufficient fuel supply, has been particularly hard-hit by this crisis. Serving 1.5 million vehicles across the country, the Enterprise has struggled to manage the sudden shortfall in diesel, a fuel type for most transportation services, including the minibus taxis that are a lifeline for urban commuters in the capital.

Esmelealem Mihretu, the Enterprise’s CEO, admitted to the severity of the situation, noting that even slight disruptions in the logistics of energy markets can lead to significant nationwide consequences. The Enterprise has resorted to pulling 1.1 million litres of benzene from its depot in Sululta, Sheger City, to calm the benzene shortage, while it opted to remain patient to meet the diesel crunch. He disclosed that the Enterprise resorts to using its diesel inventory kept across its 13 depots only during an international crisis that could derail supply for an extended period.

“Fuel supply chain is extremely fragile,” he told Fortune. “We can’t drain the depot every time there is a minor crisis.”

The CEO expects things to return to normal in a few days, as trucks are already approaching border areas and waiting for the road to clear. Diesel depots are distributed nationwide, including in the towns of Harar, Awash, Shashemene, Nekemt, Adigrat, and Meqelle. However, the cautious approach tells the high stakes in managing national fuel reserves and their critical role in ensuring energy security. The crisis is a combination of logistics, infrastructure and geopolitical dependency.

The 19-year-old petroleum terminal at Djibouti’s Doraleh Port, including its depots, is supervised by wholly owned state subsidiary Horizon Djibouti Terminals Ltd. It operates out of two berths that accommodate a bay storage capacity of nearly 400,000 cubic meters and pumps around 2,000tns an hour from its 31 tanks and 12 pumps. Esmelealem recalled a fire three months ago at the petroleum terminal that resulted in a three million litre drop in shipments to Ethiopia, which the Enterprise renegotiated back up to one million. Another technical failure occurred in one of the pumps shortly.

“We’ve not satisfied our diesel demand for the past few months,” Esmelalem told Fortune.

Despite slowly removing fuel subsidies, the federal government spent 3.89 billion dollars last year to procure 2.4 million tons of fuel.

Individual stories of hardship abound. The lifeline of the urban commute in the capital, thousands of mini-bus taxis are almost exclusively run on diesel, leaving drivers and passengers out of their wits the last few days.

Dawit Zenebe, 30, has been scrambling across the capital to meet his 25ltr daily demand for his minibus taxi, earning him an average of 3,000 Br daily. A father of two, he was forced to pause his taxi service on Friday, March 29, 2024, for his commute from Mexico Square to Bole, saving enough fuel to make it home.

“I can’t find a drop,” he said.

Authorities are investigating alleged hoarding by fuel retailers who might be trying to profit from the impending price hike on benzene and diesel. Derese Kotu, distribution head at the Petroleum & Energy Authority, has been sending inspectors to fuel stations to check if possible hoarding might be contributing to the fuel crunch in Addis Abeba over the past few days. He feared that some retailers might be hoarding to take advantage of the price hike set to increase the price of benzine, priced at 77.65 Br a litre, and diesel at 79.75 Br a litre at the end of the month.

While the dry pump is most visibly felt in the capital, which consumes 45pc of the country’s fuel imports, several regional states have also experienced the impact.

Addis Abeba’s ongoing facelift has partly fueled the supply crunch, with four major gas stations out of work.

Ephrem Tesfaye, a board member of the Ethiopian Petroleum Dealer’s Association, feels that removing the key stations around Doro Maneqia and Megenagna worsened the impact.

“They had high flow,” he said.

Andarge Gebeyehu, who works at NOC gas station around the Lancha area, has seen their 22,938ltr of diesel, usually enough for three days, wiped out before lunch on Friday.

“We’ve been serving customers non-stop,” he said.

Cross-border drivers like Getu Taye, hauling 46,000ltr of petroleum destined for the National Oil Company (NOC), have been in Djibouti the past week. Getu blames long delays during refuels, which have become frequent over the past few months and have only exacerbated the stormy problems.

“It’s impossible to pass now,” Getu said.

While the number of gas stations in the country has climbed to nearly 1,590 over the past decade, experts often blame the lack of a well-integrated network for poor endurance to shock. Fuel’s sensitivity to a country’s functionality is echoed, which should prompt an array of long-term objectives for energy independence and short-term relief for supply chain shocks.

According to logistics specialist Shiferaw Mitiku, a more forward-thinking approach to energy policy should be considered to address the country’s reliance on imported fuel and vulnerability to natural disasters. He refers to countries like Japan, which recognise their heavy dependence on imports and have resorted to developing reserves in response to natural disasters. He believes in developing domestic energy sources and enhancing infrastructure resilience, advocating for private-sector-led initiatives to explore petroleum resources within the country.

“Investments in better railway infrastructure could reduce the country’s vulnerability to supply chain disruptions,” he told Fortune.

Ethiopia Bets Big on Reforms While Juggling IMF Grenades

Posted on by Tizita S.

As federal authorities eagerly anticipate the potential billion-dollar International Monetary Fund (IMF) package, a team from the Fund conducted a series of meetings in the capital over the past week that could significantly determine the country’s economic fate.

The staff met with Mamo Mihretu, governor of the National Bank of Ethiopia (NBE); Ahmed Shide and Eyob Tekalegen (PhD), minister and state minister for Finance; Abie Sano, president of the state-owned Commercial Bank of Ethiopia (CBE); Fistum Assefa (PhD), minister of Planning & Development; Teklewold Atnafu, senior monetary policy advisor; and, Girma Birru, chief macroeconomic advisor to the Prime Minister.

The team’s visit is part of ongoing discussions, a follow-up to the one held back in October. A staff-level agreement is expected to be reached before the IMF Board approves a program. However, no deal was reported until our press time on Saturday evening.

Ethiopia’s request for financial assistance from the IMF to address food security, humanitarian needs, post-conflict reconstruction, and combatting high inflation is contingent on a staff-level agreement requiring structural economic reforms. Its economic future hinges on a successful negotiation with the IMF, whose directors have signalled their interest in providing up to 3.5 billion dollars in loans.

“Discussions took place and will continue to occur,” Governor Mamo told Fortune, declining to comment on details of the discussions.

Tobias N. Rasmussen, IMF’s resident representative in Ethiopia, also declined to comment.

“We cannot answer these questions as negotiations are ongoing,” he responded by email to questions Fortune forwarded to his office.

However, people informed of the ongoing talks point to the liberalisation of the forex regime, discipline over off-budget spending, tax reforms, and the restructuring of high debts held by state enterprises as contentious issues between Prime Minister Abiy Ahmed’s (PhD) administration and the IMF. The IMF team argue that these are crucial steps to restore macroeconomic stability.

Experts say that while loans and debt restructuring offer a lifeline, implementing the reforms the IMF pushes will be critical to achieving sustainable economic growth. For a country currently juggling foreign currency sufficient to cover only three weeks of imports, with over 20 million people in need of humanitarian assistance, and security concerns in several parts of the country impeding economic productivity, they pose the question, what next?

According to Governor Mamo, the central bank is committed to maintaining stable prices with a single-digit inflation rate, promoting financial inclusion and restructuring the central bank under a new proclamation soon, regardless of external support. He said the National Bank of Ethiopia’s three-year strategic plan guides these actions.

The three-year plan involves transitioning from a monetary policy targeting aggregate money to a price-based system, relying on open market operations and interest rates as key initiatives. The shift aligns with the recommendations often prescribed by IMF’s experts for debt-burdened economies seeking assistance from multilateral banks. It also includes measures such as promoting market operations, enhancing interbank forex and money markets, reviewing current and capital account restrictions, and addressing the disparities between official and parallel foreign exchange rates.

The potential IMF financial assistance to Ethiopia carries significant implications beyond immediate relief, as it is a prerequisite for successful debt relief under the Group of 20’s Common Framework mechanism. Bilateral creditors have set a deadline of March 31 for an agreement with the IMF, enabling Ethiopia to benefit from a debt suspension agreement from November. An IMF program is vital to the debt restructuring process under the Common Framework (CF).

Ethiopia’s application for debt restructuring was filed in February 2021, with talks beginning five months later. On September 16, 2021, a creditor committee comprising 12 countries, co-chaired by China and France, was formed. The committee includes Ethiopia’s major creditors, such as Denmark, France, Italy, Korea, Japan, and the Saudi Fund for Development. China is the major bilateral non-Paris Club creditor, claiming 30pc of the total external debt stock.

The evolution of Ethiopia’s external debt over the four years since 2019 has been marked by slight fluctuations, revealing the authorities’ caution to borrowing and debt management during economic uncertainties and aid freezes due to wars. The external debt witnessed modest adjustments — rising to 29.4 billion dollars in 2020/21 from 28.8 billion dollars the year before. It then dipped to 27.9 billion dollars in 2021/22, making a minor recovery to 28 billion dollars last year. As of September 30, 2023, the figure slightly lowered to 27.7 billion dollars.

Ethiopia’s external debt structure is characterised by its interest rate composition, which mixes fixed and variable rates, with a portion being interest-free. Over recent years, there has been a noticeable tilt towards fixed interest rates, showing the authorities’ preference for predictability in debt service costs, which are believed to reach four billion dollars in two years, according to projections the UNDP made.

There has been a significant channelling of funds into sectors deemed essential for growth and development. The government has prioritised investment areas in agriculture, transport and communications, electricity, gas and steam, and water supply.

The authorities depended on a mix of official creditors for the country’s financial needs. Multilateral institutions like the International Development Association (IDA) and the African Development Bank (AfDB) remain significant sources of concessional loans, which offer lower interest rates and extended repayment terms. The authorities view the benefits of concessional loans — lower interest rates and more extended repayment periods — as critical in maintaining debt sustainability. However, non-concessional and commercial loans introduce a layer of burden, stressing the need for meticulous debt management to prevent less favourable loan terms from undermining the country’s financial stability.

The external debt stock, with 19pc owed to private creditors, has attracted increased scrutiny from foreign bondholders. The scrutiny intensified when the country failed to make a 33 million dollar coupon payment in December.

An IMF program entails more than transitioning to a market-based exchange rate system; it requires comprehensive macroeconomic stability. Reforms to address current account deficits, achieve debt sustainability, recalibrate the balance of payments, reduce inflation to single digits, and ensure debt sustainability are first in line. A macroeconomist, speaking anonymously, likened the IMF program to an ambulance providing immediate assistance, with long-term health dependent on sustained attention to overall well-being.

“Tough but essential measures are what the program offers,” he said.

The macroeconomist praised the central bank’s current orientation and urged strong, sound, and resilient reforms. According to the macroeconomist, countries benefiting from IMF programs must leverage the potential credit facility to address structural economic imbalances effectively.

“It’s timely and encouraging,” he told Fortune.

While forecasts about the economic implications of an IMF agreement have to wait until the specific deals are known, the potential benefits of further debt restructuring agreements for lifting temporary debt burdens are not up for debate.

The inevitable devaluation of the Birr has been a topic of discussion, partly driven by the IMF’s emphasis on liberal exchange markets and the Prime Minister’s hinting at forthcoming reforms. Prime Minister Abiy recently likened reforms to a dentist pulling out a tooth, signalling the need for strict measures. The IMF’s support for Ethiopia’s economic reform agenda is contingent upon the administration’s political will to implement enabling reforms. The initial reforms proposed in 2019 targeted a gradual transition to a flexible exchange rate regime to narrow the gap between the parallel and official markets.

People familiar with the ongoing talks say Ethiopia’s authorities have agreed on the reform measures to be taken in principle; the bone of contention with the IMF is over extended time and phased implementations deals they call “back-loaded.” In the experts’ parlance, the IMF team insisted on “front-loaded” deals, meaning the authorities should take reform measures immediately after programs have been agreed upon.

Economist Atlaw Alemu (PhD) downplayed the significance of either a slight currency devaluation or a significant shift in exchange rate policy for the main economy. He views the economic turmoil as stemming from deeper systemic failures rather than exchange rate policies. Recalling past devaluations, including a 15pc drop six years ago, Atlaw noted that such actions did little to improve export performance or bolster foreign currency reserves.

“Exchange rate policy is a smaller element of the country’s economic problems,” he told Fortune.

According to the economist, the agricultural export sector, reliant on imports for inputs like fertiliser and seeds, will struggle with higher costs regardless of exchange rate adjustments. Unlike countries like China, which benefit from currency devaluation due to higher exports, Ethiopia’s productivity levels have not improved significantly. Atlaw suggested that while the IMF program could somewhat relieve debt burdens, it may not address the root causes of the economic malaise.

“A path to a little debt relief is all the IMF could offer,” Atlaw said.

Central Bank Paves Way for National Sharia-Compliant Advisory

Posted on by Tizita S.

National Bank of Ethiopia (NBE) has directed all financial institutions to collaborate on a study aimed at establishing a national Sharia-compliant board to oversee the emerging interest-free banking sector. Tasked with leading this effort Ethiopian Bankers Association has instructed banks, microfinance institutions, and insurance companies to designate personnel responsible for interest-free banking and to participate in the collaborative study with a deadline for reporting progress set for March 26.

According to Demsew Kassa, secretary of the Association, a quick study drawing lessons from Malaysia and the Middle East would be considered in this process. It is expected to be completed by mid-May and sent to the central bank. Demsew said establishing the board will bring consistency to the fragmented service currently governed by independent committees.

Central bank laid the groundwork for an interest-free financial system with a directive in 2019, mandating separate financial reporting, account segregation, and the formation of Sharia-compliant committees within banks wishing to participate. ZamZam Bank, licensed by the NBE four years ago, was the pioneer to commence operations with Shabelle, Hijra and Rammis, following suit. Yet the sector lacked a standardised framework.

During recent meetings between Prime Minister Abiy Ahmed (PhD) and members of the Islamic community, the question of advisory board was raised by participants.

Ahmedin Jebel, a board member of Hijra Bank, said establishing an interest-free directorate should become a priority in the nascent stage of interest-free banking in Ethiopia. He expressed concerns about potential exclusion from financial assistance by the central bank during liquidity crises.

“It needs a vice governor,” he told Fortune.

He enquired about the 10pc investment cap imposed by the central bank on non-banking businesses, citing it as a significant constraint hindering the growth of the interest-free sector.

The PM responded with plans to conduct a series of discussions with officials at the central bank.

Frezer Ayalew, head of Banking Supervision at the NBE, expressed expectations that the study would contribute to the establishment of a nationwide supervisory capacity, potentially unifying the powers of interest-free supervision committees across financial institutions. He said the study would assess the necessity of a board and the role of Ethiopia’s emerging capital markets in providing markets for Sharia-compliant financial products and services.

“A board will have a role in creating national consistency across IFB services,” he said.

For the past 13 years, banks have been offering interest-free banking services through separate windows, with Oromia Bank leading the way followed by the state-owned Commercial Bank of Ethiopia (CBE) and Hibret Bank. Five insurance companies—Awash, Nyala, Global, Oromia, and Nile—are currently providing Sharia compliant services.

Dawit Keno, president of Hijra Bank, supports the establishment of a separate division and an overseeing vice governor to foster the growth of Sharia-compliant banking, noting that this move would contribute to expanding financial inclusion. He said the importance of regulators determining whether the pending Board will have a supervisory or advisory role.

Dawit observes the fundamental difference between interest-free banking and conventional practices lies particularly in avoiding interest rates, and acknowledges various challenges that need to be addressed. The lack of clear regulatory frameworks for asset-backed financing is a major one that can lead to potential double taxation scenarios in the interest-free landscape.

“This’ll expand financial inclusion,” he told Fortune.

His peer Khedir Ahmed, president of Shebelle Bank, has observed diverse interpretations by various scholars. He said the importance of a board in determining what constitutes Sharia compliance, accenting the need to address divergent interpretations resulting from separate committees operating without a national framework.

While some stakeholders emphasise the importance of a national board to ensure consistent Sharia compliance, others raise concerns about potential overlap with existing structures.

Insurance companies appoint a team of experts to supervise their Sharia-compliant Takaful operations, which entail a risk-sharing arrangement facilitated by pooled funds.

Yared Molla, President of the Ethiopian Insurers Association, advocates for a more distinct division of powers to regulate the insurance sector, given its unique products compared to the banking sector. Yared stated that they have already designated interest-free officers who will participate in the study organised by the bankers’ association.

“Risk sharing and asset-based financing are entirely distinct,” he told Fortune.

This perspective aligns with the financial expert Abdulmenan Mohammed’s (PhD) view of the establishment of a board to oversee Sharia-compliant financial services as crucial for fostering the growth of a robust interest-free space. Abdulmenan believes that a national board will play a vital role in ensuring adherence to Sharia principles, promoting research and education in interest-free financial products, and facilitating the introduction of new products.

“It’s currently underdeveloped and dominated by a few actors,” he told Fortune.

Oromia Tightens Grip on Artisanal Mining

Posted on by Tizita S.

Oromia Regional State’s artisanal mining sector is in flux after stricter re-registration requirements were implemented by the Mineral Development Authority six months ago. The Authority tightened registration procedures, requiring Taxpayer Identification Numbers (TIN), member identification documents, and association memorandums, which led to the 2,063 registered associations significantly dropping to 803. These reforms come against the backdrop of a regulatory loophole for unemployed youth permits used by employed individuals.

While the federal government’s role lies in regulating small-scale industrial mines, regional states have the authority to issue artisanal mining licenses. Zewdu Taddesse, the Authority’s deputy head, said the regulation aims to curb illegal mining and tighten oversight while boosting royalty revenues.

“We were quite patient,” he told Fortune.

He said many associations were reluctant to provide identification documents required for re-registration after the stricter requirements were implemented in December. Only 365 were registered after the notice which concerns Zewdu  that loose regulations in the past exposed artisanal mining to exploitation.

The tension between the government’s desire to increase revenue and control the mining sector, and the challenges faced by legitimate miners who must navigate the expensive regulatory road is palpable.

Oromia’s royalty payments have risen by 700 million Br in eight months, suggesting the stricter regulations might be achieving their goal of increasing government revenue from mining. However, the cost of obtaining artisanal mining permits has also increased by 38pc to 1,750 Br, with similar hikes for small-scale to industrial permits between 8,502 to 15,700 Br.

A 20-year trend of tightening regulations in the artisanal mining sector suggests illegal mining appears to be on the rise, potentially due to the discovery of new mineral deposits. Exports of tantalum, lithium, and gold accounted for 142.9 million dollars in revenues during the first six months of the fiscal year.

Mengistu Waji, head of Guji Zone’s Mining Bureau, points out that re-registrations aim to realise the national ambition and increase mining exports and employment despite unfinished exploration by Authorities. He said the mandatory requirement of 12Kg of gold submissions to the central bank and similar volume quotas have created anxiety in the associations.

“No one wants to get incarcerated,” Mengistu told Fortune.

The drastic drop from 138 registered associations to only nine after the reforms highlights the significant impact on local miners. A pilot program started three years ago failed to get off the ground. It sought to partner with youth associations that have a local understanding of the terrain with investors looking to engage in mining operations.

Nega Sura was a youth association member who engaged in artisanal gold mining with 16 others in Sheka Woreda of Guji Zone until their license was terminated five months ago. The father of four has resorted to cultivating maize after 17 years of artisanal mining. He is struggling more than ever to make a decent living with his recent earnings.

“I have now become a farmer,” he told Fortune.

Bureaucratic hurdles and the financial strain on miners are creating roadblocks in the registration process. Nasir Deriba, a zonal mining bureau head, acknowledges that the new eligibility requirements, licensing fees, and budget constraints are hindering the process.

“It has become a time-consuming process,” he told Fortune.

Abdulahi Zinabe, head of the Job Creation Bureau, said the logistical difficulty of requiring all association members to be present for permit renewals.

Experts observe the reforms might be stifling the artisanal mining sector.

Tesfaye Megersa, a mining consultant, criticises the current approach. He believes the right to mine locally should not be restricted by factors like employment status or quotas. He argues that local communities should have greater access to their resources and observes the complex registration process and strict regulations overwhelm traditional associations accustomed to simpler methods.

“Assisting the miners with technology and research would be the ideal solution,” he said.

Fed Bets on Recycled Plastic to Curb Forex Costs

Posted on by Tizita S.

Ethiopia is exploring a draft regulation that would introduce recycled plastic (PET) into food and beverage packaging. Officials believe this move will reduce reliance on expensive imports and combat plastic pollution, but concerns linger about safety and feasibility. Plastic waste poses a significant environmental threat. By promoting recycling, officials hope to reduce the country’s dependence on PET imports, curb plastic pollution, and potentially save foreign currency.

The Food & Beverage Industry Research & Development Center, spearheading the initiative. Bekele Mekuria, head of the Center, is urging bottled water, edible oil, and soft drink manufacturers to explore recycling options. Currently, PET imports cost Ethiopia 40 million dollars annually, placing a strain on foreign currency reserves. Bekele points to a successful policy shift last year, where prohibiting foreign currency allocation for blue dye import saved 15 million dollars. While a complete ban on PET imports is not imminent due to industry reliance, Bekele anticipates a gradual phase-out.

“Regulation is crucial due to the hazardous nature of chemicals involved,” he told Fortune.

The standard was developed through a collaborative effort involving 10 organisations, including the Ethiopian Plastic & Rubber Association, the Ethiopian National Accreditation Service (ENAS), and the Ethiopian Food & Drug Authority (EFDA), for one and a half years, currently under review at the Ministry of Justice.

When all manufacturers work at full capacity, the country can produce nearly four billion pieces of plastic bottled water annually, raising concerns about plastic waste. The draft calls for manufacturers to invest in recycling infrastructure and waste collection systems. While the initial investment might be significant, long-term cost savings from reduced reliance on PET imports and potential brand reputation benefits associated with sustainability could outweigh the upfront costs.

However, it faces several hurdles.

With a growing focus on establishing quality standards and ensuring transparency in the process, recycled PET could offer a more sustainable solution for Ethiopia’s bottled water industry, reducing dependence on virgin plastic and its environmental impact. However, industry players like Arki Natural Mineral Water, are sceptical about the quality and safety, citing inadequate chemical cleaning practices.

Dagmawi Getachew, manager at Arki Natural Mineral Water plant, expresses hesitation in compliance, recalling that their current practices involve virgin plastic because of limitations in the country’s chemical cleaning processes for reused materials.

Under the SBG business group, the Arki water plant, established with 64 million Br capital, plans to continue importing PET from Saudi Arabia and India whether or not the regulation receives approval.

“Decreasing heavy tax levies will incentivise manufacturing better,” Dagamawi said.

The draft regulation requires an Ethiopian Food & Drug Administration (EFDA) certificate of competence and license for businesses involved in the transport, storage, and processing of PET recyclables intended for food contact.

Belete Serahbizu (PhD), a material engineering lecturer at Adama Science Technology University, feels insufficient studies have been conducted to determine how recycled PET products may impact human health, particularly regarding the potential effects on the chemical structure of the material after processing.

“Detailed research is crucial to ensure the safety,” he said.

Officials at the Ethiopian Food & Drug Administration (EFDA) concur. Mulat Tesfa, head of inspection and legal enforcement at EFDA underscore the importance of thorough preparations before implementing the regulation. He emphasises the need for rigorous laboratory testing procedures to ensure the safety of recycled plastic packaging for food and water products, acknowledging the potential environmental benefits.

The need for a united front to address concerns and ensure the success of the initiative is lauded by stakeholders.

Samson Ketema, general manager of the Ethiopian Plastic & Rubber Manufacturing Association, acknowledges that using recycled plastic for food packaging is not yet common practice in many countries. However, he views the regulations around PET recycling as a necessary step for future development.

“Standardising the recycling process is essential to ensure quality and safety,” he said.

PETCO Ethiopia works collaboratively with the plastic industry to promote self-regulation in post-consumer PET recycling and participated in drafting the regulation. Mihret Teklemariam, the executive director, acknowledges the need for extensive discussions before implementing a system heavily influenced by European practices. She raises concerns about potential health risks and the significant financial investment required for plastic recycling plants.

Despite the current limitations, some manufacturers believe there could be potential for developing smaller-scale or more localised recycling initiatives in the future, gradually laying the groundwork for a robust recycling industry.

Getahun Gezahegn, general manager of Shemaya Plastic Manufacturing Plc, reflects on the increasing difficulty in securing foreign exchange. This shortage disrupts their operations, as the company relies on 40tns of PET annually. Even with imported machinery, Gezahegn doubts the viability of large-scale domestic recycling plants due to the high capital intensity of the industry and the additional inputs required that Ethiopia might not readily produce.

“Establishing a full-fledged recycling sector might require exploring alternative approaches beyond large-scale plants,” he said.

The potential shift towards recycled PET packaging hinges on finding a balance between environmental goals, economic feasibility, and public health concerns. Experts emphasise the need for further research, investment in recycling infrastructure, and robust safety protocols for a successful implementation.

Ethiopia’s Environment Protection Authority (EPA) reported recycling 57tns of plastic within six months. Yewubdar Alemu, an environment protection lead executive, stresses the urgency of addressing plastic pollution.

As plastic takes up to 500 years to decompose and can harm the environment through soil contamination, air pollution, and damage to crops, Yewbdar believes the new regulation will significantly decrease waste. Potentially Yewubdar hopes alternative packaging materials like glass or cartons will be explored and public awareness campaigns will promote plastic use reduction and proper waste disposal practices.

 

Molla Zegeye, Personifying Perseverance in the Face of Adversity Dies at 71

Posted on by Tizita S.

To say Molla Zegeye witnessed history unfold would be an understatement. He actively tussled with it, leaving a lasting mark on Ethiopia’s turbulent but recent political history of half a century. His life was marked by momentous decision-making that turned the country’s way in a different direction.

Molla was one of the custodians of the Imperial system. It was the fate of history that he would participate in the revolution that dismantled the crown later. He felt the pangs of injustice while he was serving in the Imperial Guard — a searing indictment of neglect during the Wello famine, which ignited a fire in his gut to play a role in putting the monarchy to an end. Along with others like him, he became the storm that swept away the reigns of Haile Selassie I, after ruling the country for nearly five decades.

As a member of the sub-Derge, Molla’s voice rallied the masses towards a new dawn when the military officers of lower ranks grouped themselves under the Dergue (otherwise a committee), beckoning with their promises of equality. He embraced the change wholeheartedly, throwing himself into the revolutionary fervour. After all, it was a cause he almost lost his life for. His gift for oratory might have been bordering theatrics. But, it was a potent tool that galvanised support across the fledgling country.

Molla was not content with speeches, however. He was a man of action.

From the halls of the central bank to the fields of Chiro (Asebe Teferi), Jigjiga and Sidama, he left his marks on reforestation initiatives blooming under his watch, and war-torn communities found solace in his efforts at reconstruction. In the aftermath of the devastating war between Ethiopia and Somalia that destroyed the town and the absence of funds from the central government, Molla took the initiative to mobilise funds from the community and reconstruct the region.

However, a man of such values was bound to provoke the ire of the regime’s growing authoritarianism. His voice, once a rallying cry, became an unwelcome dissent. He was relegated to the mundane world of the Ethiopian Postal Service, stripped of his lofty position. However, the perceived punishment was a moment that changed his life’s course. It became the catalyst for a change. He enrolled in law school at night, and the courtroom became his new battleground.

That was where he met a fellow lawyer who accompanied him as a graduation committee member — Tsegaye Mekasha. Their acquaintance evolved into a friendship that outlasted decades. Tsegaye spoke of him with reverence, a man who “walked the path of his convictions to the very end.” Molla’s booming voice now wielded the power of law.

Another fate of history presented to him when he championed the causes of the Derge’s most senior leaders, advocating for their amnesty. The surviving leaders serving life sentences were eventually pardoned after two decades of incarceration.

His persistence and articulation proved advantageous in landing him high-profile cases. He became the lawyer of choice for some of the capital’s elite.

Businessman Ermias Amelga was one of the clients during his Access Bank and Access Real Estate debacles. He praised Molla’s confident demeanour and his ability to present arguments. He recounted an instance where Molla’s fierce defence in one of their cases caused his blood sugar to drop so low the court had to recess.

“The messenger is equally important as the message,” he said.

Molla’s eloquence and persuasiveness extended beyond the courtroom. These very qualities captivated his wife, Biruktawit Deresse. She recalled their casual phone conversations as the highlight of her days during courtship. Their union brought forth three children. His wife believes the good faith he had shown returned tenfold. A young man, saved from execution by Molla’s legal prowess, returned years later, extending a helping hand during a time of financial hardship.

“He possessed the love of people,” said Biruktawit.

Fate, however, dealt a cruel hand. The ghost of the Dergue regime resurfaced when the EPRDF took over the government in the early 1990s, leading to Molla’s nine-year imprisonment. These were stolen years; precious moments ripped away from his young family. Within the confines of the prison, Molla’s spirit remained unbroken. He became his own advocate, emerging from the ordeal, in his words as, “undefeated in defeat.”

Freedom after a decade was not a return to the life he once knew. The world had shifted, and Molla had to rebuild. This was not a new challenge for a man who had wrestled with the Imperial and military regimes. He believed in second chances, a concept that mirrored his life. Bole Road became his sanctuary, a place of solace where he continued to be a vocal critic of injustice until the cords betrayed him, a few years before his passing on March 7, 2024. He was laid to rest at the Holy Trinity Cathedral Church.

Those close to him cherish his memory as an illustration of the indomitable human spirit. He was a man who dared to defy the status quo, a daring person who etched his name in the lawyers’ association, where he dedicated time to uplifting the profession. In the words of Tewodros Getachew, head of the Association, Molla had a trait that all lawyers should possess — a commitment to a cause.

Molla devoted time away from gigs that would earn him financial gains and worked for the Association. His advocacy did not end there. A few years before his passing, he began a digital program in a makeshift studio on Africa Avenue (Bole Road). He had hoped to awaken the youth and leave a legacy transcending political partisanship.

Racing to the Future, Addis Abeba Leaves Its Souls in the Dust

Posted on by Tizita S.

The transformation of Dubai from Al Wasl, a quaint fishing village, to a symbol of modernity and a hub for tourism and commerce presents a fascinating study of urban evolution and cultural preservation amidst rapid development. While an illustration of its leaders’ ambition and futuristic vision, its metamorphosis also serves as a poignant reminder of the inherent value of historical consciousness in the face of relentless progress.

The case of Addis Abeba provides a striking parallel, marked by a tug-of-war between the imperatives of modernisation and the custodianship of heritage.

In the 18th Century, the then Al Wasl was little more than a speck along the Persian Gulf, its economy rooted in fishing and pearling. The early settlers laid the foundations for a community that would centuries later emerge as a global icon of architectural innovation and urban planning. Historical records from the early 1800s detail the construction of extensive fortifications, including walls stretching from the Al Fahidi District to Al Fahidi Fort, to protect the nascent community.

The Al Fahidi Fort, erected around the same time Dubai became a dependency in the late 18th Century, is a living reminder of this era of foundational development. Now housing an art gallery, the Fort connects visitors with the region’s artistic heritage, offering insights into Emirati traditions through contemporary Arabic works. The melding of the ancient with the modern encapsulates Dubai’s approach to urban development, wherein the preservation of historical sites operates in concert with the city’s forward-looking ethos.

Dubai’s evolution offers instructive lessons. Integrating preservation into the blueprint of modern urban development provides a pathway that respects both the past and the future. The preservation of cultural sites and the facilitation of modern urban living need not be mutually exclusive. They can coalesce into a cohesive vision that honours heritage while embracing change.

Contrastingly, Addis Abeba’s journey through time uncovers a more tense relationship between development and historical preservation.

Founded in the late 19th Century, the city harbours potential archaeological riches that narrate Ethiopia’s storied past. Yet, the current administration’s urban redevelopment initiatives have sparked controversy over their impact on the city’s cultural and historical legacy. Marked by civil unrest and socio-political upheaval, the demolition and construction projects have been criticised for sidelining the preservation of the city’s heritage in favour of modernisation efforts.

Prime Minister Abiy Ahmed’s (PhD) administration has been particularly zealous in pursuing urban renewal, championing policies that facilitate the demolition of old structures to make way for new developments. Its intent to allow foreign real estate ownership further reveals a vision for Addis Abeba that prioritises economic transition over cultural preservation.

This reflects a broader trend observed in rapidly developing cities around the globe, where the drive for modernity often collides with the imperative to preserve historical and cultural heritage. Dubai’s experience shows how development and preservation have been balanced more successfully. The city’s transformation did not eschew its historical roots but integrated them into its modern identity’s fabric.

Balancing modernisation and preservation should raise deeper questions about identity, heritage, and the legacies communities choose to safeguard for future generations. Demolition of ancient sites and neighbourhoods in the name of development poses a risk not just to the physical landmarks but also to the intangible heritage they embody—the customs, traditions, and communal bonds that define a place’s social fabric. The soul of a city lies not just in its physical structures but in the stories and memories that those structures embody.

The historical significance of Addis Ababa demands a considered approach to urban development, one that privileges the preservation of its heritage sites as much as it does the construction of new infrastructures. Achieving a harmonious balance between these competing demands should be possible.

Turbulence Meets Tranquility  A Crossword Ritual in the Skies

Posted on by Tizita S.

When the meal trays are cleared and the aircraft ascends to its highest altitude, the cabin transforms casting a soothing aura over the space. The once-bright lights are deliberately dimmed, while the inflight entertainment systems are set to idle mode, lowering distractions for weary travellers. For most passengers, this atmosphere serves as an invitation to the embrace of sleep, a welcomed respite during the night flight. However, through the tranquil scene, there is one passenger who remains wide awake, unaffected by the hushed whispers of slumber that fill the cabin.

That is me.

I have never been one to easily succumb to sleep outside the comforts of my home. Whether in a hotel room or as a guest in someone else’s abode, the elusive slumber seems to evade me, leaving me with the restless hours of the night. It is a peculiar habit, one that has accompanied me on countless journeys and left its mark on various occasions when the need to travel or stay away from home arises.

Being the only one awake among the hundreds of passengers who are comfortably ensconced in their dreams affords me an extra measure of attention from the crew. Their surprise is palpable at the sight of the solitary passenger, bathed in the soft glow of their seat light, diligently poring over the pages of the inflight entertainment magazine. Their concern is evident as they inquire if everything is alright and if there is anything they can do to assist.  It is a care that touches my heart, a reminder of the compassion and kindness that can be found even at 30,000 feet above ground.

I struggle to articulate the peculiarities of my nocturnal habits. But soon, the crew will understand the reason behind my wakefulness when they see what occupies my attention – a crossword puzzle.

To many, the grid of black and white squares filled with cryptic clues may seem like a foreign language, an enigma waiting to be decoded. Indeed, far fewer passengers attempt to engage with the puzzle, preferring instead to surrender to the allure of sleep. But for me, the crossword is not just a game – it is a remedy for the long hours of wakefulness and the frustration that accompanies it.

The mechanics of the crossword are simple yet profound. Clues, provided outside the grid, beckon the solver to go into the depths of their vocabulary and knowledge, seeking answers that fit seamlessly into the checkered tableau. Each word must align perfectly with its neighbours, forming a cohesive form of language and logic. As the game progresses, the need for precision becomes more apparent, as incorrect answers can lead to a cascade of confusion and chaos.

Armed with nothing more than a pencil and an eraser, I embark through the crossword grid, guided by intuition and ingenuity. Each clue presents a puzzle to be solved through a combination of deduction and creativity. As I fill in the blanks, a sense of satisfaction washes over me, a tangible reminder of the power of perseverance and the joy of discovery.

My friend and I were a formidable crossword duo, going through two entire volumes of the brainteasers. However, our victories were witnessed by a bewildered audience – our friends. Despite their strong grasp of English and general intelligence, crosswords remained an enigma for them. The frustration was palpable. We would solve a clue, explain the answer, and they would exclaim, “Of course! I knew that!” But attempts to tackle the next one would invariably end in head-scratching defeat. The most seemingly obvious clues seemed to vanish into thin air when they stared them down.

Crosswords demanded intuition, the ability to make connections and a calm demeanour. Thankfully, we complemented each other perfectly. He possessed a vocabulary that would put a thesaurus to shame. One look at a clue, and he would effortlessly conjure up a word I had never even encountered.

“What in the world is a ‘floccinaucinihilipilification’?” I would gasp, utterly bewildered. His patient explanations would unlock the door to this obscure corner of the English language.

My strength lay in intuition. I could often guess the answer based on a hunch or a seemingly random connection. He would meticulously ponder a clue, while I scan the grid, answers popping into my head like popcorn kernels. “How did you get that so fast?”. Honestly, it was usually a spark of recognition I could not explain.

The beauty of crosswords, though, was the gradual unveiling of the puzzle. With each correct answer, the remaining clues became clearer, rewarding our efforts with a sense of accomplishment. Sometimes, entire rows or columns would magically fill themselves in.

Though not widely practised in Amharic, the crossword holds untapped potential in its ability to engage and educate, offering a new frontier in language learning and entertainment. It is not confined to a single theme and can be tailored to suit the interests and preferences of art, science, history, or sports. This thematic flexibility adds an extra layer of intrigue to the game, keeping players engaged and entertained as they delve into their favourite subjects.

But perhaps the most profound revelation of all is the impact of crosswords on mental health and well-being. Research has shown that regular puzzle-solving can delay memory decline and alleviate symptoms of dementia, offering a glimmer of hope in the face of a daunting health challenge. It is believed to alleviate anxiety and improve mood, providing a much-needed reprieve from the stresses of daily life.

A 2017 study presented at the Alzheimer’s Association International Conference (AAIC) revealed a fascinating finding. Those who regularly tackled crosswords boasted brainpower equivalent to someone a decade younger!

Crosswords go beyond mere vocabulary boosters. They are social butterflies in disguise. Tackling a puzzle with friends or family is a recipe for laughter, shared “aha!” moments, and the occasional playful jab when someone gets stuck.

Remember Chandler Bing, the witty banter half of Monica Geller in the sitcom “Friends”? Monica and Chandler, all snuggled up in their cosy New York apartment, solving a crossword when Joey Tribbiani, Chandler’s less-than-cerebral best friend, witnesses this intellectual tango with a mixture of bewilderment. The show takes a hilarious turn when Joey dreams that night of conquering a crossword himself! Monica, in his dream, is completely stumped by a clue, and Joey, in a moment of glorious insight, triumphantly shouts out the answer: “CAT!” Monica, overcome with admiration, throws her arms around him. The clue, of course, was a picture of a furry feline with whiskers. Classic Joey.

Crosswords are anxiety fighters too. Studies by University of California Berkeley psychologist Sonia Bishop suggest that tackling a crossword can improve mood and alleviate anxiety.

For me, the ultimate crossword experience unfolds with a mug of black coffee and a newspaper spread before me. Each solved clue is a mini-victory, a surge of energy propelling me closer to the checkered finish line. It is a testament to the power of simplicity – a pen, paper, and a cryptic challenge that keeps my mind with a strange kind of creative energy.

Crosswords may reign supreme in my world, but I recognise the vast brain teasers out there. Chess, Sudoku, Chinese Checkers – the list goes on. I tried to lure my son into the crossword fold, but his enthusiasm remained firmly lodged in “thanks, but no thanks” territory. Just as I have my preferences, so does he, and that is the beauty of the mental playground – there is a game for everyone.

I have recommitted to carving out a few minutes each day to reacquaint myself with the joy of cryptic clues. Who knows, maybe my renewed enthusiasm will spark a similar question among friends: “Have you done your crossword puzzle today?” After all, as Andrew E. Budson (MD), a Harvard Medical School professor and crossword champion, once declared in his aptly titled article, it is a simple, affordable, and undeniably beneficial way to keep the mind sharp.

Economic Imperatives Clash with Equity in Pandemic Treaty Debates

Posted on by Tizita S.

Recent drafts of a global pandemic treaty have been widely criticised as “shameful and unjust.” When the latest round of negotiations opened on March 18, it was clear that a key lesson of the COVID-19 pandemic – that public health and the economy’s health are interdependent – was being ignored.

Achieving both requires rewriting the rules of how health and well-being are valued, produced, and distributed and how economies are governed. The treaty’s success will depend on member states’ willingness to hardwire equity into its terms, which will, in turn, require a new economic paradigm. It will fail if the treaty is whittled down to become as inoffensive as possible.

The World Health Organization (WHO) Council on the Economics of Health for All, which I chaired, has already issued recommendations for how to proceed. For starters, negotiators from all countries must remain focused on the overarching goal of preventing future health threats from becoming catastrophic. That means designing the terms of the treaty – including those related to innovation, intellectual property (IP), public-private collaboration, and funding – to be mission-oriented. Equity must be the top priority because everyone – and every economy – ultimately suffers in a pandemic if tests, vaccines, and lifesaving therapeutics are not accessible to all.

How innovation and knowledge are governed is as critical as the innovation itself.

Governments have powerful levers for determining who benefits from innovation. They are major funders of everything from early-stage research and development to product development and manufacturing. The mRNA COVID-19 vaccines, for example, benefited from about 31.9 billion dollars in US public investment. Stronger conditions on private-sector access to public funding would help to ensure equitable and affordable access to the resulting products, as well as facilitate profit sharing and reinvestment in productive activities (like R&D) rather than unproductive ones (like shareholder buybacks).

The point, in each case, is to establish a more symbiotic relationship with the private sector – one based on shared goals, and on shared risks and rewards. As we saw with the repeated spread of new COVID-19 variants, a vaccine that only some can afford will not stop a pandemic. Any pandemic treaty should unapologetically commit to this shift and avoid clauses designed to serve private rent-seeking interests.

A key part of getting public-private collaboration right is establishing an approach to knowledge governance and IP rights that serves the common good rather than protecting monopoly profits. This issue has become a major flashpoint in the treaty negotiations. Lower-income countries are being asked to share pathogen data (which aids the development of new tests, vaccines, and treatments) without any guarantee that they will have access to the resulting products.

While the current draft alludes to the importance of IP rules that do not limit affordability and access, it merely “encourages,” rather than requires, measures aimed at knowledge sharing and limiting royalties. Even weak language asking governments to “consider supporting” patent waivers has become a sticking point. This suggests that a misplaced drive to preserve IP rules complicates the negotiations. To incentivise innovation and deliver broadly shared societal benefits, patents must be narrower, encourage productive follow-on innovation and collective intelligence, and be accompanied by comments to transfer the knowledge and technology required for production.

Another obstacle to the pandemic treaty’s success is that it seems to be delinked from clear funding commitments. The International Monetary Fund (IMF) estimates that the global economy suffered losses of at least 13.8 trillion dollars as COVID-19 lockdowns and supply-chain disruptions tipped the world into recession. Governments then spent trillions more responding to the crisis. It should be obvious that scaling up investments in prevention is preferable – in health, prosperity, and justice – to incurring the costs from a crisis that has spun out of control.

As the WHO Council pointed out, “it is more cost-effective to prevent than to cure.”

The quality of financing is as important as its quantity. Lower-income countries need long-term financing for critical investments in health. The treaty’s nod to the importance of debt relief to free up fiscal capacity for pandemic prevention, preparedness, and response is welcome, but the language is worryingly noncommittal. Financing for health must be understood as a long-term investment, rather than a cost that can be reduced to serve short-sighted budget targets. It is also a responsibility that transcends national borders.

Since the scope of the pandemic treaty cuts across government ministries and sectors, health should not be left solely to health ministries.

Health is massively impacted by economic policy choices (for example, related to IP rights), and decisions across government impact the social, environmental, and economic determinants of health. Governments – across all ministries – can and should redesign how innovation is governed, how the public and private sectors relate to one another, and how finance is structured to shape markets in the interest of human and planetary health. Failure to prioritize “health for all” will have far-reaching ramifications for the resilience and stability of economies worldwide.

As member states cavil over clauses – removing references to health as a human right and watering down IP restrictions, financial commitments, and monitoring provisions – there should be no ambiguity about the choice they face. Centreing the treaty on the goal of preventing or minimising pandemics would compel policymakers to see it clearly – and abandon the myopic assumptions that have limited international and public-private collaboration.

As member states prepare for the World Health Assembly in May, this imperative should be front of mind.