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Month: November 2024

A Verdant Oasis in a Concrete Jungle

Posted on by Digital Editor

I found myself savouring the first leisurely moments of my vacation. Sitting at John Graham’s corner in the Olympiakos Greek Club, the world slowed down for a while. With good dinner and a tangy crispness of cold Sprite infused with a slice of lemon, I began to enjoy the indulgent calm which is a rare respite from the relentless pace of daily life.

To my right, under the glow of floodlights, a few dedicated players enjoyed a lively tennis game on the red clay courts. The garden hosted couples and youthful laughter echoed from a soccer match and basketball court. All of this unfolded amidst the calming presence of towering trees and the soothing chirps of birds, a natural soundtrack accompanying the cool evening air.

It felt like an oasis, an enclave of peace in the heart of urban life.

The Club is a hub of history, art, and recreation, seamlessly blending the past with the present. Its spacious grounds and thoughtful amenities make it a rare gem in a city where recreational facilities are cramped and lack the charm or value to justify their cost. Beyond its serene gardens and courts, it regularly hosts bazaars selling a wide range of items, from herbal teas and handmade T-shirts to silver ornaments and exotic incense. It is a sanctuary for those seeking a quality escape from the chaos of urban life, a haven that many have yet to discover.

Another space that offers a similar sense of leisure, albeit in a more contemporary setting, is Laphto Mall near Bisrate Gabriel. It initially appears no different from others. Yet, stepping inside reveals several recreational opportunities. While it lacks the sprawling grounds of the Olympiakos Club, the mall compensates with its diverse amenities, creating a serene environment within the urban context.

Unfortunately, spaces like these are becoming increasingly scarce in Addis Abeba. The relentless march of urbanisation, coupled with skyrocketing real estate costs, has led to the loss of many cherished recreational areas. A poignant example is a former supermarket and juice bar in Ayat. Once surrounded by a lush garden and featuring amenities like a trampoline for kids, it was a peaceful retreat. I usually visited, enjoying fresh juice and casual conversations with the friendly owners. Over time, economic pressures forced them to transform the space into a cluster of shops and steakhouses, erasing its charm and tranquillity.

Another notable loss for me is the Ronali International Hotel. With its glass facades, marble interiors, and luxurious amenities, it was a landmark at Ayat Square. I have fond memories of enjoying its ambience with my son.

Sadly, the hotel did not survive the economic fallout of the COVID-19 pandemic and was eventually repurposed into a hospital. While its new purpose undoubtedly serves the community, its transformation marked the loss of a space that had provided countless moments of joy and relaxation. Such changes are emblematic of a broader trend, where recreational facilities are sacrificed in favor of more profitable ventures.

This trend is not unique to Addis Abeba. Globally, cities face the difficulties of balancing urban development with preserving green and recreational spaces. Hong Kong, for instance, is renowned for its dense skyline, boasting 558 skyscrapers over 150m tall. Yet, it has managed to allocate 40pc of its land to country parks and protected areas. These green spaces support a rich biodiversity and offer residents a respite from the city’s frenetic pace. Kowloon Park, for example, provides a tranquil escape, with its aviary, bird lake, and shaded paths offering a stark contrast to the surrounding concrete jungle.

Addis Abeba can draw inspiration from such examples. Recent efforts by the government to develop green spaces are commendable. The initiatives signal a recognition of the importance of ecological sustainability in urban planning. However, older parks like Bihere Tsige and Hamle 19 remain neglected, their infrastructure unchanged for decades. Renovating these spaces would preserve their historical significance and enhance their potential as recreational hubs.

Developers also should be encouraged—or even required—to include green areas in their projects. While this may not align with short-term economic interests, it would substantially improve the city’s livability. Green spaces provide more than aesthetic value; they offer a reprieve from the stresses of urban life, contributing to physical and mental well-being.

With rapid transformation, the need for a balanced approach to development becomes equally urgent. Roads and skyscrapers are undoubtedly vital for economic growth, but so too are parks, gardens, and other natural spaces. These elements are not luxuries but essential to creating a city where people can thrive.

For me, the appeal of places lies in their ability to offer a sense of connection—to nature, to community, and to oneself. They remind us that amidst the noise and chaos of modern life, there are still pockets of peace to be found. It is up to us to cherish and protect these spaces, ensuring they remain for future generations.

Whether we acknowledge it or not, we are deeply connected to the natural world. As cities grow and evolve, marked with the grey hue on the main roads of Addis Abeba, we must find ways to preserve this connection. In the words of Bob Marley, the “concrete jungle” can oppress, but it can also inspire if we make room for nature to thrive alongside us.

As cities grow, we must remember what makes them livable. Roads and skyscrapers are important, yes. But peaceful corners are what breathe life into a city. They are where we find serenity, connect with loved ones, and escape the noise of daily life.

The soul of a city is not found in its tallest buildings but in its greenest spaces. These are the places that remind us to slow down, breathe, and remember that we belong to something larger than the hustle of urban life. As Addis Abeba continues to transform, we should ensure that its green spaces grow alongside it—because a city without places to pause and reflect is no city at all.

I appreciate the efforts being made by the government to create green areas. The preservation of public parks like the one at Menelik II Avenue, the Ghion Hotel and newly built ones like Unity, Friendship and Entoto parks are highly commendable to revitalise Addis to an urban centre where economic activities go hand-in-hand with recreational and leisure needs.

Construction Sector’s Ambitious Skylines, Fragile Foundations Could Lead to a Costly Legacy

Posted on by Digital Editor

The construction sector has been booming for nearly two decades, with new housing developments, commercial buildings, hospitals, university facilities, and airport terminals transforming the skylines. The surge has immensely bolstered the GDP, contributing from 4.5pc in 2012 to 10pc a decade later, averaging 7.39pc. It also spurred the growth of specialised subcontractors in fields from electromechanical systems and electrical installations to data security, fire suppression, and fire alarms.

Yet beneath this veneer of progress lies a troubling reality. Many of these subcontractors struggle to sustain their businesses beyond a decade, and the quality of their work often falls short, leaving expensive installations nonfunctional shortly after completion.

Despite substantial investments, often amounting to billions of Birr, in modern installations for public projects like hospitals and universities, many systems fail to function effectively post-inauguration. Advanced systems such as forced ventilation, air conditioning, firefighting equipment, and specialised air conditioning for operating theatres are installed but remain underutilised or completely dormant. The disconnect between investment and utility should raise concerns about the stewardship of taxpayer money and the country’s scarce foreign currency reserves, often used to import these sophisticated systems.

The responsibility for these failures does not rest solely on the subcontractors. Governmental and private organisations are often unprepared to operate, maintain, and preserve these complex systems. Technical teams on the client side may not fully understand how the installations are supposed to function or their intended purposes. As a result, the concepts behind these substantial investments linger only on paper, failing to translate into tangible benefits for building occupants.

Challenges permeate every stage of construction, from design to testing, commissioning, and handover. A pervasive lack of robust standards and guidelines exacerbates these issues. There are also no stringent building codes that enforce quality workmanship, safety protocols, and long-term serviceability of installations. The regulatory gap allows subpar work to go unchecked, undermining the industry’s overall integrity.

Corruption and poor project administration further erode confidence in subcontracted work. Financial mismanagement is rampant among contractors. Owners and shareholders often indulge in extravagant spending on personal luxuries rather than reinvesting in their companies. The neglect manifests in inadequate staff training, insufficient construction equipment and tools, low salaries, and a lack of worker motivation. Such practices contribute to early business failures and a cycle of companies entering and exiting the market, causing valuable experience and expertise to be lost.

Frequent changes in tax laws and regulations pose additional limitations. Many contractors lack the knowledge to overcome these shifts, leading to compliance issues and financial penalties that can cripple their operations. The instability discourages investment in capacity building, as companies prioritise short-term survival over long-term growth.

The way contracts are awarded also impedes industry advancement. Firms often secure projects based on personal connections rather than merit, diminishing incentives to improve quality or invest in skill development. The network-driven system stifles competition and perpetuates mediocrity, as companies rely on who they know rather than what they can do.

Despite these systemic issues, a few companies have managed to break the norm. Illustrious for their quality work, some have even secured contracts abroad, leveraging their domestic experience to achieve international success. These outliers demonstrated that Ethiopian contractors can compete on a larger stage with the right approach. Given the volume of projects and investment size within the country, more firms should have been able to join this success wagon, foretelling untapped potential within the sector.

However, relying solely on subcontracting is not a sustainable strategy. Frustrated by the performance of their subcontractors and motivated by financial interests, some of the major contractors are establishing their own divisions to handle specialised work. While this might seem like a solution, it risks creating additional problems. Specialised tasks require dedicated management and expertise, and spreading resources too thin could compromise quality further. The approach could stifle the development of specialised subcontractors, limiting opportunities for young engineers to hone their skills and contribute meaningfully to the industry.

Young professionals have entered the industry with enthusiasm and innovative ideas, contributing to job creation and reducing unemployment rates. Their entrepreneurial spirit is commendable, reflecting a can-do attitude that should bode well for the sector’s future. However, a lack of long-term vision prevents them from expanding their services and product offerings. The short-sightedness is a constraining factor in their inability to grow commensurately with their investments and time in the market.

Education systems may also bear some responsibility for the industry’s shortcomings. A possible overemphasis on immediate success without adequate preparation leaves professionals ill-equipped to handle complex projects. Insufficient training in financial management contributes to the prevalent mismanagement seen across companies.

Nonetheless, the recent policy shift allowing foreign workers into the country introduces another layer of competition. Foreign firms could easily overtake local subcontractors, particularly if the latter do not address their performance issues. The potential displacement should inform policymakers of the urgency for Ethiopian subcontractors to enhance their technical and financial management capabilities.

One viable path forward is the establishment of third-party verifiers to assess the quality, reliability, and performance of specialised work. Such entities could help bridge the knowledge gap and compensate for clients’ and consultants’ limited capacity. Encouraging this practice would require substantial investment in testing equipment and technical expertise but could considerably elevate industry standards. Currently, the industry lacks this crucial layer of oversight in the construction sector.

Professional associations, government bodies, and educational institutions should collaborate to address these systemic issues. Implementing stringent building codes and standards can enforce quality and safety. Encouraging merit-based competition for contracts can incentivise companies to invest in capacity building. Financial education and support can help firms deal with regulatory complexities and manage resources effectively.

Can Technology End Corruption?

Posted on by Digital Editor

Corruption disproportionately affects the poorest and most marginalised communities, making it an economic and social tragedy as much as a political issue. According to the World Economic Forum, corruption costs the world economy an estimated 2.6 trillion dollars annually, or about five percent of the global GDP, leaving fewer resources for essential services in many developing countries.

At the end of October, the International Anti-Corruption Academy (IACA) held its annual meeting in Vienna. Representatives from 81 member states assessed progress on the organisation’s mission to fight corruption through education, capacity-building programs, and research. Digital tools can and should play an essential role in the effort to eradicate corruption. Governments can use them to increase transparency, promote accountability, and empower citizens.

However, the assembly concluded that technology alone cannot guarantee success. Policymakers should also commit to anti-corruption measures, deliver leadership and vision, and uphold the rule of law. For starters, technology can aid the fight against corruption by enabling the digitalisation of government services. Cumbersome bureaucratic processes all too often become breeding grounds for graft and bribery.

Digital platforms that streamline and automate such services would minimise face-to-face interactions and thus reduce opportunities for wrongdoing. For example, Estonia, a pioneer in e-government, has digitised nearly all of its public services, from tax payments to business registration, providing greater transparency and making it harder for corrupt officials to demand kickbacks.

Governments could also use blockchain technology and artificial intelligence (AI) to identify and prevent corruption. Blockchain-based public procurement systems would create a transparent and immutable record of tender processes. Governments have begun using AI and data analytics to track illicit financial flows, often costing billions of dollars in lost tax and customs revenue. AI could also detect patterns and anomalies that might indicate corruption, such as suspicious financial transactions or inconsistencies in procurement data. Such tools enable early intervention, which can stop corruption from growing unchecked.

Some of the world’s largest corruption scandals have been exposed by whistleblowers. To facilitate reporting of wrongdoing, policymakers should introduce encrypted systems allowing individuals to report corruption and bribery incidents anonymously. These platforms, coupled with social media, enable citizens to speak up quickly and without fear of retaliation, putting pressure on governments and businesses to act.

Despite the advances in digital tools for uncovering corruption, however, technology cannot prevent bad actors from finding workarounds. The digital divide between rich and poor countries means that citizens and officials in the developing world often lack access to anti-corruption tools, despite having the greatest need. This problem is especially pronounced in rural areas, where corruption tends to be more widespread, and people may not have the digital literacy or resources to use e-government services or online whistleblowing platforms.

For digital tools to be effective in combating corruption, the people in power should have the skills to spot wrongdoing and be aware of best practices. To that end, the IACA has focused its efforts on education and training programs. Ethics and moral reasoning should be integrated into school curricula starting from a young age. Public officials, business leaders, and law enforcement officers should receive regular training on the most effective and efficient anti-corruption measures.

Likewise, governments should uphold the rule of law by vigorously enforcing anti-corruption legislation and closing legal gaps. Convicting corrupt actors requires strong legal frameworks, an independent judiciary, and empowered law-enforcement agencies, without which even the best technology will fail to have any real impact.

Rooting out corruption is one of the defining struggles of our time, and we now have a new set of powerful digital tools at our disposal. But while technology can help detect and prevent wrongdoing, anti-corruption laws and the authorities tasked with enforcing them should be granted the authority to finish the job.

The World’s Babies Need Antibiotics, Not Just Vaccines

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Over the last half-century, the number of children who die before reaching the age of five has fallen dramatically, from around 20 million in 1960 to 4.9 million in 2022, mainly owing to the expanded programme on immunisation (EPI). Established by the World Health Organization (WHO) in 1974, the programme has been extraordinarily successful in providing the youngest people with access to vaccines, saving more than 150 million lives.

But while such progress is worthy of celebration, much work still exists. Newborns comprise half of all deaths in children under five each year, many of which are caused by infection.

Progress on reducing neonatal mortality has historically been much slower than for children under five. It has begun to stall in recent decades, despite reductions in mother-to-child transmission of HIV, syphilis, and hepatitis. That is because many of these deaths are caused by treatable – but untreated – bacterial infections. To reverse this trend, the international community should ensure that all children – especially in the African countries where most of these deaths occur – can access antibiotics, much like the EPI has done for vaccines.

Infants are particularly susceptible to infections in the first 28 days of life. As a paediatrician, I saw this firsthand when I was younger, working in the neonatal ICU at the Chris Hani Baragwanath Hospital in Soweto. It is possible to ward off some kinds through infection prevention and control; access to water, sanitation, and hygiene; and vaccines. But for those that cannot be prevented, antibiotics are needed to avert further complications, such as sepsis, which affects up to three million newborns a year.

Unfortunately, most African countries lack access to existing and new antibiotics, putting already vulnerable babies at a much higher risk of dying from treatable infections. Shortages of generic versions can be attributed mainly to the steady exit of pharmaceutical companies from the antibiotic market in recent decades, owing to low returns. Similarly, new antibiotics are often sold in only the wealthiest countries or priced out of reach for most African governments and citizens.

For example, less than half of the new antibiotics approved between 1999 and 2014 were registered in more than 10 countries. Worse, only four of the 40 new antibiotics approved since 2000 are labelled for pediatric use. When drug development is driven primarily by profitability rather than public health needs, infants in poorer countries—one of the world’s most vulnerable populations—get the short end of the stick.

If clinicians cannot access the right first-line antibiotics or use them because of drug-resistant infection, they often turn to those that are specialised or kept in reserve as a last resort. These substitutes can be less effective, and reliance on them increases the risk of drug resistance developing, making infections more difficult to treat in the long term (although African countries are often priced out of these last-resort antibiotics, too).

As a result, children under five account for one in five deaths caused by drug-resistant infections, with 99.7pc of them living in low- and middle-income countries. At the same time, the failure to treat these infections in newborns is fueling the rise and spread of antimicrobial resistance (AMR), which is already associated with 4.7 million deaths annually.

No country can tackle this problem alone. Ensuring that all infants are protected from infection requires an EPI-scale global initiative to help developing countries build their capacity and surveillance, identify the necessary antibiotics, and bolster their health systems. Equally important, we should dramatically increase the availability of existing antibiotics and spur the development of new ones that are safe and effective for children. Both imperatives require prioritising public health over profit.

The United Nations High-Level Meeting on Antimicrobial Resistance recently produced a political declaration committing countries to reducing global AMR-associated deaths by 10pc a year until 2030. Donor governments can begin doing this – and saving the lives of newborns – by supporting organisations like the Global Antibiotic Research & Development Partnership, which is working to improve access to and encourage the development of antibiotics.

The WHO’s Pediatric Drug Optimisation exercises have made a shortlist of antibiotics that should be prioritised above all others for pediatric use. But, stakeholders, including the WHO, regulatory agencies, the pharmaceutical industry, non-profit developers, and pediatric experts, should collaborate to shepherd such treatments through development and approval. Preventing infant deaths from treatable infections would go a long way toward stopping the spread of AMR and safeguarding our future.

 

A Better Approach to Climate Finance

Posted on by Digital Editor

Two years behind schedule, in 2022 the world’s developed countries finally fulfilled their 2009 pledge to mobilise 100 billion dollars annually to support developing countries’ climate efforts. But now it is time to look beyond this milestone.

The clean-energy transition represents a profound macroeconomic issue, yet we continue to approach it as a microeconomic problem. Without a course correction, support for decarbonisation in developing countries is bound to falter. One reason for this is that most developing countries are near their external debt ceiling, limiting their ability to borrow. The ceiling is low because of the high interest rates they face and their insufficient export capacity, which is too weak to generate the foreign exchange required to service external debts.

The original rationale for climate finance was straightforward: climate change is driven by carbon dioxide emissions. Wealthy countries, home to only 16pc of the world’s population, are responsible for most of the CO2 released into the atmosphere since the Industrial Revolution. They still account for about 25pc of annual emissions. To avert climate catastrophe, we should achieve net-zero emissions, which requires the remaining 84pc of the global population to forgo the benefits of fossil-fuel use.

To make this shift more attractive, rich-country governments committed to providing developing economies with cheap financing as an incentive to decarbonise.

Now that the target has finally been met, can we truly say this promise has been fulfilled?

The answer depends on how we understand the cost of finance. A microeconomic perspective would examine each project individually, assessing its costs and benefits. If the benefits outweigh the costs, the project creates value. By contrast, a macroeconomic approach would consider the opportunity cost of countries using their limited borrowing capacity for climate-related projects instead of other development goals like economic growth, education, and healthcare. The more a country borrows for climate initiatives, the less flexibility it has to address other priorities – unless climate finance can somehow expand its borrowing capacity.

In theory, this should be possible. Climate finance could increase developing countries’ borrowing capacity by reducing the cost of debt or boosting exports, thereby saving or generating the foreign exchange needed to support a higher debt ceiling.

But neither of these options is currently on the table. Regrettably, the focus remains on the total amount of climate finance committed rather than the size of the subsidy component that – barring a boost in exports – could enable countries to secure additional financing without breaching their debt ceilings. In the absence of such subsidies, which private finance does not include, countries are left to pursue climate projects at the expense of other development goals.

Multilateral development banks (MDBs) illustrate this dynamic. While they increased their total annual financing, nearly all of the additional lending capacity has been directed toward climate finance, which reached a record-high 125 billion dollars in 2023, leaving other essential development needs unmet. Consequently, developing countries have been forced to shoulder the macroeconomic costs of decarbonisation on their own, despite the 2015 Paris Agreement’s assurances of meaningful burden-sharing.

Increased exports, on the other hand, could raise developing countries’ debt ceilings, making the climate effort far more beneficial. After all, carbon neutrality requires not only a commitment to reducing emissions but also access to the necessary tools for achieving that goal. This means scaling up global supply chains for clean-energy technologies such as solar panels, wind turbines, electric vehicles, and batteries, all of which rely on critical minerals.

Since transporting green energy is much more expensive than fossil fuels, it is more efficient to use it where it is produced. An effective global decarbonisation effort would thus seek to relocate energy-intensive industries to regions with ample, affordable, clean energy, a strategy known as “powersharing.”

To facilitate a more effective climate agreement, developing countries should play a much larger role in global mitigation efforts. There are two ways to achieve this.

The first is to enhance these countries’ ability to produce and export decarbonisation enablers and their components. The second is improving their green-energy infrastructure, encouraging major emitters to relocate to newly established green industry parks. Together, these steps could position developing countries as key suppliers in the clean-energy transition, fostering economic growth and sustainable development.

At Harvard’s Growth Lab, we have been studying green value chains to identify the most feasible and promising clean-energy products and components, tailored to each country’s existing capabilities. With the support of Azerbaijan’s government, the host of this year’s United Nations Climate Change Conference (COP29), we have created a green growth website called Greenplexity. Together with our Atlas of Economic Complexity, which now covers green products, this tool allows countries to chart their unique growth paths in a decarbonising global economy.

By harnessing the capabilities of developing countries, we can accelerate global decarbonisation while creating new growth opportunities. This approach would advance crucial climate goals and ensure that a larger share of the world’s population can enjoy the fruits of the clean-energy transition.

Beyond the Gates of Society’s Neglect

Posted on by Digital Editor

Returning to social media after a three-year hiatus, I anticipated updates from friends, snapshots of celebrations, and a dose of positivity. What I did not expect was a video that would grip me with despair and force a profound reflection on the state of humanity.

The video captured an elderly woman—possibly in her 80s—trying to buy a meal with a 10 Br note. Her frailty was heart-wrenching: sunken cheeks, hollow eyes, and the skeletal frame of someone long forgotten by society. Clutching a tattered plastic sack containing nothing of value, she approached a waiter at the gate of a restaurant, pleading for food.

His reaction was chillingly indifferent. He rejected her request with an air of disdain, denying not just her plea but her dignity. She turned away defeated, with her empty sack dragging behind her. For days, the image haunted me, sparking thoughts like if she found something to eat and if I could have done something.

The video was more than a personal tragedy—it was a mirror reflecting a society that has grown desensitized to suffering. Hunger is not a new issue, but what unsettles me is our collective apathy. How did we, as a community, lose our compassion?

It is particularly painful to see children and the elderly begging for food. These are the most vulnerable. Children, unable to fend for themselves, are victims of systemic failures. The elderly are left abandoned by systems and communities that should uphold their dignity. Their plight is compounded by age, poor health, and the absence of any safety net.

Kindness does not require wealth. A single meal or warm clothing can make a world of difference. I learned this from my late father, who instilled in me the joy of easing others’ suffering. Continuing his legacy of helping the needy has been both my source of comfort and a way to honour his memory.

Over the years, I have witnessed how small acts of generosity can transform lives. Among those I have supported financially, one has gone on to pursue a medical degree, turning his gratitude into action by treating the sick. Such stories are a testament to the ripple effects of compassion—it multiplies, changing lives in unexpected ways.

While individual efforts are powerful, systemic solutions are crucial to address the root causes of hunger and neglect. Ethiopia needs a robust social welfare system to protect its most vulnerable. Community food banks, mobile food units, and digital platforms connecting donors to those in need can all play a role. Surplus food from businesses and producers could be redirected to feed the hungry, creating a sustainable support network.

But systemic change requires more than logistics—it demands a cultural shift. Compassion must be cultivated, starting with education. Teaching empathy and modelling kindness can create a ripple effect, inspiring others to act.

Videos like the one I saw should do more than shock us; it should compel us to make a difference.

I have chosen to channel the sorrow evoked by that video into action—helping more than I ever have before. Imagine a country where no one begs for food, where children and elders are cherished, and where dignity is a given, not a privilege. This vision requires a collective effort, beginning with a simple question of what can I do today to help someone in need.

As the saying goes, “A society’s greatness is measured by how it treats its weakest members.” The hungry children, elderly, and marginalised are a call to action, a reminder of our shared humanity.

Hunger With Ambitions to End It

Posted on by Digital Editor

I was returning from dropping my son off at school when I saw a young mother huddled on a rough stone by the roadside. Her infant was strapped securely to her back, and though she did not shout or actively solicit, her eyes carried an unspoken cry for help.

The indifference of the crowd contrasted with her quiet desperation. People hurried past with their faces buried in phones or fixed ahead, consumed by their priorities. The rush-hour frenzy—work deadlines, school drop-offs, and endless appointments—formed a wall of oblivion, shielding passersby from her raw reality. I felt a pang of guilt, sharp and immediate. I wanted to offer something but had only my phone—a symbol of the cashless world we now inhabit.

I wonder how homeless people who are on the streets survive in a world increasingly reliant on digital transactions. Poverty in urban areas blends into the background, overshadowed by the fast-paced routines. The quiet struggles of those in need are easily overlooked, leaving a pressing question: how do we bridge the gap between modern convenience and meaningful assistance in a cashless, technology-driven world?

Is a future without begging possible?

My thoughts turned to the recent A World Without Hunger Summit hosted just a short distance away. Leaders and economists gathered in a lavishly catered conference, to discuss how to eradicate it by 2030. Yet, on the very streets outside its venue, hunger sat visible, embodied by this young mother clutching her child. The contrast was as stark as it was painful.

Of course, their discussion was contingent upon mobilising up to 3.98 trillion dollars. Yet here we are six years short, and the enormity of that goal feels crushing while the optimism of the summit clashes harshly with reality. It demands an immense financial commitment.

My thoughts turned to the world’s wealthiest individuals, whose fortunes surpass the GDPs of entire nations. If they contributed just five percent of their wealth to fund job creation, infrastructure development, and industries that empower communities, would it solve the problem or not? Unlike one-time donations or fleeting acts of charity, systemic investments could create long-term solutions, breaking the cycle of dependence and poverty.

The question of whether such monumental sums truly reach those in need is another issue. Corruption casts a long shadow over efforts like these, raising fears that aid intended for the hungry might instead enrich the unscrupulous. The barriers—economic inequality, inflation, conflict, and war—seem insurmountable, dragging millions deeper into poverty. This mother’s plight played out under the shadow of high-rise buildings and summit banners, is not an isolated story—it is a mirror reflecting the disparities that define our world.

Just as I was lost in these thoughts, an elderly woman appeared with two loaves of bread, offering them with quiet insistence. The young mother hesitated but finally accepted, her gratitude unspoken but palpable.

The scene was striking. The elderly woman was far from comfortable herself and shared her meagre sustenance. Meanwhile, cars continued to speed by, their occupants oblivious to the quiet drama unfolding, their wealth offering no solace to the desperate mother. The contrast was grand: those with the means to help remained detached, while someone who could have used help herself extended a hand of compassion.

In a city of sharp contrasts, where the glittering ambition of eradicating hunger exists alongside its grim reality, the generosity of a frail woman carrying sticks became a lesson in humanity. Perhaps the road to ending hunger begins not in boardrooms or at international summits, but with simple acts of kindness—one person at a time.

Initiatives to eradicate hunger constantly clash with the visible struggles of individuals in need. The staggering financial commitments required spotlight the difficulty of addressing systemic issues. It raises questions about the effectiveness of large-scale efforts in tackling localised poverty.

 

“It’s flying off the shelf.”

Posted on by Digital Editor

Brook Taye (PhD), CEO of Ethiopian Investment Holdings (EIH), described the initial public offering (IPO) of Ethio telecom, launched in October 2024. Offering 10pc of Ethio telecom’s shares to the public, the federal government intended to use it as a blueprint for future listings of state-owned enterprises on the newly established Ethiopian Securities Exchange (ESX).

20,000,000

Posted on by Digital Editor

The number of people in Ethiopia needing water, sanitation, and hygiene (WASH) services. Despite massive donor support and government focus on WASH improvements, national access to sanitation fell from an already low 11pc in 2020 to nine percent in 2023, reversing progress made over the years.

 

Ahadu Bank Finds a Footing, But Policy Cloud Path to Ambition

Posted on by Web Master

Ahadu Bank, one of the youngest financial institutions in the market, has made a noteworthy recovery from substantial losses during its founding years, posting a net profit of 90.9 million Br in the fiscal year 2023/24. The turnaround came after the Bank absorbed a hefty loss of 193.68 million Br the previous year.

For Sefialem Liben, the Bank’s president, the story is not so much about the amount of profit as it is about how it was achieved in the face of several policy changes. The National Bank of Ethiopia’s (NBE) lending cap “severely affected new entrants” like Ahadu, constraining their ability to expand loan portfolios. It compelled many in the industry to seek alternative strategies to generate income and control costs.

A strategic shift toward non-lending activities and stringent cost management fueled Ahadu Bank’s recovery. Initially, the Bank had focused on aggressive resource mobilisation and loan disbursement, advancing about 800 million Br in loans in the first two months of the fiscal year. The Central Bank’s sudden introduction of the credit growth cap forced a recalibration.

“We lobbied the regulators for special consideration while exploring new income streams,” said Board Chairperson Anteneh Sebsibie.

Ahadu’s net interest income constituted 65pc of its total income (similar to the industry’s average for the 10-year beginning in 2012), revealing reliance on interest-bearing activities as the primary revenue source. The Bank also doubled down on financial intermediation and non-financial services, doubling its total income to 1.1 billion Br. Interest on loans and advances, as well as other investments, soared to 371.64 million Br.

Commission and service charges jumped to 679.22 million Br, and gains on foreign exchange dealings surged to 89.06 million Br, a more than threefold increase from the previous year.

“The increase in all income items is very laudable,” said Abdulmenan  Mohammed (PhD), a London-based financial analyst.

The Bank doubled its total assets to 6.42 billion Br, with deposits surging by 129.5pc to 4.66 billion Br. Loans and advances increased by 90pc to 1.76 billion Br, although the loan-to-deposit ratio declined to 37.8pc from 45.6pc. The industry’s loan-to-deposit ratio stood at 83.7pc by 2022. While the average loan-to-asset ratio was around 66.2pc, Ahadu Bank’s posted 55pc.

Abdulmenan found the ratio “alarmingly low” and cautioned the Bank’s executives to do more to increase it substantially.

The President differed. He believes the ratio meets Ahadu’s policy and Central Bank’s requirements.

Expenses too rose sharply, climbing to over one billion Birr, a 150pc increase. Wage expenses increased by 153.3pc to 489.98 million Br, and other operating expenses went up by 140.7pc to 350.1 million Br. Net interest expenses account for 40pc of total expenses, demonstrating the costs associated with the Bank’s interest-bearing liabilities. Wages and administrative expenses represented 35pc of total expenses, revealing substantial operating costs related to staffing and administration.

“It’s understandable considering the formative stage of the Bank,” said Abdulmenan.

The Bank implemented a cost-optimisation strategy, suspending branch expansions.

“Our plan was much bigger,” said Sefialem.

Despite the slowdown, Ahadu Bank, nonetheless, opened 29 new branches, bringing its total to 104, where average deposit reaching 44.23 million Br, with profit per employee at approximately 202,312 Br.

One of these branches is on Africa Avenue (Bole neighbourhood), managed by Fikreyesus Temesgen. He attributed their success to a favourable location and strong teamwork.

“Serving mostly corporate and SME clients, we’ve excelled in deposit mobilisation, customer acquisition, and share sales,” he told Fortune. “Working on our initiatives and inclusivity is our plan for this year.”

The Bank’s earnings per share (EPS) climbed to 48 Br, a positive gesture for shareholders who had weathered the initial losses.

“The year represents a crucial milestone,” said founding shareholder Tsegaye Jifar, who plans to increase his shareholding. “It sets a foundation for future trust in the Bank’s capacity to generate sustainable profits.”

Tsegaye is pleased with the financial performance and customer service.

“Customer service is plausible as well,” he told Fortune.

Another founding shareholder, Alemayehu Argaw, voiced contentment with the Bank’s performance and hopes it will improve its digital services while positioning ATMs in strategic locations.

“I’m planning to buy more shares,” he said.

However, an accumulated loss of 144.26 million Br led to dividends being deferred for shareholders like Tsegaye and Alemayehu.

With over 30 years of experience in the financial industry, including stints at the Central Bank, Bank of Abyssinia, and the Development Bank of Ethiopia (DBE), Sefialem brought a wealth of expertise to his role. Armed with a postgraduate degree in management and business administration from Addis Abeba University, he is keen on steering Ahadu Bank toward growth.

Under Sefialem’s managment, who took over from founding president Eshetu Fantaye, Ahadu Bank targeted long-term sustainability.  Its cash and bank balances doubled to 2.05 billion Br, although these balances to total assets ratio slightly declined to 31.9pc from 32.8pc. According to Abdulmenan, the Bank should use its resource efficiency to generate more income.

Ahadu Bank began its journey three years ago boasting 503 million Br in paid-up capital, mobilised from 9,600 shareholders. It has increased from the previous year by 53.3pc to 1.03 billion Br. Non-distributable reserves of 998 million Br and a capital adequacy ratio of 56.7pc showed that the Bank had more than sufficient capital base.

“We’ve devised a strategy to increase capital and be competitive,” Sefialem told Fortune.

According to Sefialem, while the road to meeting the Central Bank’s capital threshold requirement is long, a merger is considered a last resort, contingent upon finding a company that shares the Bank’s vision.

Ahadu Bank operates near the lower end of the industry, as it contends with giants that boast far greater capital and market share. The state-owned Commercial Bank of Ethiopia (CBE), a behemoth in the industry, posted a net income of 21.06 billion Br, accounting for over 36pc of total net income of 58.37 billion Br. Leading private banks such as Awash and Dashen banks reported net incomes of 8.13 billion Br and 5.07 billion Br, respectively.

Mid-sized competitors further unveil the disparity.

The Cooperative Bank of Oromia (Coop Bank) and United Bank, with net incomes of 2.96 billion Br and 2.92 billion Br, respectively, operate on a scale that grants them extensive branch networks, robust deposit bases, and substantial market sway. Newer banks, such as Tsehay Bank, posted net incomes of 126.14 million Br.

Ahadu Bank’s net profit margin was 2.78pc; for every 100 Br in assets, the Bank generated approximately 2.78 Br in net profit, meeting the industry average. The analyst saw this as a modest return that signalled potential issues in asset utilisation and profitability. The asset-to-equity ratio of 6.12 (for every one Birr of equity, the Bank has 6.12 Br in assets) revealed a reliance on debt financing, which could pose risks if not managed prudently. The capital-to-asset ratio, the Bank’s assets financed by shareholders’ equity, a crucial metric for assessing financial stability and the capacity to absorb potential losses, was 16.34pc, three percentage points higher than the industry’s average for the decade.

The Bank has allocated two percent of its total loans as provisions for bad loans, demonstrating a cautious approach to potential credit losses, given the competitive pressures and economic volatility.

There are signs of growth. Year-over-year increases in vital financial indicators show positive trends: total assets increased by 15pc, total loans grew by 12pc, total deposits rose by 18pc, and profit before tax experienced a noteworthy increase of 25pc. According to an analyst, these figures showed that Ahadu Bank is expanding.

 

 

Dashen Bucks the Trend as Forex Market Tightens Grip on the Birr

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Over the past week, the Brewed Buck has been under intensifying pressure, revealing cracks in the foreign exchange market. Banks were seen adopting varied tactics to respond to the scarcity of dollars, with Dashen Bank emerging as a notable outlier in its aggressive pricing strategies.

In the six days beginning November 18, the Birr continued its downward trajectory against the U.S. Dollar. The average buying rate was 121.61 Br a dollar, while the selling rate averaged 124.16 Br, maintaining a spread of approximately 2.05pc. The consistent spread across most banks demonstrated the National Bank of Ethiopia’s (NBE) firm grip on forex transaction margins, limiting volatility in an already constrained market.

However, beneath this surface stability, noteworthy variations emerged among individual banks. The state-owned Commercial Bank of Ethiopia (CBE) consistently posted the lowest buying rate of 119.2 Br a dollar throughout the week. Its conservative stance likely comes from CBE’s executives’ desire to prioritise stable foreign exchange flows over short-term profitability, aligning with teh Central Bank’s objectives to maintain market equilibrium.

Dashen Bank adopted an aggressive approach. It offered the highest buying rates, surpassing 123 Br a dollar on multiple occasions. On November 23, Dashen’s selling rate peaked at 127.2114 Br a dollar, much higher than its competitors. The bold strategy could show Dashen’s keenness to optimise foreign currency inflows where the forex supply has been constrained, possibly responding to heightened demand pressures within its client base.

Other banks, such as Wegagen, Abyssinia, and Awash, also posted higher rates near the market’s upper end but maintained steadier trajectories. Their more cautious strategies exhibited a balanced approach to market shifts, avoiding the extremes of Dashen’s pricing.

Adding to the market’s complexity, the National Bank of Ethiopia (NBE) displayed unusual fluctuations in its own rates.

On November 18, the Central Bank’s posted spread aligned with the industry average at 2.05pc. However, it dropped sharply to 0.77pc on November 19 before climbing back to 1.62pc by November 23. The irregularity may signal the Central Bank’s efforts to influence market behaviour or to test the elasticity of forex demand. It could also be about policy adjustments under pressure to manage the widening gap between official and parallel market rates.

The divergence in banks’ strategies and the Central Bank’s rate fluctuations expose underlying tensions in the forex regime. The enduring pressure on the Brewed Buck stems from structural challenges within the macroeconomic framework. A liquidity crunch, compounded by a widening trade deficit and limited external inflows, has intensified competition among banks for scarce forex holdings. The consistent depreciation of the Birr also signals deepening structural macroeconomic imbalances, calling for broader reforms to stabilise the foreign exchange market.

Last week’s trends could be a manifestation of these constraints, with banks like Dashen willing to test the boundaries of regulatory constraints to secure liquidity.

As the Birr’s erosion became more pronounced in the latter half of the week, concerns over forex supply intensified. Banks will likely continue competing aggressively for available liquidity unless underlying macroeconomic issues are addressed.

Mercato’s Taxing Transformation Tests Tax Authorities

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Business owners in Mercato, the largest open market, were left stunned by a sudden gridlock following a consequential decision by authorities to tighten tax administration in the economic hub. The move has exacerbated an already fragile business climate in the capital. Last week, many closed their shops for a few days in protest. Some, fearing potential confrontations with authorities, discreetly moved their merchandise under the cover of night.

A 38-year-old retailer sat in quiet unease in front of his shop around the Military Tera area, a hub for selling tailored garments. He expressed a deep sense of uncertainty casting a wary eye over his modest inventory priced between 100 Br to 300 Br.

“I’m hesitant to engage in any sales,” he said.

The retailer claims that authorities have threatened his business, accusing him of non-compliance. His distress intensified after receiving a letter from Derara Chala, head of law enforcement at a district’s tax bureau. The letter warned of a 100,000 Br fine and legal action for selling goods without issuing receipts, confirmed through investigations. He lamented the recent enforcement of strict receipt requirements, which he says have become a source of harassment. Officials, he claims, demand receipts even for decade-old inventory.

“They didn’t even treat us like human beings,” he said, referring to his interactions with tax authorities.

In response to the demands, the retailer joined a wave of merchants who closed their shops in protest, hoping to signal their frustration and stress to the authorities. The issue, many traders argue, stems from systemic non-compliance within the supply chain, where wholesalers and importers usually fail to issue receipts.

Mercato has been reeling from a series of setbacks, including two major fires in as many months. Shops in prominent areas like Shema Tera and Sidamo Tera were eerily quiet following the crackdown, with closed shops and idle porters reflecting the uncertainty hanging over the area.

The Addis Ketema District Revenue Bureau penalised 126 traders for operating without receipts during the crackdown.

Party Nigussie, a deputy director at a Mercato tax bureau, defended the enforcement measures. He argued that the initiative to formalise sales and bring traders into the tax system had been preceded by months of discussions with importers, manufacturers, and retailers.

“It didn’t happen overnight; enough time was given,” he told Fortune.

Overseeing 13,000 traders, 19 manufacturers, and 531 importers, his bureau plans to double tax revenues this year, targeting 2.3 billion Br. He confirmed widespread business closures, noting that over 10 out of 34 commercial buildings in his jurisdiction had completely closed shops for two days.

“It seems they wanted to continue with their illegal activities,” he said.

Traders, however, claim the enforcement was abrupt and poorly communicated.

Authorities categorize their actions as part of a broader plan to reform trading practices in Mercato. Mayor Adanech Abebie noted the market’s economic value while acknowledging its role in promoting tax evasion. Speaking before the City Council at the Adwa Victory Memorial Museum, she described the problems in Mercato as deeply entrenched.

“The issues are more complex than they appear,” she said.

Adanech accentuated the broader societal benefits of improved tax collection, including investments in infrastructure and housing. She reiterated that taxes are meant to benefit society, underlining that stricter enforcement would strengthen the system and expand the tax base.

“There will be no mercy for those who break the law,” she warned.

Retailers argue that their non-compliance stems from the reluctance of manufacturers and wholesalers to issue receipts. Some manufacturers agree while others fiercely contest the practice. A finance manager of a foam manufacturer operating five outlets, supports receipt enforcement, citing unfair competition from businesses that bypass regulations. He criticised the burdensome tax environment and accused authorities of creating difficulties for compliant taxpayers while letting the others operate unchecked.

One top management of a prominent sanitary products manufacturer notes that no supply has been sold to retailers without a receipt, and manufacturers have been feeling the weight of unsold supplies.

Officials at the Addis Abeba Revenue Bureau outlined sweeping plans to tackle under-invoicing and contraband trading. Sewnet Ayalew, head of communications, noted that while receipt requirements have existed for two decades, lax enforcement has allowed such malpractices to flourish.

“We are simply enforcing the existing law,” he said.

Establishing an efficient system that focuses on the full supply chain is raised as a point by economists.

Tewodros Mekonnen (PhD), a macro-economist, advocates for a more inclusive tax system to ensure transparency and fairness. He argues for a progressive tax system and addressing tax evasion at the source, by ensuring compliance among importers and manufacturers before focusing on retailers.

“While under-invoicing has long persisted, over-invoicing is becoming an emerging concern, facilitating capital flight,” he told Fortune.

He believes that robust penalty systems should be kept in place for non-compliance and evasion, similar to the practices in other countries. He also warned authorities to consider the cost-benefit analysis of enforcement, as the cost of investigation may outweigh the potential tax revenue.

The city aims to collect 230 billion Br in domestic taxes this fiscal year, with 47 billion Br raised in the past three months. Officials anticipate substantial contributions from Mercato, which has historically been poorly regulated.

The rise in over- and under-invoicing is attributed to a relaxation of customs regulations over the past five years, according to Tewodros Kebede, a senior tax assessor with over two decades of experience at Dragon Logistics Plc. He contends that the discontinuation of a valuation company’s role, coupled with the subsequent assumption of this responsibility by customs authorities, has led to a less rigorous tax assessment process.

“The absence of robust data sharing between customs authorities and banks is a major factor contributing to oversight in import valuations,” he said.

Ethiopian Customs Commission officials concur. A senior official in the IT department disclosed that they are developing systems to integrate services between banks, customs bureaus and the central bank.

Ethiopia’s tax-to-GDP ratio has plummeted from 13.2pc to less than seven percent over the past decade, accentuating the need for systemic reforms. The government plans to boost revenue collection to 1.5 trillion Br in the fiscal year, with the tax-to-GDP ratio targeted to reach 10.2pc by 2028.

A recent IMF report noted Ethiopia’s urgent need to strengthen its tax system to fund public services and infrastructure adequately. This year’s tax collection target has risen to 851 billion Br, with 487.22 billion Br expected from domestic sources, including 170 billion Br from VAT collections.

To achieve this goal, authorities say they are implementing a series of tax reforms and have established the National Medium-term Revenue Strategy (NMTRS), which incorporates key program-supported revenue mobilisation reforms, including VAT, excise, corporate taxes, presumptive income taxes, and property taxes.

They are introducing a new QR code system on VAT receipts with hopes of combating tax evasion and market distortions caused by illicit receipts. Yared Fekade, director of the tax declaration monitoring directorate, noted that selected printing companies will be the sole providers of QR-coded receipts. He places the initiative as part of the efforts to curb illicit activities throughout the supply chain, from importers to traders.

Tax experts stress that effective administration requires operational efficiency, consistent enforcement, and disciplined oversight. Tadesse Lencho (PhD), a tax expert, pointed out that Mercato has long been a symbol of tax non-compliance.

“Big Brother is watching now,” he said, warning that inconsistent enforcement nurtures tax evasion and unfair competition.

He recommends training tax administrators, improving operational capacity, and combating corruption, calling for understanding taxpayers’ motivations while implementing strict enforcement measures.