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Month: January 2025

Closing the AI Skills Gap in 2025

Posted on by Digital Editor

With artificial intelligence (AI) poised to reshape industries worldwide, a paradox is emerging. Despite growing demand for people with the knowledge to leverage the technology’s potential, AI-related skills remain in short supply.

The scarcity of AI-related skills – from proficiency in machine learning, prompt engineering, and data science to understanding AI’s ethical implications – is becoming a major obstacle to deploying the technology effectively. In one recent report, 47pc of executives say their employees lack the necessary skills. This will affect companies’ ability to move AI projects from conception to implementation. A 2023 report from the World Economic Forum finds that “six in 10 workers will require training before 2027, but only half of workers are seen to have access to adequate training opportunities today.”

This skills gap bodes ill not only for individual career growth but also for economic growth more broadly.

Capitalizing on the opportunities that AI presents will require updated approaches to education and training. In the coming year, educational and vocational institutions will likely place a much greater emphasis on teaching AI ethics skills, offering flexible lifelong learning, and infusing AI into their offerings to be more competitive.

AI ethics skills will become a core concern – and for good reason. In the space of a few years, generative AI has become available to anyone with a computer and an internet connection. For employers and their information technology (IT) departments, this raises the problem of “shadow AI,” or unsanctioned use of generative AI by employees, which could expose companies to a wide range of security, compliance, and reputational risks. In addition, the workforce will need AI ethics skills to manage new AI agents, like tools that can automate complex tasks that would otherwise require human resources.

Shadow and agentic AI both demand new guardrails to help users protect AI applications based on responsible AI practices. Education providers will begin to emphasise training on the fundamentals of AI explainability, fairness, robustness, transparency, and privacy. Without a basic understanding of how AI models generate their output, for example, those responsible for protecting data or controlling autonomous systems will be ill-equipped for the task.

With AI and other new technologies evolving rapidly, lifelong learning will become the new normal. The process can be divided into developing skills that meet immediate needs, anticipate future needs, and furnish always-in-demand expertise.

Many traditional roles within an organisation will soon change. Some employees who currently work independently (who do not manage other people) may join new types of teams in which humans manage AI agents. And, to prepare them for this fundamental change, demand for online courses and digital credentials in AI-related fields like natural language processing and machine learning will likely increase. The future use of quantum computing will continue to drive the need for new skills. And, the steady rise in the number and variety of cyberattacks – such as “harvest now and decrypt later” (HNDL) hacks – emphasises the importance of up-to-date cybersecurity skills.

Our organisation is working with community colleges across four American states to offer a new cybersecurity certificate that will prepare students for in-demand roles across the workforce. Similarly, our collaborations with Singapore Polytechnic and historically black colleges and universities (HBCUs) in the US provide young learners with free AI training. And while this process may begin in the classroom, we can also expect to see more opportunities for upskilling as the relevant technologies evolve.

For anyone who wants to stay competitive in the job market, lifelong learning has become indispensable.

AI and automation technologies can make existing education platforms far more effective, as we are likely to see in 2025. AI-powered solutions have reached a tipping point from being a nice-to-have to a must-have. Educators, whether in schools or other organisations, will find new ways to apply AI-powered tools to personalise and tailor learning experiences, understand students’ needs and match them with relevant courses, or enhance coaching and feedback.

The same technologies can also enhance customer service aspects of education. At IBM, we have already seen the benefits of using AI to analyze feedback from more than 60,000 learners in 47 languages. This led us to simplify online registration and other parts of the process. In the coming years, education systems and platforms will also benefit from multimodal AI models that can process audio, video, charts, and images to provide an even more effective, individualised learning experience.

By embracing AI, we can enhance learning and professional outcomes, improve operational efficiency, and reduce costs across the economy. But all of that will require developing the skilled workforce we need.

A Journey Down Memory Lane, Alumni Reunion

Posted on by Digital Editor

When a couple of old elementary school friends started chatting on WhatsApp, I was curious but unsure what they were planning. Soon, they created a group named after our elementary school and graduation year. It was clear they were organising a reunion for the class of 1990,  the year before the regime we had known since birth was overthrown. Their ambition intrigued me, though I doubted their chances of success.

Initially, the group was small, with about six friends who had stayed in touch over the years. We struggled to remember the names of everyone in our graduating class of 48. One of the group’s founders suggested creating a roster, and we began listing names we could recall. Slowly, the list grew, but we were still about a dozen names short.

Then, a newly joined classmate shared an old group photo of us lined up before school. The image jogged our memories, helping us recall more faces and names. Photos are powerful triggers for memory. As the group expanded to about ten members, a friend from the UK joined, sparking excitement. Soon after, a few classmates from the US joined and brought even more energy, sharing contacts of others living abroad. Before we knew it, the group swelled to around 30 members.

Interestingly, the roster had grown beyond the original 48 names, reaching about 60. This was because many classmates had left before graduation for various reasons.

At this point, someone suggested sharing current photos to help us match faces with names. Gradually, photos trickled in, igniting waves of nostalgia. We greeted each other like we were meeting anew. Some struggled to recognise faces, partly because not everyone had been in the same class year. For example, those who joined later years had not shared time with those who left earlier. Others simply were not good with names or faces.

Joyful stories began to circulate in the group. Some recounted a Christmas drama performed during our final year, sharing laughs about comical incidents from rehearsals and the performance. One friend recalled the narration of books during idle moments, while another mentioned newspaper readings designed to encourage learning habits. Meanwhile, more classmates joined the group, and the collection of photos grew steadily.

That is when I had an idea. I remembered the Photo Mixer app I had downloaded from the Play Store. I often used it to surprise friends and family by creating commemorative images for holidays, birthdays, anniversaries, and other special occasions. With the growing cache of images shared in the group, I decided to use the app to create something special for the reunion.

When I shared the image file with the group, the response was overwhelmingly positive and filled with delight.

As new members joined and shared their photos, I updated the collage, incorporating their images and sharing the revised file. The process became an exciting experience, not because of any artistic skill, but because it reflected our shared love and passion for the memories we had built together.

As the chats continued, it became challenging to keep up individually, with participants joining from distant time zones, including Seattle. People hopped in and out of conversations during their preferred times, keeping the cherished memories alive. Some mentioned stopping their cars to respond, while others contributed during kitchen chores. Despite differences in location, lifestyle, and livelihoods, the enthusiasm and warmth only grew stronger with time.

Suggestions emerged for a Zoom meeting to connect virtually, while others proposed an in-person reunion, an idea complicated by the physical distances, as everyone was scattered across continents. Amid the excitement, some paused to commemorate beloved teachers and classmates who were no longer with us. One friend lost their life to a long battle with hypertension and stroke. Another was a casualty of the Ethio-Eritrean war, and yet another perished in a plane crash while working as an airline stewardess. For many in the group, these losses were news, even though they occurred decades ago, showing how detached we had been from one another over the past three and a half decades since graduation.

At the time of our separation, most of us were thirteen, unable to imagine our paths crossing again after so long. It was remarkable that, despite the years apart, an online social media platform could bring us together in just a few days. Without digital technology, such a reunion, connecting people in Addis Abeba and across the far corners of the world, would have been impossible.

The virtual reunion felt like a portal to an era of innocence, trust, friendship, and companionship. Almost immediately, it was clear that none of us had experienced the same pure love, care, and faith in others as we had during our time together before going our separate ways. Reconnecting with my childhood friends felt like rediscovering the best version of myself.

It is still early to predict what will come next, but one thing is certain: the outcome will be positive, thanks to the group’s shared experiences, collective goodwill, and common values. Even without any grand future plans, this reunion has been energising and fulfilling. Reconnecting with priceless old friends, once buried in the subconscious, has been a journey down memory lane like no other.

I found the reunion of old friends a perfect opportunity to reflect on and redefine life’s purpose and reset priorities.

Tariffs Protectionism’s False Promises

Posted on by Digital Editor

The world economy awaits with dread the arrival of Donald Trump’s trade tariffs. Trump clearly loves import duties and has promised to raise them for goods from China, Europe, Mexico, and even Canada. How much havoc this will wreak depends not just on the tariffs’ scope and magnitude, but also on the purpose to which they are put.

Economists dislike tariffs for a variety of reasons. Like all barriers to market exchanges, they create inefficiency. They prevent selling something of value more than they have, leaving buyers and sellers worse off in principle. Economic theory does recognise that this inefficiency can be offset by gains elsewhere. For example, tariffs can do some good in the presence of infant industries, knowledge spillovers, monopoly power, or national security concerns.

Even then, economists will argue that tariffs are a very blunt instrument. After all, an import tariff is a specific combination of two different policies: a tax on the consumption of the imported good and a production subsidy for its domestic supply, at equal rates. Any economic or non-economic objective can be met more effectively by deploying these policies separately and at customised rates, targeting them at desired outcomes more directly. To economists, tariffs are a pistol aimed at one’s own foot.

Trump’s view could not be more different. In his imagination, tariffs are like a Swiss Army knife, a tool that can simultaneously fix America’s trade deficit, enhance its competitiveness, foster domestic investment and innovation, shore up the middle class, and create jobs at home.

This view is almost certainly fanciful. Tariffs will have highly uneven effects on US manufacturing, benefiting some while hurting those that depend on imported inputs or foreign markets. Even where they boost profits, there is no guarantee this will lead to more investment in new technologies or job creation. Corporations that get richer can choose to distribute the proceeds to their managers and shareholders instead of increasing productive capacity.

If Trump insists on his view, the good news, for the rest of the world at least, is that the economic costs will be borne mainly by Americans. That is another key insight from economics: just as the benefits of opening up to international trade accrue mostly at home, so do the costs inflicted by protectionism. Hence it would be a tragic mistake for other countries to overreact and retaliate with their own tariffs. There is no reason for them to replicate Trump’s error and raise the risk of an escalating trade war.

Trump could, of course, adopt a more limited approach. He has often made a narrower case for tariffs, as a weapon to extract concessions from trade partners. Importantly, this implicit rejection of across-the-board tariffs also seems to reflect the view of his nominee for Treasury Secretary, Scott Bessent. Before the election, for example, Trump threatened Mexico and Canada with 25pc tariffs if they failed to “secure their borders.” In principle, such threats do not need to be carried out if other countries comply with Trump’s demands.

But, it is unclear whether using such threats to change others’ behaviour will be effective.

China, India, and other large countries are unlikely to be swayed by them, given the risks of appearing weak. In any case, tariffs are a poor threat regardless of whether one views them as a faulty pistol or a Swiss Army knife. In the conventional view, because tariffs are harmful to the domestic economy, they lack credibility as punishment for others. On the alternative Trumpian view, tariffs are inherently desirable, which means they are likely to be used regardless of what trade partners do.

A fourth, more realistic conception of tariffs has been effective in some key instances. Advocates of this perspective view tariffs as a shield behind which other, mainly domestic policies, can work more effectively. Traditionally, trade laws have allowed countries to use tariffs to protect vulnerable sectors or regions under specific conditions, effectively supplementing domestic social policy.

An even more significant example is infant-industry protection, which has worked best when it exists alongside other instruments to incentivise domestic firms to innovate and upgrade. Some notable cases include the late-19th-century United States, post-1960s South Korea and Taiwan, and post-1990s China. In each of these cases, industrial policies went far beyond trade protection, and it is unlikely that tariff barriers on their own would have produced the gains each of these economies experienced.

Similarly, green policies often require some trade barriers to make them economically and politically viable, as in the case of the European Union’s (EU) carbon tariffs and the local-content requirements of the US Inflation Reduction Act. In all these cases, tariffs play a supporting role for other policies that serve a broader purpose, and can be a small price to pay for the larger benefit.

Unfortunately, Trump has not offered a domestic agenda of renewal and economic reconstruction in any of these areas, and his tariffs will likely stand – and fail – on their own. When tariffs are moderate and are used to complement a domestic investment agenda, they need not cause much harm; they can even be useful. When they are indiscriminate and are not supported by purposeful policies at home, they do considerable damage, and more so at home than for trade partners.

Impact Investing Bridges Ethiopia’s Poverty Gap, Profit Divide

Posted on by Digital Editor

Impact investment appears to have gained traction in Ethiopia as a strategy, addressing the country’s social and environmental issues while pursuing financial returns. In a place where poverty, food insecurity, and climate vulnerability remain urgent, this hybrid approach presents a path for delivering economic growth and lasting societal benefits. By channelling capital toward ventures seeking to improve healthcare access, boost agricultural productivity, advance education, and develop renewable energy projects, impact investors hope to spur change beyond a mere balance sheet.

Observers say such efforts depend on collaboration among non-governmental organisations, banks, development financial institutions (DFIs), and the nascent capital market, all of which are critical in guiding Ethiopia toward sustainable growth.

Impact investment, broadly defined, directs money into projects intended to generate measurable positive outcomes for local communities and the environment. It offers investors a viable financial return. It is not philanthropy, though it shares some of the same ethos; it is an investment strategy that seeks to address dire problems through market-based solutions.

With its rising population and persistent development gaps, Ethiopia could become an ideal testing ground for this model. Many communities lack essential healthcare and modern agricultural tools, while educational resources remain scarce in remote regions. Supporters of impact investment argue that the country’s ability to leapfrog in specific sectors, such as mobile technology and renewable energy, creates favourable conditions for private capital to achieve results that traditional aid or conventional investments might not deliver on their own.

Among the most influential players in this new wave are non-governmental organisations (NGOs). Because they are present on the ground, NGOs possess insights into local needs that are often inaccessible to outside investors. NGOs connect farmers to resources that improve yields, organise basic financial literacy classes, and partner with health clinics to distribute essential services. Their work identifying and articulating community-level problems helps ensure that investments reach initiatives with the most potential impact.

These organisations also focus on capacity building, offering training in project management or sustainable farming techniques to help local groups effectively use incoming funds. By acting as intermediaries between investors and local initiatives, NGOs help businesses, healthcare providers, and community leaders acquire the skills necessary to manage funds efficiently. That role is especially vital in a country where many enterprises have not encountered large-scale investment and should learn financial reporting, corporate governance, and risk management from the ground up.

Banks, meanwhile, are beginning to recognise the promise of impact ventures. Some have introduced specialised loan products or credit lines catering to businesses pursuing social or environmental objectives. These may be agricultural cooperatives devising drought-resistant seeds, solar energy providers installing off-grid power in rural communities, or private clinics offering affordable care in underserved districts.

The rationale for banks is partly aligned with profit; by supporting these ventures, they cultivate new customers and local economic ecosystems that eventually translate into broader business opportunities. Yet, there is also an incentive to safeguard investments, which has prompted the development of innovative financing structures. Banks, for instance, may mix grants and loans or incorporate guarantees to reduce risk, appealing to investors who might otherwise be reluctant to enter uncharted territory. These arrangements expand financial inclusion and help marginalised groups access credit they might not get through traditional banking channels.

Development financial institutions, specialised financiers focused on emerging markets, likewise serve as a linchpin.

DFIs often venture where commercial investors fear to tread, seeding projects that have the potential to catalyse follow-on capital from private firms. By providing services ranging from early-stage financing to long-term loans, DFIs can be patient in a way that profit-driven investors usually are not. They allow worthy ideas time to grow even if returns materialise later. Technical assistance is central to their value proposition.

DFIs can fund feasibility studies, support market research, or train local staff, making ventures more attractive to mainstream capital providers. In essence, DFIs try to unlock possibilities with strong social or environmental upside that might not fit neatly into the mandate of regular commercial banks. Because they are structured to promote sustainable practices, many DFIs focus resources on areas such as renewable energy projects that displace fossil fuels, agricultural innovations that ease food insecurity, and medical services that address otherwise neglected communities.

The emerging capital market adds further momentum, which government officials and private actors hope will broaden opportunities for entrepreneurs and impact-driven ventures. While still at an early stage, developing vibrant capital or bond markets holds the promise of greater transparency, potentially boosting both domestic and international investors’ confidence. By offering mechanisms to issue green bonds, social impact bonds, or other specialised financial instruments, capital markets can help match investors who value mission-driven ventures with enterprises eager for capital.

Expanding these markets could, in turn, facilitate a shift away from short-term speculation toward longer-horizon investment strategies. That cultural shift may prove essential in a country where infrastructure projects, healthcare expansion, and agricultural transformations can take years to deliver a visible payoff.

Sceptics argue that impact investment might sometimes blur the line between profit-driven initiatives and philanthropic efforts or that it risks prioritising returns at the expense of genuine social progress. Proponents respond that clear metrics and accountability structures serve as guardrails, ensuring that projects deliver the positive impacts they promise. By measuring health outcomes, farm yields, school enrollments, or emissions reductions, investors gain a window into what their money accomplishes beyond dividends or interest payments.

In Ethiopia, where official statistics often lag real-time realities, that kind of granular assessment can prove vital for course corrections and policy decisions alike.

Can Building Public Tech Infrastructure Turn to Dystopian Dangers?

Posted on by Digital Editor

In recent years, the concept of Digital Public Infrastructure (DPI) has gained considerable attention from the international community, including the United Nations and the G20, as a new policy paradigm for development. But, understanding the risks of DPI is crucial to ensuring that its potential benefits materialise.

The risks stem from the fact that “digital public infrastructure” lacks a clear definition.

The term encompasses the many digital technologies that serve as economic and social infrastructure, from digital identification and payment systems to data exchanges and health services. As a policy initiative, though, DPI refers to a vague vision of using these technologies to serve the public interest. This could result in the internet and technological innovation working for everyone, or only as easily turn them into tools for political control.

In discussions about DPI, policymakers often point to cases that highlight how technology and connectivity can spur development. They frequently cite India’s Unified Payment Interface, which has expanded financial inclusion and reduced the costs of digital transactions for its hundreds of millions of users.

It is also understood that such infrastructure is to be built with Digital Public Goods (DPGs), a concept that encompasses open-source software, open standards, and other non-proprietary components. This definition is partly intended to position DPIs as being “for the public” but also to enhance competition and mitigate concentrations of power in the global digital economy.

Proponents point out that DPI could bolster international cooperation, particularly as the 20-year review of the World Summit on the Information Society (WSIS) approaches. This important UN initiative has provided the framework for countries to collaborate on digital development. Although authoritarian states have previously sought to assert greater control over the internet’s governance during these negotiations, a focus on promoting DPI could avoid this politicised debate and instead promote a constructive agenda to bridge digital divides.

But, basing policy on such an ill-defined concept poses risks. Ideally, governments would convene other stakeholders to create an enabling environment for DPI and safeguard users’ rights and interests. It is easy to imagine, however, that some governments will place their own interests above civil liberties and fundamental rights, using this infrastructure for surveillance and targeting in the name of law enforcement or national security. An especially pernicious example could involve the monitoring and regulation of individual behaviour through dystopian social-credit systems.

While many proponents hope that DPI could chip away at Big Tech’s outsize power, it has also been associated with narratives of digital sovereignty that could contribute to the internet’s fragmentation, a systemic threat to global communications. For example, one can imagine scenarios in which some governments challenge the multi-stakeholder model for governing global internet resources like IP addresses and domain names on the grounds that they constitute DPIs.

In fact, we recently witnessed something similar in the European Union (EU) when it proposed an amendment to the Electronic Identification, Authentication, & Trust Services (eIDAS) regulation that would have empowered governments to mandate the recognition of digital certificates that did not adhere to stringent industry standards. This risked undermining the global governance model for browser security and could have allowed European governments to surveil communications within and beyond their borders.

The policy vision of DPI will continue to evolve, and ongoing discussions, it is hoped, will help identify and clarify further opportunities and risks. Initiatives such as the UN’s Universal DPI Safeguards Framework, which seeks to establish guardrails for DPI, are a promising start. But much more must be done. For example, the UN’s framework has recognised the need for continuous learning to ensure that the right safeguards are in place.

As the concept of DPI gains traction in the UN system and other multilateral organisations, vigorous and informed debate about its potential advantages – and pitfalls – will be essential. With clear-cut policy guidelines and protections, we can help prevent these technologies from becoming tools for surveillance and repression, ensure that everyone benefits from the burgeoning digital economy, and keep the internet open, globally connected, and secure.

Subsistence Is Not Enough

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In 1990, more than one-third of the global population lived below the World Bank’s extreme poverty line (2.15 dollars a day). Since then, the share has fallen below 10pc, a remarkable and inspiring achievement. But barely scraping by falls far short of what impoverished people aspire to.

To this end, the McKinsey Global Institute (MGI) has introduced the concept of an “empowerment line.” Building on the work of development economists, this threshold represents the income required to access essentials like food, shelter, healthcare, education, water, transportation, and energy while also saving enough to weather unexpected emergencies.

Income is vital for economic empowerment, but affordability is equally important. While the income required to meet basic needs varies by country, the global benchmark is 12 dollars per person per day in purchasing power parity terms. Despite decades of progress, roughly 80pc of people in low-income economies, and 50pc in middle-income countries, still fall below this threshold. Even in the world’s most developed countries, 20pc of the population remains economically disempowered.

One reason for this persistent empowerment gap is that rising GDP per capita does not always translate into widespread economic benefits. The cost of essentials, such as housing in high-income countries and food in lower-income countries, often rises faster than wages, effectively “crowding out” income gains and eroding living standards.

Lowering the cost of critical goods and services could play a crucial role in promoting inclusive development. MGI estimates that reducing prices in high-cost countries to match those of more affordable peers at similar income levels could lift around 230 million people – 2.8pc of the global population – above the empowerment line. In countries with per capita incomes between 2,500 dollars and 5,000 dollars, for example, food costs often vary widely, with some households paying more than twice as much as others for necessities.

Narrowing these gaps would not only alleviate financial pressures but also enable millions of families to achieve lasting economic security.

Efficient markets help keep prices in check, while inefficiencies drive up costs and limit access to essential goods and services. A recent MGI report shows the need for governments to improve affordability and emphasises the effectiveness of fostering competition, domestically and globally, through regulations and trade policies.

The private sector, which employs the vast majority of the global workforce, is also well-positioned to support economic empowerment, and there are three compelling reasons why companies should.

For starters, the private sector is already driving economic empowerment by creating quality jobs and delivering goods and services. According to MGI, US businesses channel four trillion dollars annually toward empowering employees, suppliers, and communities, while their European counterparts contribute 2.1 trillion dollars. At this scale, even minor improvements could generate substantial benefits. Businesses face increasing pressure to consider their social impact alongside financial performance.

Research shows that addressing the broader effects of their activities can help companies enhance employee satisfaction, improve customer loyalty, and boost productivity.

Lastly, an empowerment-oriented approach can reveal new market opportunities. While few mobile providers entered sub-Saharan Africa or South Asia with the goal of empowering local communities, their success at linking small farmers to global markets and accelerating financial inclusion has accomplished that. A similar trend is playing out in the retail sector, where discount grocery stores’ low-cost business model has made food more affordable for millions of people around the world.

To understand how businesses can promote empowerment, MGI analyzed initiatives launched by 100 large companies from a range of industries worldwide. These efforts include subsidised healthcare, in-house training programs to help employees advance to higher-paying roles, and philanthropic activities like donations to food banks and disaster relief. A growing number of companies have also pledged to pay their employees a living wage, with some requiring their suppliers to do the same.

But, determining the most effective approach remains a considerable challenge. While marginal abatement cost curves are a widely accepted tool for assessing the cost efficiency of efforts to reduce greenhouse gas emissions, there is no comparable framework for evaluating the impact of social initiatives. To fill this gap, MGI has developed an “empowerment impact” metric, which measures the benefits of such programs relative to their costs. A ratio of 1.0 means that each dollar spent delivers a dollar in benefits to households below the empowerment threshold, while a lower ratio reflects greater cost efficiency.

Using this metric, companies can better design and implement social programs. For example, MGI estimates that if US corporations and foundations improved the cost efficiency of their charitable giving – totalling 140 billion dollars annually – by just 10pc, they could lift an additional five million people above the economic empowerment threshold.

Companies could leverage their expertise to identify the groups most at risk of falling below the empowerment line, tailoring solutions to address specific challenges, such as housing shortages in Germany, high food prices in Vietnam and China, and rising healthcare costs in the US. Recognising these local contexts could help companies develop initiatives that play to their core strengths. For example, a pharmaceutical company might focus on expanding access to life-saving drugs, while a bank could invest in affordable housing projects.

To be sure, economic growth is the single most powerful driver of poverty reduction, particularly in low- and middle-income countries. But growth alone is not enough. Achieving meaningful progress requires widely shared benefits, supported by robust social provisions and improved affordability. Without these foundations, economic empowerment will remain elusive, preventing millions of people from reaching their full potential.

Pride Overpowers Empathy, Civility

Posted on by Digital Editor

Last weekend, my family and I set out for a simple visit to relatives in the Old Airport neighbourhood. What should have been a routine trip quickly turned into a harsh reminder of the decline in civility and respect within the society.

The incident began innocently enough. As we parked near our relative’s home, a man in another car reversed recklessly, nearly hitting a family member who had come to greet us. The close call startled us. My husband and I sat in silence, processing what had happened.

A relative stepped forward to point out the driver’s mistake. Instead of apologising, the man exploded with anger. His reaction was not just defensive but hostile, laced with insults. He accused us of arrogance, assuming the issue was about the car we drove or our youth. We were stunned but decided not to escalate the situation and quietly entered the house.

Minutes later, my husband went back to the car to retrieve our daughter’s diaper bag. What he found left us reeling: our new vehicle had been vandalised. Long, deep scratches marred the back of the car, clearly inflicted with a sharp object.

Witnesses confirmed that the culprit was the same man who had nearly caused the earlier incident. This was no accident. It was a deliberate act of spite.

The damage was devastating, both emotionally and financially. Repairs cost us tens of thousands, compounded by the unavailability of materials locally. The actions of a man in his late fifties, an age that should come with wisdom and maturity, revealed something far darker: a complete disregard for others and the principles that uphold a community.

This man’s behaviour was not just disappointing; it reflected a troubling societal decay. The inability to take responsibility for one’s actions, the prioritisation of pride over reason, and the use of malice to settle trivial grievances point to a deeper problem.

A healthy society relies on shared values such as kindness, accountability, and respect. These principles serve as the glue that holds communities together, allowing conflicts to be resolved constructively. Yet, incidents like this show how easily these foundations can crumble when individuals abandon empathy and reason for anger and ego.

At its core, this incident reflected a clash between accountability and pride. A simple apology for the near-accident could have resolved everything. Instead, the man chose to escalate, first with words, then with actions.

Anger and pride are destructive forces. They cloud judgment and lead to behaviour with far-reaching consequences. His irresponsible actions didn’t just damage a car; they damaged trust, respect, and the sense of community that holds people together.

Accountability is a cornerstone of any functioning society. It ties individuals to their actions and ensures that mistakes are addressed constructively.

When people reject accountability, they harm not only themselves but also the trust within the communities. A society without accountability fosters resentment, alienation, and chaos.

Every action, whether good or bad, creates a ripple effect. The driver’s decision to vandalise a car did not just cost us financially, it left us questioning his mindset. It was a reminder of how bitterness can overshadow reason, and how one person’s hostility can impact others profoundly.

What made the incident even more disheartening was the man’s age. In his late fifties, he should have embodied maturity and wisdom. But maturity isn’t about age. It’s about acting responsibly, resolving conflicts with grace, and prioritising the greater good over personal pride.

When older generations fail to set an example, they erode the very values they should pass down. It raises a troubling question: if maturity cannot be expected from those in their later years, where does that leave younger generations seeking role models?

This incident is a reminder that rebuilding societal values starts with individuals. While people cannot control others’ actions, they can control how they respond and what values they choose to uphold.

Accountability is the foundation of a healthy society. When people take responsibility, whether through apologies or making amends, they restore trust and strengthen communities.

In a better society, the initial encounter would have ended differently. A mistake would have been met with an apology, turning a tense moment into an opportunity for connection. Instead, pride and hostility escalated it into something unnecessarily destructive.

A sincere apology for his mistake could have diffused the situation entirely, replacing animosity with understanding.

Open and respectful communication prevents misunderstandings from becoming conflicts. Dialogue fosters understanding and leads to constructive solutions.

At any age, people must model the behaviors they wish to see. Acts of kindness, humility, and accountability inspire others to do the same.

The scratches on our car will eventually disappear, but the lessons remain. While people cannot change others, they can change themselves. By committing to accountability, empathy, and respect, they can be the change they wish to see.

In every action, one is making a choice. Do they let anger, pride, and irresponsibility define them? Or do they rise above them and work to rebuild a culture of respect and decency?

Everyday actions matter. Every act of kindness, every moment of accountability, and every effort to understand someone else brings people closer to a society where stories like this become rare.

The Burden of Beauty, Pressure for Perfection

Posted on by Digital Editor

Ethiopia’s kaleidoscope of skin tones reflects its rich diversity. Complexion varies not just between individuals but often within the same person. Many, myself included, grapple with uneven skin tone, a frustrating reality where the color of the face differs noticeably from the rest of the body. This is not merely a cosmetic issue; it deeply affects self-perception and confidence.

My struggle with uneven skin tone began in my youth. Like many, I tried various over-the-counter products that promised a flawless, even complexion. But the commitment they required, a strict skincare routine applied consistently over time, was too demanding for my younger self. Even as I grew older, I lacked the discipline, patience, and understanding needed to achieve real results. Eventually, I gave up and resigned myself to living with uneven skin.

Recently, however, I have felt a renewed interest in addressing this issue. Online skincare routines showcasing pigmentation correction and the pursuit of “glass skin” have reignited my desire for improvement. Yet, these routines often come at a steep cost. The products are expensive, and the uncertainty of how long treatments will take, along with the ongoing maintenance required, make it a big financial and time investment. While natural, homemade remedies are an option, I find myself drawn to commercial products. I have convinced myself, perhaps wrongly, that their effectiveness outweighs the risks of chemical ingredients.

This internal conflict, the desire for an even complexion versus the cost and effort involved, was brought into sharp focus during a recent visit to a nail salon. As I sat there getting my nails done, I noticed my hands. For the first time, I saw the stark difference in tone between my hands, darkened by sun exposure, and my face. This seemingly minor observation struck a chord. It was not just about aesthetics; it revealed an overlooked inconsistency in my appearance that I had not fully acknowledged before.

The conversation between the nail technician and another client deepened my thoughts. The client, who also had a noticeable contrast between the tone of her face and hands, was advised to use a cream to even out the difference.

These moments merged into a broader reflection on the evolving pressures people, particularly women face today.

In the past, concerns centred around makeup application, hair styling, weight management, and clothing choices. Now, the pursuit of an even skin tone, ensuring the complexion of the face matches the rest of the body, has joined the growing list of beauty demands. It feels overwhelming, another task in an already exhaustive regimen of self-care.

The question lingers: at what cost do people chase this ideal? Is the pursuit worth the effort and potential sacrifices? The answer is deeply personal and varies for each individual. However, acknowledging this pressure and discussing its impact is a critical first step.

It would be a relief if people were taught to fully embrace and love themselves, flaws and all. While personal growth matters, the constant striving for improvement can be exhausting.

Tsehays Dollar Dash, CBEs Poker Face, a Forex Market Dancing on Edge

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The Brewed Buck’s relentless downward drift against a basket of major currencies showed little sign of slowing as the new year began last week.

The Birr’s value against the Dollar was kept under 125, an exchange rate that appears to be propped up by invisible policy levers. Forex managers at several banks, including Dashen, Abyssinia, Awash, and Wegagen, have quietly settled into this new normal, keeping their offers below this threshold. In doing so, they distanced themselves from more bullish peers who continued to push the currency deeper into depreciation.

Underlying this divergence is a monetary environment strained by tightening policies and heightened foreign-currency demand. Over the last week, the Brewed Buck’s sustained slip against the Green Buck has laid bare its growing fragility.

Several banks have displayed disparities in their exchange-rate postings, uncovering the fractured forex market facing foreign-currency traders. For the third consecutive week, Tsehay Bank set its buying rate for the dollar above 125 Br, hitting 125.96 Br on January 11. It also had the highest selling rate in the market, 128.48 Br. This aggressive move, likely driven by a determination to stockpile foreign currency, illustrated the Bank’s willingness to offer a premium in a market where forex supply remains constrained.

The National Bank of Ethiopia (NBE), typically more guarded in its daily rate adjustments, mirrored this shift toward higher rates. By the end of last week, it had nudged its own buying rate to 125.35 Br, with a selling rate of 126.62 Br. This change, albeit measured, could signal a reluctant acceptance of the Birr’s ongoing decline. It also stoked concern that inflationary pressure may mount, adding fresh challenges to policymakers already balancing multiple policy objectives.

The state-owned Commercial Bank of Ethiopia (CBE) remains a stabilising force, consistently posting the lowest buying and selling rates, with the former at around 124 Br and the latter at 126.48 Br. The deliberate strategy could inform CBE’s policy-driven mandate of smoothing volatility and damping speculative swings.

Over the six-day stretch that began on January 6, 2025, the average buying rate across all banks was 124.81 Br, while the average selling rate clocked in at 127.26 Br, maintaining a roughly two percent spread. Yet notable outliers persisted.

Tsehay Bank’s rates outpaced the entire market, while CBE’s offerings anchored the lower end of the spectrum. In between were institutions like Amhara and Awash banks, which appeared to acknowledge the market’s downward momentum by holding below the 125 Br mark. Their positions hinted at a collective resignation to the Birr’s depreciation, even if banks are not uniform in how aggressively they respond.

The uneven playing field could reveal a deeper tug-of-war between private and state-owned banks, as well as between market forces and regulatory ambitions. Tsehay Bank’s forays above the 125 Br threshold signal that dollars are in scarce supply, with some players willing to pay a noticeable premium to ensure access to foreign exchange. On the regulatory side, the Central Bank’s uptick in its weighted average rate appears to align it more closely with unfolding market conditions, though the pace of that adjustment remains cautious. By contrast, CBE’s conservative position serves as a counterweight, illustrating an institutional reluctance to embrace the Birr’s tumble fully.

The fallout for the broader economy could be considerable. As the Birr weakens, imports become more expensive, compounding inflation in an economy that relies heavily on foreign goods and raw materials. Food prices, industrial inputs, and consumer products all stand to register price increases if the depreciation endures. In this tense setting, banks’ divergent strategies — Tsehay’s aggressiveness, CBE’s caution, and the quiet accommodation by others — reveal a market seeking equilibrium, yet beset by mismatched incentives and the pressing need for hard currency.

 

Hijra Bank’s Leap of Faith in Soaring Profits Soar as the Industry Tests Newcomers

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Hijra Bank’s year-end financial report for last year reveals a noteworthy leap in profitability, with a net profit climbing more than four times its previous year’s record. Industry observers, aware that a relatively small baseline can inflate year-on-year gains, nevertheless see evidence of progress in cost containment and resource mobilisation.

In its financial year 2023/24, Hijra Bank posted a profit after tax of a little over 100 million Br. Its net profit margin on total assets reached 1.23pc, up from 0.37pc, a mark of rising efficiency. Despite trailing the longer-standing industry benchmark of closer to 2.4pc or 2.6pc in return on average assets, its performance represents the promise and the problems confronting a newcomer working within fast-evolving regulatory constraints.

According to Dawit Keno, the bank’s president, financial inclusion in the interest-free banking sector is an untapped market, a factor that helped drive the Bank’s 29.5pc deposit growth. He believes Hijra has built trust in rural enclaves by offering Sharia-compliant services and promoting awareness in communities that had not used banking channels. Dawit attributed the Bank’s profitability to its short-term financing offerings and disciplined cost optimisation, even as the credit cap introduced by regulators forced his management to innovate to sustain growth.

Hijra’s assets reached 8.182 billion Br, a jump of over 30pc that surpassed many competitors, no small feat in an environment where tighter monetary policy and rising interest rates have forced banks to refine their lending strategies.

Hijra Bank expanded its loan book to 3.38 billion Br, about 42pc of total assets. While this loan-to-asset ratio remains conservative relative to some established private banks that operate closer to two-thirds, it showed its executives’ appetite for balanced risk. Deposits rose by nearly 30pc to 6.279 billion Br, lifting the loan-to-deposit ratio to below 54pc, a moderate size considering the Bank’s capacity to deploy more funds into loans once regulations allow.

The Bank relies heavily on net interest income, which makes up 64.9pc of total revenue. That concentration echoes industry-wide norms, where conventional lending products remain the principal driver of bank profits.

Fee-based services contributed 203.4 million Br to the Bank’s bottom line and, together with new digital initiatives, could help diversify revenue streams in the coming years. Its interest expense is roughly 18.4pc of total costs, well below the 40pc-plus range standard in many rival banks, unveiling that wage, benefit and administrative costs remain Hijra’s main expenditures. More than 80pc of total expenses go toward day-to-day operational outlays, with personnel costs alone consuming 374 million Br, or 61pc of operating costs.

Inflationary pressures notwithstanding, the Bank’s cost-to-income ratio was 86.8pc, revealing room for improvement. Yet, its management is pressing ahead. Operating expenses jumped by 60pc to 615 million Br as the Bank scaled up its workforce to 1,635 employees, a 32pc increase.

Branch expansion has been a key driver behind that hiring spree. Hijra now operates 100 branches, 77 of them outside Addis Abeba, as part of an effort to capture unbanked segments and spur deposit growth. A newly launched Sharia-compliant mobile wallet, “HalalPay” is viewed by executives as another milestone in the Bank’s quest for a broader customer base. Dawit believes bridging knowledge gaps— among employees and clients — is essential.

“If staff are well-versed in technology and Sharia-compliant finance,” he argues, “They can bolster customer awareness and retention.”

Nesredin Mohammed manages a branch near Olympia where he sees an opportunity to lure more exporters, though he also saw regional instability as a constraint on expansion.

Hijra’s ability to carve out market space while keeping non-performing loans contained at around three percent of its financing portfolio is no small achievement. Nevertheless, it faces the same pressures as all newer banks, which are wary of growing too fast or extending credit too aggressively. Shareholders keeping an eye on efficiency also note that Hijra’s profit per employee was above 61,000 Br, below the industry’s average.

Mohammed Ali, one of Hijra’s founding shareholders, believes the bank has opened vital pathways for large portions of the unbanked population to access financial services based on Islamic principles. He hopes branch expansion will continue, with a parallel focus on educating potential customers.

Deposit per branch — 62.79 million Br — is also modest compared to the nearly 200 million Br average across the banking industry. However, the industry-wide figure is skewed by larger banks with deeper urban footprints. Hijra Bank’s executives say many new accounts are sourced from rural communities that were traditionally excluded from banking because of faith-based concerns over conventional interest-bearing products.

While its financing portfolio grew by 13pc, Hijra relies heavily on Murabaha, a sales contract in which the Bank purchases an asset and resells it to the customer with a profit margin. Dawit acknowledged that critics see Murabaha’s near-total dominance in the financing portfolio as a potential constraint on innovation. However, he argued that it is a safer choice for a financial institution at this stage. Hijra began piloting Musharaka arrangements with two customers this year and plans to expand.

In a Musharaka structure, the bank and the customer jointly invest in a venture and share profits and losses. Dawit conceded it carries a higher risk.

“We’ll keep on expanding it,”  he told Fortune. “It’s high risk but advantageous.”

According to Aminu Nuru, a finance expert based in Doha, Qatar, Islamic banks typically wrestle with lower earnings per share (EPS) due to profit-and-loss sharing models, narrower investment opportunities, and higher compliance costs. Yet Hijra Bank has bucked this trend. Its EPS climbed from 24.92 Br to 73.84 Br, a jump he finds particularly impressive considering the constraints of Islamic finance. ZamZam Bank, which entered the market a year earlier, reported an EPS of 5.94 Br.

“Hijra hints at the upside potential of Islamic banking when supported by the right balance of deposit mobilisation and operational efficiency,” said Aminu.

Dawit attributed much of Hijra Bank’s asset growth, which rose 32pc to 8.18 billion Br, to a remarkable 605pc increase in financial assets and a 308pc surge in non-financial assets. While regulatory ceilings on loan growth limited its expansion to 13pc, Hijra’s operating income shot up 67pc, reaching 708 million Br. Financing and investment income accounted for 459.9 million Br, about 65pc of total income.

Fee and commission income comprised another 203.4 million Br, while foreign exchange valuation gains brought in 10 million Br.

Hijra’s underlying ratios tell the story of a bank that is growing steadily but still staying cautious. Its Return on Assets (ROA) was 1.2pc, while its Return on Equity (ROE) sat at 6.5pc. Cash reserves reached 2.5 billion Br, including 1.73 billion Br deposited with local banks, demonstrating Hijra’s liquidity strength. But, it also unveiled the Bank has not fully utilised available resources. Aminu believes tapping borrowing limits or allocating more capital toward financing could fuel additional growth.

Dawit concurred but insisted deposit mobilisation had to come first.

“The Bank focused on cultivating a deposit culture in communities new to formal finance,” he said. “Awareness campaigns conducted last year have started to bear fruit, making it possible now to consider more expansion in lending products.”

Dawit, an alumnus of Addis Abeba University, served as vice president for resource and credit management at the state-owned Commercial Bank of Ethiopia (CBE) before helping to found Hijra Bank four years ago, with a subscribed capital of 1.3 billion Br. In the latest reporting period, the Bank’s paid-up capital rose by 17pc to 1.49 billion Br, translating to a capital-to-asset ratio of around 18pc, higher than the 13.5pc average often seen among private banks.

The industry’s aggregate capital has topped 290 billion Br, with private banks claiming two-thirds of that share, where the average capital is five times larger than Hijra’s. According to financial analysts, the healthy buffer is a precaution against potential shocks in a climate where year-on-year (YoY) inflation, still exceeding 19pc, undermines the real value of lending rates and savings. Yet, Hijra’s asset-to-equity ratio was around 5.29, beneath the market average of roughly 7.8.

“Hijra can afford to leverage its capital further, provided it maintains sufficient stability in provisioning and adheres to regulatory parameters,” said Aminu.

Equity reached 1.54 billion Br, supported by robust shareholder participation that Dawit sees as critical to meeting future regulatory targets. The Bank’s capital adequacy ratio (CAR) was 37.8pc, well above the required minimum, a sign of strong capitalisation but also a marker of untapped leverage. About 36pc of Hijra’s total assets sit in cash or bank balances, a conservative position that buttresses liquidity but may weigh on returns.

The National Bank of Ethiopia’s (NBE) directive to raise the minimum capital requirement to five billion Birr, however, looms on the horizon as a litmus test of Hijra’s staying power.

“The credit cap required us to adopt innovative solutions to sustain growth within regulatory constraints,” Dawit said.

According to the Board Chairman, Abduselam Kemal, Hijra will concentrate on meeting that threshold while pursuing further branch growth and digital platforms to improve service delivery. Failure to meet the requirement could force a merger, reshaping Hijra’s operations as it has begun to hit its stride.

Nevertheless, Dawit remains confident. He credited the Bank’s 13,000-plus shareholders who have pledged to recapitalise within the year, and he welcomed the possibility of new shareholders in the Middle East, provided they share Hijra’s commitment to Islamic finance.

 

Paper Bag Industry Thrives, Plastic Ban Looms

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Bethelhem Dejene has noticed a growing demand for paper bags. After completing a contracted project, she decided to continue producing paper bags with the same team.

As the founder and CEO of Zafree Papers Plc, a company producing tree-free paper pulp from agricultural waste, Bethelhem plans to begin paper bag production this month. The company also plans to establish a factory with an investment of five million dollars.

The paper bag market is booming, driven by a draft Solid Waste Management Proclamation that bans the import, production, usage, and sale of single-use plastic bags. This shift presents opportunities for companies like Zafree, which started producing paper from banana trees and recycled materials in 2023. The company plans to launch eco-friendly paper bag products to meet the rising demand.

To scale production, Zafree will form partnerships and use recycled paper. The company targets businesses such as cosmetics shops, cafes, and boutiques needing custom-branded packaging. However, Bethelhem says there are obstacles, including high taxes on imported craft paper. She urges the government to reconsider customs duties and exempt the paper bag industry to ease financial pressure.

Bethelhem argues paper bags must be more affordable than plastic to drive adoption. She believes the planned factory will lower operational costs, enabling the paper bag industry to compete more closely with plastic.

Dagem Abebe, CEO of Filla Trading Plc and a veteran in the paper bag industry for the past 10 years, recognises the growing demand. He recalls that, in the past, companies only used paper bags for special occasions and focused more on printing and advertising for marketing.

The company currently supplies 10,000 paper bags per month to 10 regular customers, with prices ranging from 30 to 100 Br per bag, depending on type, size, and quality. The recent surge in demand has led Dagem to apply for a loan from the Development Bank of Ethiopia (DBE) to expand production. However, he says that clients are reluctant to use paper bags due to their high cost, which remains a major obstacle.

Like Bethelhem, Dagem faces problems sourcing quality craft papers, as no local companies produce them. To address this, he plans to build a factory to produce craft papers from sugar cane. While this will require substantial capital, it could resolve the supply shortage, according to him.

Dagem recommends industry players share resources, such as printing, to reduce costs and stay competitive. He says that the cost of imported craft paper has risen by at least 30pc after Birr’s devaluation in June last year, further undermining the competitiveness of paper bags against plastic.

However, the industry is increasingly seen as a profitable venture. Bruk Sewmanew, who has been producing paper bags for nearly two years, now trains aspiring entrepreneurs. For the past seven months, he has offered short-term production courses while expanding into the supply of craft paper. He observes that demand for both the products and his four-day courses continues to rise.

“It is harder for people wanting to enter the industry now,” Bruk told Fortune, comparing the current climate to when he first joined. He says importing craft paper requires bulk purchases of at least 600kg, costing 40,000 Br, making entering the industry difficult.

However, imported craft paper has a density of 250g and can carry up to six kilograms per bag, while locally recycled paper has a density of 175g and can carry only up to three kilograms, according to Bruk.

The draft proclamation has impacted Bruk, as his training programme, which previously cost 5,000 Br, has risen to 7,000 Br since news of the bill emerged. The increased demand for his training, along with the shortage of craft paper, led him to raise prices.

“The increase in demand was immediate,” he said.

Dawit Goshu, a recent graduate, entered the industry ten months ago, starting a small-scale paper bag business from home. He now takes orders for 100 to 150 bags per week, with prices ranging from 35 to 50 Br per bag. Initially, he struggled to convince customers to buy his product, but used Instagram (a social media platform) to promote his business, which he started with 10,000 Br in capital. Despite the rising demand, Dawit worries that larger companies may overpower smaller businesses like his with higher efficiency, larger production, and lower prices.

Tesfaye Beljige (PhD), the government’s chief whip to Parliament, introduced the solid waste management bill to Parliament on December 10, 2024. He stated the growing environmental and health damage caused by solid waste, particularly plastic.

The bill intends to create an effective system for solid waste collection, transportation, storage, reuse, recycling, and disposal. Tesfaye also stressed the importance of greater involvement from society, businesses, and the private sector.

The proclamation includes penalties and accountability standards for industry stakeholders, citing risks such as groundwater contamination and serious health problems.

The draft proclamation is currently under review by two standing committees: Water, Irrigation, & Lowland Development Affairs and Urban Infrastructure & Transport Affairs.

Ermias Abelneh, a chemical process engineer, sees the paper bag industry as a major opportunity, especially if the draft proclamation is approved. He supports replacing plastic with alternatives, arguing plastic causes serious harm to lakes and other water bodies.

While paper bags are a good alternative, he believes importing materials is impractical. He suggests using recycled paper, particularly paper from the education sector, which he describes as “both resource-efficient and cost-effective.” This would help reduce the amount of craft paper imported, according to him.

Ermias recommends biodegradable bioplastics made from natural materials like mango and banana waste. But, he argues, these bioplastics, used in yogurt and coffee packaging, require a high investment.

The expert advises products to be packaged in a way that makes them easier to grab, eliminating the need for disposable plastic bags.

Plastic contributes greatly to costs in some industries, according to Ermias. For instance, during a visit to a water bottling company, he found that the cost of plastic bottles accounted for 25pc of the final selling price.

A 10-year plastic waste management strategy developed by the Environmental Protection Authority (EPA), seeking to implement a full-scale ban on single-use plastics, plans to reduce plastic in water bodies and promote alternatives, cut down on plastic bags and unnecessary packaging, and achieve a 25pc reduction in single-use plastic production and consumption.

However, Ethiopia’s plastic imports increased by 34.8pc from 2017 to 2021. The country’s annual plastic consumption is between 280,000 and 300,000tn, with single-use plastic making up 70pc. The water bottling industry is a major contributor to this.

Editor’s Note: This article was updated from its original form on January 13, 2025.

Leather Industry Falters, Quality Declines, Factories Shutter

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Daniel Megersa, a butcher in Addis Abeba’s northern Asko area, has watched his in-home slaughtering business decline sharply in recent years. Once overwhelmed by customer calls during holidays like Genna (Christmas), Daniel now faces dwindling demand.

This past Genna, only four customers requested sheep slaughtering, and just two needed oxen services. “Five or six years ago, more than 10 people would call me to slaughter sheep, and over five for oxen. I used to struggle to prioritise my clients,” he recalls. He earns 500 to 600 Br per sheep or goat.

The fall in demand has also affected Daniel’s ability to profit from byproducts, such as hides and skins, which once made up over 50pc of his income. Today, these byproducts contribute only 10pc to his earnings. Customers often dismiss them as “trash,” letting Daniel to collect and transport them himself, sometimes walking over three kilometres to the nearest collection site.

This, coupled with low returns, has made hide collection unprofitable. “It takes time and effort to skin the animals, but the payment does not match the work,” he says. “Sometimes, I just want to finish quickly and go home to my family because the effort is not worth it.”

Despite leading Africa in livestock population, with 70.3 million cattle, 95.4 million sheep and goats, and 8.1 million camels, Ethiopia struggles to turn this potential into economic gains.

Cherinet Assefa, who recently bought a sheep for Genna, said, “I paid 16,400 Br for the sheep, but the hide is worth only 40 or 50 Br. It’s easier to let the butcher take it because its harm as trash is greater than its value as income.”

Samuel Abera, a hide collector, echoes this sentiment, citing frequent losses. “We make little profit, and sometimes we lose money transporting hides. Wholesalers often reject them due to small, unseen holes,” he said.

He buys sheep skins for 50 to 60 Br and sells them to larger traders and collectors for 80 to 100 Br. Samuel said, “the sector is declining every year, and it is difficult to rely on this as full-time work.”

Tariku Weldetsadik, a hide and skin collector business, is burdened with high operating costs. The company, a large-scale collector, buys skins from people like Samuel and sells them to tanneries. Employing about 50 permanent workers, rising to 100 during holidays, the company is struggling with increasing operational costs, particularly high rent cost and salt, which is essential for preserving hides. Mamush Weldetsadik, the general manager, says that salt supply has become inconsistent, further complicating their work.

Mamush stated that while the value of skins has increased by 42pc this year, from 70 Br to 100 Br, the volume of hides collected is lower than last year due to the declining quality and dwindling demand from tanneries.

The company uses its own vehicles to collect hides from smaller neighbourhood collectors and is contracted to collect hides from sources like the Burayu Abattoir outside Addis Abeba. However, the company faces challenges due to the central bank’s cash withdrawal limits, as it operates on a cash-based system.

The Addis Abeba Abattoirs Enterprise processes a large number of hides annually, producing over 300,000 ox hides and 50,000 sheep and goat skins, according to Atakilti Gebremichael, its communications head. The daily output varies, with lower production during fasting periods. The Enterprise sells its raw hides and skins to a contracted buyer.

Tarekegn Jida, head of research and development at the Leather Industry Development Institute (LIDI), told Fortune that the quality of hides and skins has been sharply declining over the past decade. “Ten years ago, about 50pc of collections were high-quality [grades one to three]. This year, that figure has dropped to just 10pc,” he said.

He stated that the number of factories in the leather sector has also been reduced. Several factors have contributed to this decline, including a shortage of foreign currency needed to import over 90pc of the chemicals and accessories required for leather processing. Other issues include a lack of shipping containers at ports, instability and conflict in many parts of the country, and the global downturn in the leather industry during the Covid-19 pandemic. These factors, combined with the declining quality of raw materials, have crippled many tanneries.

The government is trying to address the problems in the leather sector by improving quality through awareness programmes aired in the media, according to Tarekegn. “We are hopeful for better quality leather this year,” he said.

He states that prices are incrementally increasing, with sheep skins in Addis Abeba selling for 130 Br to 140 Br, goat skins for 25 Br to 35 Br, and ox hides for 10 Br per kilogram.

Prices vary across regions. For instance, in Sheger City, sheep skins sell for 60 Br to 80 Br, goat skins for 30 Br to 50 Br, and ox hides for 80 Br to 100 Br per piece.

Tanneries and manufacturers continue to face losses from hidden defects in hides that only become apparent during processing. “Defects are revealed after the removal of hair, causing losses to tanneries after they have already purchased the hides,” said Tarekegn.

Biruk Hailu, deputy manager at Bahir Dar Tannery Plc, stated that the company sources raw materials from Debre Markos and Gonder cities in the northern Amhara Regional State. He disclosed a decline in both production and exports this year. Only 10pc to 15pc of their products meet export standards, with the rest sold locally.

The declining quality of hides stems from several issues, including animal diseases and bites before slaughter, and poor practices post-slaughter, such as knife damage, inadequate preservation, and insufficient salting due to high salt costs. Poor transportation methods further degrade the quality.

Biruk says international demand for Ethiopian leather has dropped. However, he believes improved hide quality could strengthen the company’s position in global markets, as Ethiopian leather still holds competitive advantages.

He cited production delays as a key obstacle. Processing cycles can take 20 to 25 days, and road closures can extend the transportation of hides from two or three days to two weeks.

The factory, which employs over 250 workers and has a daily processing capacity of 700 ox hides, 2,000 goat skins, and 2,000 sheep skins, is currently operating at only 40pc of its capacity.

Abaynesh Beyene, CEO of AB Leather Products, says her company is considering shifting from leather to textile production due to persistent hurdles. “For the past three months, most of our customers have turned to other countries,” she said.

Abaynesh says that inconsistent production has cut their output by half. “The quantity and quality of leather are decreasing year by year, while tanned leather prices keep rising.”

Abraham Tesfaye, designer and owner of Abraham Tesfaye Leather Products, echoed these troubles. He says there is a severe shortage of raw materials and accessories for products like bags and jackets. “We cannot get the colours we need to compete in the market,” he said.

The leather industry comprises 188 companies, with 25 tanneries, 36 shoe factories, and several smaller manufacturers. Seven factories are involved in chemical imports and consulting.

Dagnachew Abebe, secretary general of the Ethiopian Leather Industry Association (ELIA), confirmed that poor-quality raw hides are a major issue, caused by diseases, thorn and bite damage, careless slaughtering, and low supply. These issues leave tanneries operating below capacity and unable to produce diverse, high-quality leather products.

Addis Ketema, head of leather and leather products at the Ministry of Industry (MoI), said there has been “no notable change in quantities or prices between last year and this year.”

He states that the government is working on awareness campaigns to improve the quality of rawhide and skin. The campaign focuses on educating the public on proper livestock management, pre-slaughter care, preservation, and transportation. A pilot programme will soon launch in Addis Abeba and Sheger cities.

“Tanneries are in ICU [intensive care unit],” said Industry expert Solomon Getu, describing the leather sector as being in a critical state. While foreign currency availability has improved since August 2024, tanneries face severe problems. Solomon called for urgent government support, including financial aid and tax breaks, to help tanneries recover from post-COVID-19 setbacks.

He says that many rawhide problems are man-made and can be addressed through better awareness. Solomon urged the return of initiatives like radio programmes that previously educated the public about skins and hides.