Ethiopia’s Digital Strides Amid UN’s E-Governance Index Low Ranking

Ethiopia’s journey into the digital age faces challenges as a recent UN report ranked the country 169th out of 193 countries in the E-government Development Index.

Published last week, the survey categorized Ethiopia as low-to-middle. Key evaluation components include e-participation, reliability, accessibility, governance, literacy, and infrastructure. The survey also introduced e-government literacy as a new assessment area. Ethiopia’s ranking improved by 10 positions, rising from 179th out of 193 countries in the 2022 assessment.

The report highlights Ethiopia’s progress, particularly in the development of the National Identity Program (Fayda), which aims to issue 90 million digital IDs within five years. Additionally, initiatives like the UNHCR and MasterCard project to verify refugees’ identities and ensure their access to entitlements, as well as the digital agriculture initiative, through the Digital Green project, which equips farmers with essential information to boost crop yields, have been recognised as positive progresses.

Of the 193 countries ranked worldwide, 65, primarily European nations, were rated higher. Most African countries were categorized as middle to low, highlighting a broader regional challenge. In the Online Service Index (OSI) and Government Development Index, nine African countries, including Ethiopia, Angola, Guinea, Lesotho, Sierra Leone, Congo, Togo, and Tanzania, were rated as middle.

Despite the improved rankings, Ethiopia’s digital transformation journey faces significant challenges. Abiyot Sinamo (PhD), CEO of e-government and services at the Ministry of Innovation & Technology (MInT), highlighted the persistent gaps in digital infrastructure and literacy. He emphasized the substantial challenges that remain to be addressed. “The huge gap is recognizable”, he said.

He noted that digital adoption has been uneven across cities and regions, with a gradual pace of progress. He criticized the cluttered digital infrastructure, pointing out that strategically located data centres are essential for broader reach. He emphasized the need for a new enterprise architecture to define the structure of infrastructure, aligning with business and inclusivity strategies.

Abiyot highlighted the regulatory frameworks introduced in recent years, including cybersecurity, e-transaction, and personal data protection proclamations, as well as the ongoing IT strategy. He emphasized the “substantial investments made in digital assets to facilitate ease of doing business.”

The Ministry has developed a five-year e-governance plan requiring a 40-million-dollar investment, prioritizing digital literacy, skills development, and legal frameworks. The strategy aims to enhance functionality, capacity, and finance, addressing critical challenges in data management, governance, and enterprise architecture within public services.

Despite significant digital advancements, Ethiopia continues to grapple with various challenges, including technical issues, workforce inefficiencies, and suboptimal digital and operational outcomes.

This comes amidst ambitious reforms under ‘Digital Ethiopia 2025’, championed by Prime Minister Abiy Ahmed (PhD), which aspires to build infrastructure that enables the creation of a digital ecosystem with increased interactions and integrated systems across several sectors including e-governance, e-commerce, and national identifications.

In a parliamentary session a few months ago, Abiy stated his wide ambitions to explore new technology lines, including artificial intelligence, smart manufacturing, robotics, and biomedical engineering. The viewpoint may define investments in enhancing technology infrastructure, kindergarten and preschool education, and renewable energy generation until 2050.

The UN report points to new megatrends including the rapid digitalization of services globally, the shift towards remote work, the integration of artificial intelligence (AI), the emphasis on digital identity and data management, and the increased use of data and emerging technologies for policymaking.

The survey explores the emerging role of artificial intelligence in public administration. Lin Junha, the UN’s Undersecretary General for Social and Economic Affairs who signed the report, emphasized the potential of AI to improve government operations but also cautioned about the risks of widening the digital divide. He highlighted the need for strategic investments and capacity-building to ensure equitable access and participation in the digital age.

The report suggests the need to strengthen local e-government for comprehensive digital transformation.

Several initiatives have been undertaken by the private sector to enhance Ethiopia’s e-governance. A set of projects, spearheaded as part of the ease of doing business reform, with approximately 8 million dollars in funding, is an example. This project, undertaken by GIZ International Services and McKinsey & Company in cooperation with five federal agencies, including MInT, is part of a wider plan to improve the digital ecosystem and create a more favourable business climate.

Dubbed the ‘Business Environment and Investment Climate’, the project kicked off in 2021 and was set for until next year, overseen by a National Authorising Office and chaired by the Ministry of Finance.

The projects are hoped to enhance governance across all public services through electronic improvement. The projects include the completion of the E-consultation system, E-tax, development of the credit-rating system (CRS), upgrading E-trade system, and E-PPD (Public-private dialogue).

Alberto Gomez, team leader and private sector development expert at BEIC, stated the ubiquity of a web of tangles in the business landscape with bureaucratic hurdles from starting a business, tax payments, obtaining licenses, to access to finance. He further stated it is instrumental to curb such practices and boost the ease of doing business by introducing electronic alternatives. “We have taken major steps to enhance the e-governance structure of the country,” he said.

He stated that Ethiopia’s adoption of e-governance has been delayed compared to many other countries. He revealed that unlike many countries in Europe, where the private sector plays a leading role, Ethiopia’s private sector has remained weak and not mature enough to lead in digitalisation, making the country lag behind in E-governance.

“Funding is also another issue for progress,” he said.

Million Kibret, an investment consultant and general manager of BDO Consulting, acknowledges the shift toward e-governance as a promising strategy. However, he emphasizes the necessity for several comprehensive overhauls to improve the overall business environment.

He praised the outsourcing of services to the private sector while emphasizing the need for policy overhauls. He suggested that government agencies should promote transparency, predictability, and accountability to improve the business landscape, in addition to digitization efforts.

He emphasized the need to invest in power distribution lines to strengthen digital infrastructure. At the same time, he stressed the importance of implementing robust security prevention mechanisms to address the prevalent cyber-security threats and frauds. He also highlighted the need to improve digital literacy.

UN-Backed Fund Targets Overlooked Entrepreneurs, Contests Entrenched Banking System

The United Nations-backed initiative spearheaded by the IFL represents a step toward resolving the financing challenges SMEs and startups face. The program seeks to build a robust venture capital system through innovative financial instruments and strategic partnerships to support the country’s economic ambitions. With the anticipated launch of the ESX and ongoing regulatory developments, Ethiopia aspires to become a more attractive destination for domestic and foreign investors.

A United Nations-backed initiative is set to inject hundreds of millions of dollars into nearly 150 small and medium-sized enterprises in Ethiopia, aspiring to bridge the financing gap that has long frustrated startups and businesses underserved by traditional financial institutions. The Innovative Finance Lab (IFL) under the United Nations Development Programme (UNDP)and in partnership with the National Bank of Ethiopia (NBE) and Ethiopian Capital Market Authority (ECMA), is preparing to launch a groundbreaking funding facility that could reshape the entrepreneurial scene.

From an initial pool of 600 applicants, the IFL has identified around 150 SMEs and startups demonstrating scalability. According to Dagmawit Shiferaw, the IFL’s director, the Initiative focuses on leveraging the private capital market to expand access to venture capital.

“We’re building the venture capital system,” she told Fortune, expressing optimism that the Enterprise Financing Facility (EFF) will catalyze sustainable economic growth.

The program plans to operate within the private capital market, directly investing funds into high-potential businesses or channelling them through fund managers. The approach is designed to ensure that resources are allocated to ventures with robust growth potential, spurring innovation across multiple industries.

An international bidding process was launched over three months ago. Nine companies participated in the selection process, and two were shortlisted. The IFL is currently negotiating with one of these firms, whose identity remains undisclosed, and hopes to reach a final agreement soon. The selected fund manager is expected to contribute up to two percent of the investment and attract additional investors to the Initiative.

The fund management firm selected by the IFL will play a crucial role in collecting funds, maintaining accurate accounting records, implementing investment strategies, and managing trading activities. It will also be responsible for selecting businesses worthy of investment and attracting investors. The IFL plans to establish a finance facility with an initial capital of at least 10 million dollars, gradually increasing to 100 million dollars. The lab hopes to attract development financiers, along with contributions from the government and private sector.

The Ethiopian Capital Markets Authority (ECMA) is developing a collective investment scheme directive to govern the funds in the upcoming capital market. As the draft undergoes ratification, the funding scheme will be tested in a regulatory sandbox to ensure its readiness. The sandbox provides a controlled environment for innovative firms to experiment with their products and gather consumer feedback. Investment funds allow investors to benefit from economies of scale and potentially generate higher returns through private equity investments within five years, making them attractive options.

Ethiopia faces a trap known as the “missing middle”, businesses too large for microfinancing yet too small to qualify for traditional bank loans. These enterprises often struggle to access credit, limiting their growth despite strong business models and high demand for products or services. A World Bank study estimates the global financing gap for formal micro, small, and medium enterprises (MSMEs) to be one trillion dollars, increasing to 2.6 trillion dollars when including informal businesses.

There are an estimated two million MSMEs in Ethiopia alone. According to a 2021 UNDP report, only 1.9pc of small enterprises have access to loans or lines of credit, compared to six percent for micro-enterprises and over 20pc for medium-sized enterprises. In contrast, 35.5pc of large enterprises can secure loans, exposing the disparities in access to finance.

Dagmawit and her team at the IFL seek to address these gaps through innovative financial instruments, including loan guarantee schemes, recoverable grants, and favourable loan terms tailored to the unique issues MSMEs face.

“We aim for more than just financing businesses,” Dagmawit told Fortune.

According to her, the Initiative wants to promote long-term success among funded enterprises. The lab combines financial support with technical assistance, offering capacity building, training, and business development services through a Technical Assistance Facility (TAF).

One of the companies eligible to benefit from the Initiative is E Mecce Engineering & Agro-Industry Trading Plc, a medium-sized enterprise incorporated in 2020. Despite an initial capital of five million Birr, the company has struggled to secure sufficient financing to expand its operations.

“We want to increase our production capacity,” said Ephrem Melaku, the company’s general manager and major shareholder.

E Mecce specialises in manufacturing feed processing machinery and has secured six patents for its trademarks. However, traditional banks have provided limited assistance, converting only two patents into financing. Banks have also demanded collateral and small processing payments, discouraging the company’s growth plans.

The banking industry has faced a liquidity crunch recently, with several banks struggling to meet weekly liquidity requirements and comply with real-time gross settlement system (RTGS) payments. According to a recent financial stress report by the Central Bank, the top 10 borrowers in the banking industry account for nearly 23.5pc of the total 1.9 trillion Br — 21.7pc of GDP — in loans and advances, revealing the high concentration of credit in a small number of entities.

This concentration has made it difficult for smaller businesses to access loans. Worku Lemma, an investment banker, observed that stringent monetary policies, such as high bond requirements of up to 21pc and a 14pc cap on loan portfolio growth, have limited banks’ ability to lend to MSMEs. According to Worku, loan applications have been stranded as banks seek to curb their risk exposure, preferring to lend to a few companies with high levels of collateral. He suggested that banks take on more risks by offering non-collateralized loans and accepting movable assets as collateral.

“There is a huge fund shortage in banks,” he said, urging for innovative solutions like the EFF to address the credit constraints faced by SMEs like E Mecce.

Nearly a year ago, E Mecce submitted a proposal for 200 million Br in funding through the IFL. Ephrem hopes to secure this financing to double production and explore related business opportunities in the long term.

Mered Fikireyohannes, founder and CEO of Pragma Capital, praised the Initiative for offering desperately needed funding to help businesses grow from venture investments to public listings. He believes that a strong financial ecosystem, objective company valuations and tax incentives for capital investments are critical to driving the growth of the capital market. He also stated the importance of hands-on regulation from the ECMA to ensure smooth operations.

“Regulatory oversight will be crucial,” he said.

The Ethiopian Securities Exchange (ESX) is expected to play a defining role in attracting private-sector investment as the capital market expands. State-owned enterprises, including Ethio telecom and Ethiopian Shipping & Logistics, are preparing for listing on the Exchange, and foreign investors have shown interest in participating. A total of 17 institutional investors have invested in the ESX, where the federal government holds a 25pc stake through the Ethiopian Investment Holdings (EIH), a sovereign fund managing a portfolio of state-owned companies valued at 38 billion dollars.

Tilahun Kassahun, CEO of ESX, is upbeat about the future of Ethiopia’s capital market, expecting substantial growth over the next four years.

“We’re ready to begin soon,” he said, disclosing that the ESX has already completed the necessary infrastructure for launching the debt market and that further regulations and participants to support equity market activities are in the pipeline.

 

Lease Dispute Leads AquaAddis Water Plant Shut Down, Leaving Hundreds Jobless

AquaAddis, one of the pioneer bottled water brands, has abruptly suspended operations at its Burayu plant following a contentious dispute with regional tax authorities over millions of Birr in alleged unpaid land lease fees. The closure has left hundreds of employees in uncertain fate.

The plant, owned by Asku Plc, has been a prominent player in the water bottling industry for over two decades. Located in Burayu, a town on the outskirts of Addis Abeba, the facility spans approximately 62,000Sqm and boasts a daily production capacity of 85,000 bottle packs. Trouble began when Burayu authorities implemented a new land policy requiring all plots, existing and newly held, to be leased. The policy shift has caused confusion and concern among property owners, many of whom were unprepared for the sudden financial demands.

Three months ago, Asku Plc received a letter from the Burayu land administration office demanding an immediate down payment of 30 million Br, representing 10pc of a total 300 million Br lease fee. The balance is payable over 40 years for an 80-year leasehold period. The company contested the request, deeming it groundless, and appealed to district and city officials. Despite months of appeals, district revenue authorities forcibly shut down the plant.

Company executives have expressed frustration with the flawed sequence of events, receiving unsatisfactory responses to their numerous letters requesting respite.

“They closed the company like it was nothing,” said Yonathan Girma, the plant manager, unable to conceal his disappointment. “It’s been almost two weeks since we were shut down.”

Yonathan questioned the legitimacy of the process, wondering if such a change to land administration systems could be implemented through simple letters or circulars. He disclosed the substantial financial burden imposed by compliance and asked whether closing the business was a viable option.

Sheger, a new city formed from consolidated satellite cities encompassing Addis Abeba, is divided into 12 districts, including Burayu, and 36 woredas. It is a hub for thousands of factories. According to Kifle Tekle, head of Burayu’s land administration office, the new policy conforms with the broader Sheger City Administration’s decision to transition all land ownership to a leasehold system. He stated that the town needs to increase revenue for infrastructure development, including water, electricity, roads, and other essential services.

“Leasing land is one way to generate revenue,” he said.

A letter signed by Abdisa Galii, deputy head of the Sheger Revenues Bureau, confirms that the Sheger City Municipal Council approved, in December 2023, the pricing structure for manufacturing lands at 61.98 Br for a square meter for an 80-year lease term. According to Abdisa, the decision was made after Asku Plc failed to comply with the new rules and regulations.

“They’re required to abide by the law,” he told Fortune, adding that companies can file complaints and appeals according to the law. “It’ll all be treated fairly.”

Ethiopian Beverages Manufacturing Industries Association leaders intervened, hoping to resolve the issue. However, their appeals have remained unheeded, leading to the company’s unprecedented shutdown.

“It’s shocking to see it has closed down,” said Ashenafi Merid, the Association’s general manager.

He suggested that such disputes should be resolved through mutually acceptable settlements, such as agreed instalment payments.

The plight of AquaAddis raises broader concerns among investments operating in the region. Several companies have faced similar demands for unprecedented land charges. Amenti Plc, a sister company, received a similar letter from the Burayu land office demanding it pay 310 million Br, with 10pc due upfront.

A recent United Nations study revealed a decline in the manufacturing sector’s contribution to the GDP, falling by 1.5 percentage points to 4.6pc in 2022. The report cited loose monetary policy, supply chain bottlenecks, and security challenges as critical issues affecting the sector. The beverage industry has consistently opposed the excise tax since its imposition, arguing that it operates in an already unfavourable environment.

AquaAddis has experienced operational hiccups over the last several years due to industry-wide concerns, such as raw material shortages caused by foreign currency scarcities. Like its peers, it was operating at 50pc capacity before the closure. The recent foreign currency reforms had offered hope in reviving its capacity by accessing vital forex. However, the unexpected demand from authorities has presented a refreshed dilemma to its managers and owners.

Asku Plc and Amenti Plc are part of the ABIG Group, run by Michael Birhane and his siblings. The conglomerate’s diverse portfolio includes investments in retail, healthcare, and manufacturing, with 12 subsidiaries like Astu Injera, Girum Hospital, and Daily Mini Mart. Asku Plc bottles AquaAddis water and other beverages such as Royal Crown tonic water, RC Lemon, and Orange. With several of its companies operating within Sheger, the conglomerate is facing financial pressure due to unanticipated payments.

At the AquaAddis bottling plant, the job security of 380 workers hangs in the balance. With the threat of termination looming, Berecha Lemma, leader of the labour union at the bottling company, expressed deep concern about the growing anxiety among the workforce. He depicted the situation as “unfortunate,” noting that many employees are the primary breadwinners for their families.

One such employee is 42-year-old Reta Tolera, who has worked for the company for over 12 years on the production line. As the primary provider for a family of six, earning approximately 4,000 Br a month, losing his job has created anxiety.

“I’m hoping things will return to normal soon,” he said, expressing a glimmer of hope for reinstatement.

A World Bank study found that sub-Saharan African countries have weak land property rights systems, leading to heightened disputes and high registration costs. Experts note that these requirements have broader implications, which are bound to create further precarious conditions for companies and frustrate regional investment.

“This is a politically driven decision,” said Arba Beyene, a lawyer and partner at Ethio Alliance Advocates LLP.

He argued that the changes were unlawful, claiming that subjective judgments and arbitrary regulations cannot be used to alter established contracts. According to him, while regional administrations have the authority to implement federal laws through their administrative workings, these laws should be well-defined, predictable, and avoid conflicts with other laws.

“Local legislators should have been more cautious in writing the laws,” he said.

Arba contended that the lack of transparency and unpredictability would inevitably stifle businesses and investment.

Nascent Deposit Insurance Fund Seeks Growth, Faces Funding Shortages

The pioneering sovereign deposit insurer, the Ethiopian Deposit Insurance Fund (EDIF), is undertaking a major step to enhance its operational efficiency vying to deploy an automatic payout system for depositors. Aimed at bolstering public confidence in the financial system, the one-year-old Fund looks to revolutionize how depositors are reimbursed in the event of a financial institution’s failure.

EDIF’s leadership is optimistic that the automated payout system will streamline reimbursement processes, offering immediate financial relief to depositors impacted by sudden bank failures. Desalegn Ambaw, CEO of EDIF, noted that the fund is preparing a request for proposal (RFP) document with the assistance of experts from the Commercial Bank of Ethiopia (CBE) and the National Bank of Ethiopia (NBE).

“The cost required will be very high,” Desalegn stated, indicating that the fund is also pursuing development financing options with discussions ongoing with the World Bank and other financers to secure funding for the system.

Since its inception last year, EDIF has amassed 6.51 billion Br in premiums from all commercial banks and microfinance institutions (MFIs) over four instalments, constituting 0.3pc of their average deposit balances. CBE is the largest contributor, accounting for 49pc of the total funds raised. Last year, deposit mobilisation across the country’s 85 financial institutions reached 2.05 trillion Br.

To optimize returns on its assets, EDIF has invested a significant portion—5.94 billion Br—into treasury bill bonds and 540 million Br in a Mudaraba account with CBE, strategically aiming for profitable yields while expanding the bank’s portfolio.

The Fund’s recent performance report, presented at Zemen Bank’s headquarters building where its main office resides, underscores its commitment to fortifying depositor confidence and enhancing financial stability, according to Desalegn. The global financial crisis of 2008 underscored the critical need for robust deposit insurance frameworks worldwide, and Ethiopia is the 148th country to establish such a mechanism. This initiative is particularly timely, given the recent challenges faced by the country’s banking sector, which has experienced failures that put depositor funds at risk.

Experts argue that Ethiopia’s banking sector has consistently faced risks to depositor funds but has seemingly survived due to accommodations and regulatory forbearance. Some contend that this approach may have masked underlying vulnerabilities.

The Ethiopian government allocated an initial 50 million Br to EDIF out of a total of 200 million Br earmarked by the Ministry of Finance (MoF). Desalegn states that this initial startup capital of the Fund only serves as a contingency plan to ensure timely disbursement to depositors when necessary. The fund aims to grow its direct collection from banks to approximately 7.3 billion Br while expanding its investment strategies to strengthen its financial position.

Currently, only deposits of up to 100,000 Br are covered by the Fund. Lack of resources has forced this limitation. Still, 97pc of depositors have less than 100,000 Br in their accounts. “We have covered most of the population,” he said.

The Fund provides deposit insurance with certain exceptions. Deposits between financial institutions, deposits by government agencies and state-owned enterprises, deposits of financial institution executives, foreign auditors, court-revoked deposits, and deposits by major shareholders are not covered by EDIF.

In addition to improving operational efficiencies, EDIF is working to enhance its connectivity with financial institutions through a digitized platform and also plans to reassess fixed premium rates based on each institution’s size and risk profile, thus creating a more prudent regulatory environment.

Last year, EDIF commenced its operations by issuing a directive to regulate the financial sector’s participation in the deposit insurance scheme, aiming to strengthen the fund’s regulatory capabilities. This followed the enactment of the first deposit insurance legislation by the Council of Ministers four years ago.

Merga Wakeya, the operational manager and key architect of EDIF’s formation, highlighted the intention to tailor premium rates according to the risk assessments of individual financial institutions in the long run. This approach could potentially strengthen the financial sector’s resilience but requires the institutional capacity of the Fund to grow. However, some financial veterans warn that such measures could inadvertently create instability if not managed carefully.

While acknowledging the limited coverage of the 100,000 Br insurance, he noted that the collected funds have been too small and expressed plans to expand the Fund, emphasizing the upcoming capital market’s potential for investment growth. “Managing our liquidity is important to us,” Merga said.

Investment banker Worku Lemma stresses the necessity of protecting small savers against economic volatility and banking failures. “It’s all about protecting the depositor,” he said, while explaining the delicate balance banks must maintain between accessible liquid assets and the potential for deposit withdrawals, which can pose risks to the financial system.

Worku emphasized caution as the capital market opens up regarding both EDIF’s potential investments but also the increased risk of potential defaults that could lead to significant losses. He suggested that the fund utilize its resources to increase its capital base to enhance its capacity and expand coverage.

A concerning report from NBE revealed that deposit concentration poses a significant risk to the liquidity of commercial banks. The report indicated that if the ten largest depositors in each bank withdrew their funds simultaneously, 18 out of 29 commercial banks would fall below the minimum regulatory liquidity requirements. The statistics expose the precariousness of the current financial landscape.

With total assets in the financial sector now exceeding 3.1 trillion Br—accounting for over a third of Ethiopia’s GDP—the implications for deposit insurance and depositor protection are profound. The 31 banks dominate the asset base, with the CBE contributing nearly half, while MFIs hold a mere two percent share.

The establishment of EDIF has sparked debate among financial institutions regarding the balance between enhancing depositor confidence and imposing additional financial burdens. While financial experts express optimism about the potential benefits of improved insurance coverage, others like leaders of MFIs caution against the high premiums that may detract from financial stability.

Teshome Abebe, CEO of Dire Microfinance Institution, voiced concerns that the costs associated with the EDIF’s premium requirements may outweigh the benefits for depositors. He pointed out that MFIs are grappling with rising operational costs, hindering their capacity to attract and retain deposits. Dire’s total deposit was close to 855 million Br last year and its EDIF premium was around 1.4 million Br.

He highlighted the industry’s broader concerns, noting that discussions with the central bank have been ongoing for over a year without satisfactory resolutions. He argued that micro financers may not be adequately prepared to participate in this scheme.

History has shown the critical role of deposit insurance in maintaining financial stability. The establishment of the Federal Deposit Insurance Corporation (FDIC) in the United States during the Great Depression is a prime example of how effective insurance mechanisms can restore public trust in financial systems.

The IMF recommends prudential supervision, including on-site and off-site monitoring through regular financial reporting and examinations using internationally recognized accounting standards, to serve as the eyes and ears of the deposit insurance system.

Eshetu Fantaye, a veteran financial consultant, emphasized the importance of the EDIF at this juncture, stating, “insurance funds are national savings.” He called for a broader focus on investment strategies beyond treasury bills, urging the Fund to pursue opportunities that yield higher returns while ensuring financial stability.

He emphasized the need to improve the fund’s operations and invest in assets that can protect against inflation. He suggested exploring investment options beyond Treasury bills to achieve higher returns and strengthen the financial stability of the institution and depositor insurance. He set a target return on investment of at least 20pc.

To enhance insurance coverage, he proposed reallocating the 1pc bond requirement imposed for use by the Development Bank of Ethiopia to the insurance fund. This would allow for adjustments to premiums and total insurance coverage. He concluded by stating “a robust financial sector safety net is crucial for a healthy financial system.”

Inflation, Insecurity Leave the Tourism Industry Smouldering

For 43-year-old Alemnesh Neri, travels to her hometown of Gumer in central Ethiopia have long been a cherished tradition. Twice annually for the past 22 years, she would make the trip from Addis Abeba, laden with goods and gifts for family and friends. This year, however, spiralling costs and mounting logistical problems have forced her to cut back her visits to only once.

Items that used to cost her 5,000 Br now have skyrocketed threefold. Inflation has dramatically eroded her purchasing power. Transportation expenses have tripled, soaring threefold from 500 Br, further straining her modest income. Travel itself has become more arduous. Hotels along the route are frequently overcrowded during peak travel times, leaving visitors like Alemnesh scrambling for accommodation.

Despite the allure of cheaper goods in smaller towns along the way, the constraints of rigid bus schedules, often limited to brief one-hour lunch breaks, make it difficult for passengers to make necessary purchases.

“From spices to clothing, these stops offer a break from rising city prices,” she told Fortune. “But, the journey has turned into a race against time.”

The New Year festivity coincides with Mesqel, a vibrant carnival celebrated on 27 September, marked by the burning of a large bonfire known as “Demera.” The holiday holds deep cultural and religious importance, especially in northern and central Ethiopia. It represents the end of the rainy season and prompts city dwellers to return to the countryside. The festivities are characterised by processions, hymns, and communal gatherings, mirroring the cultural richness of a traditional society.

However, the influx of travellers during the Mesqel season has placed immense pressure on local infrastructure, exacerbated by inflation and security concerns. These issues manifest the broader problems besieging the tourism sector, particularly in regions where Mesqel is heavily celebrated.

The road from Addis Abeba to the Gurage Zone, where Gumer is located, embodies these difficulties. Tour operators report that parts of the route, especially near Boti and Batu (Ziway), are plagued by security concerns. Fears of kidnapping and violence have discouraged local and foreign tourists from using this path.

“Safety has become a paramount concern,” says one operator. “The risks have led many to reconsider their travel plans.”

Infrastructure woes compound the problem. Many roads remain unpaved, creating inconvenience for travellers. Even in Welkite, a central and relatively more developed town along the route, adequate restroom facilities and other essential services are scarce. Unreliable electricity and water supplies make rest stops less comfortable, detracting from the general travel experience.

Yet, local efforts are underway to improve tourism facilities. In the Gurage Zone’s Arekert Wereda, the newly opened Muluworq Resort embodies the region’s ambitions. Built for 250 million Br, the resort boasts 47 rooms, all fully booked in the days leading up to Mesqel. The holiday season has drawn local and international tourists to the area, offering a glimmer of hope for the beleaguered sector.

One such tourist is Getu Yilma, who has travelled to the region from Johannesburg, South Africa, for the past four years. Spending up to 400,000 Br during his six-day visit, Getu acknowledged the progress and the persistent problems in the region’s tourism development.

“The zone needs to have better roads,” said Getu. “Improvements to local infrastructure could enhance the tourism experience.”

Despite the arduous journey, the festive atmosphere and the gathering of families from across Ethiopia gave Getu a profound sense of fulfilment. His family celebrated Mesqel through the traditional ox-slaughtering event known as “Qircha”, where portions are shared among friends and family.

“It’s a connection to our heritage that keeps us coming back,” he said.

However, the tourism sector faces powerful headwinds. The flow of international tourists has been sluggish, particularly in the years following the COVID-19 pandemic. Experts attribute much of this decline to lingering security concerns and travel advisories issued by Western countries like the United Kingdom (UK) and Canada, which discourage non-essential travel to most parts of Ethiopia due to safety risks caused by civil unrest and militarised conflicts.

For Bogale Abey, owner of Dynasty Ethiopia Tour, these travel advisories have had a major impact on the sector.

“Tourists cannot obtain travel insurance with a travel advisory against the country of destination,” he said.

These travel advisories put several regions of the country in the red zone. The result has been a drastic reduction in the number of tourists visiting the country, particularly from foreign nations.

According to Ftsum Gezahegn, president of the Ethiopian Tour Operators Association, which represents over 300 tour operators, many of whom have been struggling due to the downturn in tourist numbers, improved marketing and promotion of Ethiopia, as well as streamlined visa processes, are needed to attract more international visitors.

“We’ve so much to offer, but the obstacles are formidable,” he told Fortune.

Henok Seyoum, a travel journalist, observed a near complete absence of foreign tourists in his tours of southern Ethiopia this September, citing ongoing regional security concerns and limited local movement. According to him, substantial incentives and investments for service providers in the sector are crucial, noting that tour operators pay VAT even though most of their expenses are not issued with receipts and thus cannot claim rebates.

“The financial burden on operators is unsustainable,” he warned.

Fitsum concurred, calling for increased state support. While laws permit tour operators to import vehicles tax-free, experts argue that more needs to be done, particularly in addressing security concerns that deter both foreign and local tourists.

“We need loans and tax incentives for operators to help the sector recover,” he said.

Domestic tourism, however, remains a key area of focus for the federal government authorities. In the Gurage Zone, officials anticipate more than 800,000 visitors this holiday season, including 3,000 foreign tourists, a projected 40pc increase from the previous year. According to Meseret Amelga, head of the Gurage Zone Culture & Tourism Bureau, the Zonal office expected to generate more than 100 million Br in transactions during the season.

Handmade goods, including pottery, traditional weaving, and products made of horn, are gaining traction, with local artisans set to generate an estimated 1.5 million Br in sales this holiday season. Despite these economic gains, Meseret acknowledged that the region still suffers from manifold constraints, particularly of infrastructure.

“Local roads remain underdeveloped, and improvements to basic services such as water and electricity are urgently needed to sustain long-term tourism growth,” she told Fortune.

With relatively few logistical, infrastructure, or security concerns, preparations for the festivity in Addis Abeba began months in advance. Debre Bisrat St Gabriel Church, in the Kotebe area, was selected as the organiser, deploying 5,500 youths from the Sunday School Union of the Ethiopian Orthodox Tewahedo Church. The Patriarch, Abune Mathias, presided over the proceedings on Friday, attended by President Sahle-Work Zewde, religious leaders, and guests. Invited priests from the Russian Orthodox Church performed religious hymns and chants, adding an international dimension to the festivities.

Preparations for Mesqel have been extensive. According to Ashenafi Mulugeta, president of the Addis Abeba Hotel & Tourism Professionals’ Association, “more than 150 hotels in the city were ready to serve tourists arriving for the ceremonies.”

Addis Abeba is known for lighting one of the most enormous “Demera” bonfires at Mesqel Square, an event that attracts visitors from near and far. This tradition was instrumental in UNESCO’s 2013 recognition of the Mesqel festival as an Intangible Cultural Heritage of Humanity, demonstrating its cultural and historical importance.

Data from the Ministry of Tourism show that Ethiopia generated 4.3 billion dollars in tourism revenue from 1.1 million visitors last year. The Ministry’s officials plan to draw 200,000 more tourists this year, including 395,218 during the peak season from September to December. They hope to generate 5.47 billion dollars.

However, industry experts question the accuracy of these figures. For Atlaw Alemu (PhD) of Addis Abeba University, the extremely low tourist visibility contradicts the Ministry’s reported income, especially considering the widespread closure of tourist destinations.

“The Covid-19 pandemic’s effects on the tourism sector require in-depth analysis to identify areas needing greater focus,” he told Fortune. “We can’t say we have tourists when there are just a few.”

Industry experts agree that more needs to be done to revitalise the tourism sector.

The Ministry has taken steps to incentivise investment in the sector, offering tax-free imports of construction materials and land supply to developers.

As the tourism sector struggles to rebound from the effects of the pandemic and ongoing security issues, partnerships between the government and private sector are seen as crucial. With proper investment in infrastructure and increased security, Ethiopia could unlock its vast tourism potential. For travellers like Alemnesh and Getu, addressing these challenges could mean a more comfortable and enriching experience. And for Ethiopia, a thriving tourism industry could offer economic benefits.

Back in Gumer, as the flames of the “Demera” bonfire flickered against the night sky, there was a sense of hope mingled with apprehension. The Mesqel festival continues to draw people together, a symbol of unity in uncertain times.

For Alemnesh, despite the hardships, the journey remains worthwhile. “This is home,” she says softly. “No matter the challenges, it’s where my heart is.”

Banks Remain in a Desperate Scramble as Birr Continues to Bite the Dust

The Birr has continued spiralling downward against the U.S. Dollar over the past week, deepening the predicaments facing the country’s financial system since the authorities liberalised the foreign exchange market in July this year. The currency’s rapid depreciation has laid bare underlying economic strains as commercial banks scramble to overcome a volatile environment marked by inconsistent pricing strategies and liquidity concerns.

Between September 23 and 28, exchange rates across 17 commercial banks fluctuated considerably, revealing consequential divergences in buying and selling prices for the Dollar. On September 28, the average buying rate stood at 111.8 Br, while the average selling rate reached 124.9 Br. The depreciation in both rates widened the gap between buying and selling prices, as banks increased their spreads to hedge against growing volatility.

The divergence in exchange rates among the banks unveiled the uncertainty gripping the market following the federal government’s decision to open the foreign exchange market. Banks are trying to gasp air with rapidly changing conditions, leading to inconsistent pricing strategies. Outliers like Abay Bank (AYB) and Oromia International Bank (OIB) illustrated the fragmented nature of the market as it adjusts to the floating Birr.

Addis International Bank (AdIB) posted the highest spread over the past week, with the Birr trading at a selling rate of 125.89 Br, a premium of 16pc above its buying price of 108.55 Br. The spread revealed a cautious approach by the bank’s executives, likely seeking to buffer against future currency depreciation. Amhara Bank’s (AMB) spread stood at eight percent, with the dollar selling at 125.28 Br and buying at 116 Br. The smaller margin reveals a more aggressive strategy to attract foreign exchange, limiting the need to widen its spread drastically.

Oromia International Bank (OIB) consistently posted one of the highest selling rates for the dollar, reaching 127.01 Br on September 28, while its buying price remained relatively subdued at 112.40 Br, yielding a spread of 13pc. Its executives appeared to be reacting to liquidity constraints, possibly facing increased demand for foreign exchange commitments.

Hibret Bank (HB) offered a high spread of 13pc, reflecting a similar cautious positioning as the Birr continues its downward spiral. Abay Bank (AYB) posted the lowest buying rate throughout the week, with the Birr valued at 103.07 on September 28 and a selling rate of 115.43 Br, a spread of 12pc. The unusually low buying rate showed the Bank’s desire to limit exposure to foreign currency transactions, perhaps due to liquidity concerns.

While the International Monetary Fund (IMF) praised the authorities’ efforts to bridge the gap between official and parallel markets, the short-term volatility has exposed structural weaknesses in the economy, including a growing current account deficit and double-digit inflation. The authorities’ decision to float the Birr, a currency historically tightly managed, has led to considerable fluctuations as market forces begin to determine its value. Commercial banks are now forced to overcome these turmoils independently, adjusting their exchange rate offers to reflect internal foreign exchange reserves, external liabilities, and perceived market risks.

As the Birr continues to depreciate, the broader economic consequences of a weaker currency are becoming increasingly evident. Import costs are rising, putting further pressure on inflation, which has remained in double digits for months. Businesses that rely on imported goods face higher costs, often passed on to consumers. Exporters, on the other hand, may find temporary relief with higher returns when converting foreign earnings.

However, the divergence in rates across the banking industry has continued to cause uncertainty as businesses adjust their pricing to avoid risks and remain competitive.

ACIBADEM HEALTHCARE GROUP

Acıbadem Healthcare Group, a leading provider of cancer treatment in Türkiye, has been offering a comprehensive and individualized range of treatment options for both adults and children diagnosed with all types and stages of cancer for the past 25 years. Our goal is to eradicate the tumor while protecting healthy tissues, thereby enabling patients to lead healthy lives. At Acıbadem, surgeons, radiation oncologists, and medical oncologists collaborate closely to provide comprehensive care and achieve the best possible outcomes for patients.

By bringing together coordinated cancer care under one roof, Acıbadem transforms the way patients access their doctors and all healthcare services, leading to a unique patient experience.

What We Treat

Acıbadem is committed to ensuring that every patient with cancer has access to the best care possible. We combine expertise, compassionate care, and advanced technologies to cultivate the safest and most effective treatments for numerous cancer types, including:

  • Urologic Cancers (Prostate, Kidney, Bladder and Testicular)
  • Gynecologic Cancers (Cervical, Ovarian, Endometrial)
  • Gastrointestinal Cancers (Esophageal, Stomach, Colorectal, Pancreatic, Liver)
  • Breast Cancer
  • Brain and Spinal Cord Tumors
  • Head and Neck Cancers
  • Bone Cancer
  • Thoracic Cancer
  • Lymphoma
  • Melanoma
  • Childhood Cancers

Treatments We Offer

Acıbadem Oncology is the primary destination for managing and treating cancer and provides services for the full spectrum of cancers. Modern techniques are used in an individualized, patient-oriented approach. At Acıbadem, every cancer patient receives an individualized treatment plan tailored to their unique needs. Treatment may comprise any combination of various options.

Surgery

Surgically removing the tumor successfully is often the most effective approach to eliminating many types of cancer. Therefore surgery often stands out as the primary treatment for many types of cancer, offering the best chance of cure if the tumor can be completely removed from the body. The success of tumor resection significantly influences a patient’s likelihood of cure and survival rate; it also increases subsequent treatments’ efficiency.

At Acıbadem, cancer surgery is primarily performed using minimally invasive approaches, utilizing specific surgical instruments instead of traditional open surgery. Additionally, Acıbadem surgeons have extensive experience in robotic surgery, an advanced form of laparoscopic surgery. Robotic surgery empowers surgeons to perform operations using tools attached onto robotic arms. Not only does minimally invasive surgery allow for better outcomes, it also facilitates quicker recovery and reduces the risk of complications.

Systemic Therapy

At Acıbadem, all systemic therapies can be employed in the treatment of cancer.

Chemotherapy medicines circulate via the bloodstream to destroy cancerous cells, throughout the body. Thus, it is utilized to treat cancer almost anywhere in the body.

Immunotherapy aims at enhancing the immune response by medicines, enabling the immune system to distinguish, target, and destroy cancer cells more effectively.

Targeted therapy, is a cancer treatment targeting the genetic changes or mutations that turn healthy cells into cancer cells. Unlike traditional treatments, targeted medicines are designed to attack specific abnormalities within cancer cells.

Hormone therapy is used in the treatment of certain cancer types that rely on hormones for growth, such as prostate cancer and breast cancer.

Radiotherapy

Advancements in radiation techniques have revolutionized cancer treatment with radiotherapy emerging as one of the most promising modalities. Today, radiotherapy is recognized as a valuable treatment option for many types of cancer. For the past 25 years, Acıbadem has been at the forefront of utilizing the most advanced radiotherapy technologies to deliver an effective cancer treatment. In essence, radiation oncology employs radiation to eliminate tumor cells. Through precisely delivered beams of radiation, it is possible to eradicate or shrink cancer without the need for surgical intervention. Radiotherapy can be applied as the primary treatment or used after the surgery to minimize the risk of recurrence.

Acıbadem is a world leader in healthcare services and has long been a ray of hope in Türkiye for patients with cancer who seek better treatment options from the entire planet.

Patient Success Story: A Hopeful Journey to Acıbadem Türkiye

Illustrating the improved outcomes of cancer treatment through application of all these treatment options could be more tangible for patients and their relatives through a narrative.

A 57-year-old Ethiopian lady applied to Acıbadem with a breast cancer diagnosis. She had applied to different clinics and met with different doctors in her country, only to realize that she needed to receive comprehensive treatment. Around that time, one of her friends suggested Acıbadem Hospital in Istanbul, where her husband had received bladder cancer treatment earlier. She contacted Acıbadem Information Office in Addis Ababa, and on the following week, she flew from Addis Ababa to Istanbul for a consultation with the doctors at Acıbadem Hospital. She met with a breast surgeon who explained the treatment plan involving chemotherapy to shrink the tumor initially, followed by a safe and effective tumor resection, and finally, radiotherapy to ensure the destruction of all cancer cells, enhance outcomes, and reduce the risk of recurrence. She also met with a breast radiologist and medical oncologist and received detailed information about the disease and treatment steps.

Treatment began with chemotherapy regimens, followed by the surgical removal of the tumor. She underwent a less extensive surgery called a breast-conserving procedure, which involved excising the tumor with a safe margin of surrounding healthy cells instead of the entire breast, while preserving the natural shape and appearance of the breast to the greatest extent possible. After the surgery, she received a single session of radiotherapy while the incision was still not closed, a technique known as Intraoperative Radiation Therapy (IORT). Simultaneously, the plastic surgeon performed the breast reconstruction procedure and recreated the shape of the breast. Today, our patient has been cancer-free for more than 3 years, which is wonderful.

Acıbadem’s expert team, specialized on personalized and comprehensive care, is dedicated to assist you before, during, and after your treatment. You can rest assured that Acıbadem International Patient Center is going to plan every step of your journey elaborately. We welcome you to call or email us if you have any questions or concerns at any time.

Contact us now to get free second medical from our oncology experts. Click the link: https://acibademinternational.com/

 

STREET CELEBRATIONS

Youth celebrating traditional new year celebrations, Gobe, are marching down Africa Avenue. September brings with it multiple Ethiopian holidays celebrated on the high street–including Meskel and Ireecha. Gobe, for young men, and Shinoye, for young women is a significant cultural event with roots in Oromo culture, marking the new year and symbolizing renewal and hope

 

LOCATION MATTERS

A digital advertising board of a previous age being overtaken by growing trees in front of National Theatre. The large-scale corridor development project being undertaken in Addis Abeba is mandating only digital means of advertising along main streets. Digital screens on street poles and elsewhere in the city are becoming more common, but this one has seen better days.

UNDER DEVELOPMENT

A creative destruction site shows the demolished area around Kera behind corrugated tin fences that are skillfully painted on the other side. The gentrification of the city is in full swing under the guise of the city’s ambitious corridor development project, with the transformation of neighborhoods and displacement of long-standing, lower-income residents. The structures have been razed, leaving a solitary tree standing for the time being.

Melika Bedri Replaces Melaku Kebede at EthSwitch Board of Directors

ZamZam Bank’ president is elected Vice Chair of the Board of Directors for the national switch, replacing the former United Bank president. This was announced in a special program organized by EthSwitch last week at the Hilton Addis Hotel. The share company expressed its gratitude to the outgoing Board and welcomed newly elected members while acknowledging the dedication and service of board members. As one of the founders of EthSwitch, Melaku made significant contributions to Ethiopia’s financial infrastructure, and as Vice Chairman, has guided the institution through key developments, according to the company. The majority of board members have been re-elected during the shareholders’ meeting. Established in 2011, EthSwitch is a share company primarily owned by all banks.

CBE, Visa Join Hands

The agreement between Visa International and the Commercial Bank of Ethiopia will last for five years and will include capacity building training for the bank’s staff. The strategic agreement is crucial for the implementation of international payments following the financial policy reforms made by the government and will also play a significant role in improving the bank’s operations. The President of the Commercial Bank of Ethiopia, Abie Sano, in his message at the ceremony, said that the strategic agreement is crucial for the implementation of international payments while Chad Pollock, Visa International’s President and General Manager for East Africa, said he is delighted with the partnership with CBE.