The volume of capital mobilised in Birr from 23 new investment projects operationalised during the fourth quarter of 2023/24. Although the projects’ number registered a 91.7pc growth compared to the same period the previous year, it plummeted by 86.2pc in the value of cumulative investment capital. The mismatch could show a surge in low-capital or micro-scale ventures dominating the market, possibly due to tightened credit conditions or risk aversion among larger investors.
Month: January 2025
“It’ll be completed within a year.”
Abdulhakim Mulu (PhD), state minister for Trade & Regional Integration (MoTRI), announced last week that the federal government would fully phase out its longstanding fuel subsidies. Despite hiking retail prices by 10pc last week, a rise that pushed the cost of a litre of benzene beyond the 100 Br mark, federal authorities continued to spend around 300 billion Br subsidising the import and distribution of petroleum products.
Mandatory Membership Plan Sparks Dispute Over Metropolitan Chamber’s Autonomy
The Addis Abeba Chamber of Commerce, long regarded as a rare pillar of the private sector, is bracing for a general assembly in less than two weeks, an event that could redefine the institution’s identity and the degree to which it can speak freely for the city’s private sector. Founded more than seven decades ago, anchoring in voluntary membership, the Chamber is now at a crossroads. With proposed amendments to its bylaws, its revised constitution will compel all licensed businesses in Addis Abeba to sign on.
This radical approach risks turning a once-independent entity into a government-aligned institution.
The debate intensified at a press conference on December 23, 2024, when the Chamber’s President, Mesenbet Shenqute, heralded a “radical transformation reform.” Praising the internal auditor, recently elevated to Deputy Secretary General for Resources & Innovations, for uncovering 23 alleged policy violations, she singled out resource misuse and unauthorised hiring practices as manifestations of the problems she claims to be remedying.
The findings, which have not been independently verified, prompted the creation of a reform team, which is now entering a second phase of restructuring.
Central to the restructuring process are proposals to drastically change the Chamber’s constitution, replacing its voluntary character with automatic enrollment. Chamber leaders say most of Addis Abeba’s 483,000 licensed businesses remain on the sidelines, undermining the organisation’s legitimacy. They hope that imposing membership will expand the Chamber’s influence and representativeness.
Yet, the plan has sparked an outcry from longstanding members who see it as an affront to a longstanding principle enshrined in laws governing chambers of commerce. No less are legal experts unsettled, arguing that the proposed change violates the federal Constitution (Article 31), which protects the right to free association.
Opponents of the amendments draw parallels to practices sometimes observed in regional states, where membership in similar chambers is forced. Though widely seen as unlawful, these practices have spread with the blessing of leaders who compare them to policies under the Dergue regime, when chambers were systematically aligned with the government. Critics insist such moves rob business associations of their credibility, warning that a body forced to accept every business under legal compulsion would end up serving political interests over private-sector concerns.
The looming general assembly adds urgency to the dispute.
Initially set for January 3 and then postponed to January 11, the gathering was abruptly moved to the Adwa Museum, a change widely interpreted by critics as a bid to manipulate voting or facilitate outside interference. The Chamber’s board of directors, whose tenure expired in September 2024, has dismissed several senior officials, replacing them with junior staff seen as more likely to be sympathetic to external agendas.
Amid these shake-ups, fear is growing that non-members may influence the Chamber’s internal affairs, reinforcing suspicions of political meddling by government agencies. Dismissing this as a baseless fear would be unwise, though. Some leaders of the Ethiopian Chamber of Commerce, Addis Abeba Trade Bureau officials, and groups within the ruling Prosperity Party (PP) have been singled out for endorsing, if driving, the proposed transformation. Their involvement, critics say, shows an intent to consolidate influence over one of Ethiopia’s most prominent business groups.
For decades, the Addis Chamber prided itself on standing apart from government-aligned associations, upholding a robust model of volunteer-driven membership. By prioritising its constituents’ commercial needs rather than the government’s political priorities, it earned a reputation for authenticity that has been amiss in many corners of civil society. This reputation lies in jeopardy.
If the proposed amendments become a reality, sceptics contend the Chamber will be relegated to a shell of its former self, reminiscent of organisations under the EPRDF regime that nominally represented traders but ultimately followed the state’s lead. The fear is that adding hundreds of thousands of businesses under a mandatory framework, combined with the directors’ recent personnel reshuffles, could lead to decisions favouring government objectives rather than the grassroots interests of local entrepreneurs.
In a last-ditch attempt to halt the amendments, legal experts advise longtime members to seek an injunction suspending the Board and appointing a caretaker administration until an inclusive general assembly can be held. Supporters argue this could ensure compliance with the Chamber’s constitution and restore some semblance of member-driven decision-making. Whether the courts would intervene in an organisation that has historically been left to manage its affairs independently remains an open question.
However, observers note that the broader challenge reflects a familiar struggle in the civil society scene. Groups that try to remain genuinely independent can face pressure from multiple fronts, including government entities eager to bring them under a more unified policy umbrella.
The Addis Chamber has weathered years of upheaval, including shifting political climates demanding associations’ loyalty. It has repeatedly chosen the difficult path of maintaining a voluntary membership system and resisting overt political allegiance. Many local business owners saw this as a refreshing counterweight to state-led institutions, an arrangement that also boosted the Chamber’s credibility. Should mandatory membership take hold, that credibility could disappear, replaced by an organisation that is broad in numbers but narrow in genuine representation.
Emotions run high among the Chamber’s current and prospective members as the general assembly approaches. In private discussions and on social media forums, some vow to confront the Board at the assembly, pressing leaders to abandon the proposals in favour of a collaborative approach. Others advocate for overhauling the Chamber’s governance to end what they see as counterproductive meddling by outside interests. Several businesses could also consider legal remedies or official complaints to higher authorities.
Whether the Addis Chamber will endure as the country’s largest voluntary membership-based association, defending the interests of business owners who joined voluntarily, or become a top-heavy organ leaning toward government priorities is out for the jury. The institution’s future depends on the upcoming general assembly, where the competing forces of autonomy and control will collide in a decisive moment.
If dissenters block the amendments, the Chamber may preserve the autonomy that has defined it for decades. If not, its metamorphosis into a more tightly controlled structure could be a foregone conclusion that echoes far beyond Addis Abeba’s city limits and into the broader civil society.
The identity of the author has been withheld upon request.
Turning Pages, Breaking Barrier
Ten entrepreneurs reveal the ups and downs of building businesses. From turning coffee waste into oil products to digitizing traditional equb, they share how personal experiences, local problems, and ideas shaped their startups. Their toughest obstacles include lack of funding and skepticism from clients. They share the risks that paid off and their favourite books, writes HAGOS GEBREAMLAK, FORTUNE STAFF WRITER.
Bethelhem Dejene
Founder and CEO of Zafree Papers, producing tree-free paper pulp from agricultural waste.
Bethelhem Dejene was born in Saris and raised in Kotebe, Addis Abeba. She attended Hillside School and graduated in economics from Addis Abeba University.
What was your very first business idea – even if it failed?
I started with waste management, then moved to plastic recycling, and later, paper recycling.
What is the inspiration behind your startup?
As a university student, I saw piles of waste in Mercato’s Atkilt Tera. The environment was ugly, and I felt the need to take action. I researched waste management and launched a plastic recycling business, which led to paper recycling. I realised paper production harms forests.
What was the most difficult thing when you started your business?
Lack of experience and resources. I did not know who to consult or where to start. I just had an idea.
What is the most important quality or thing to be an entrepreneur?
Courage and discipline.
What is the most important thing you have learnt in your entrepreneurship journey?
Continuous learning is crucial. The more I learn, the more I realise how little I know.
What is the riskiest decision you made that surprisingly worked out?
Making paper from banana peels. It was risky because we lacked experience and didn’t know the quality outcome. Partnering with AB InBev was a gamble that paid off.
How do you define innovation in the context of your business?
We save trees by producing paper from bananas. Innovation is finding better ways to do things.
If you had to launch a completely different business tomorrow, what would it be?
Vegan leather or biodegradable plastic from banana peels. Alternatively, I’d launch an e-commerce platform.
Which book or film that you have read or watched did you like?
The 10X Rule by Grant Cardone. Favorite films include Super Pumped: The Battle For Uber, Breaking Bad, and Better Call Saul.
How do you spend your holiday?
I spend holidays with my family and visit my grandparents.
Nahim Ali
Founder of Bony Filter Material, producing animal feed and calcium phosphate from bone waste.
Nahim Ali was born in Adaba, Bale, and raised in Shashemene. He graduated in mechanical engineering from Jimma University in 2016. His company, launched in March 2022, started with 270,000 Br and now operates with two million Br in working capital.
What was your very first business idea – even if it failed?
An aluminum molding machine business.
What is the inspiration behind your startup?
While working for an NGO in fluoride water treatment, I saw the high demand and impact on local communities. This motivated me.
What was the most difficult thing when you started your business?
Acceptance. Chicken farms were hesitant to buy our product. Securing land was also difficult.
What is the most important quality or thing to be an entrepreneur?
Articulating your vision.
What is the most important thing you have learnt in your entrepreneurship journey?
The importance of communication.
What is the riskiest decision you made that surprisingly worked out?
Quitting my job and giving up a monthly salary.
How do you define innovation in the context of your business?
Adding value to existing resources.
If you had to launch a completely different business tomorrow, what would it be?
I’d manufacture machinery.
Which book or film that you have read or watched did you like?
Time.
How do you spend your holiday?
I spend holidays with my family.
Alemu Mekonnen
Founder and General Manager, producing supplementary food for patients with diabetes, cholesterol, sinus, asthma, and H. pylori.
Alemu Mekonnen was born in Gore, Oromia Regional State. He graduated in teacher training and later pursued laboratory profession training. He worked as a chemistry teacher and lab technician before starting his business in 2017. Alemu Supplementary Food launched with 9,200 Br and now operates with over 18 million Br.
What was your very first business idea – even if it failed?
I didn’t have any prior business ideas. I was a teacher before launching this company.
What is the inspiration behind your startup?
My father was a pharmacist, and I saw diabetic patients visiting his pharmacy daily. I wanted to create something to help them avoid lifelong medication.
What was the most difficult thing when you started your business?
Securing patents, finance, and working space.
What is the most important quality or thing to be an entrepreneur?
Reading.
What is the most important thing you have learnt in your entrepreneurship journey?
There are many valuable tree varieties in Ethiopia that can be used for medicine.
What is the riskiest decision you made that surprisingly worked out?
Quitting my job and being jobless for seven years. I survived on support from friends and family, but it eventually paid off.
How do you define innovation in the context of your business?
Creating new supplementary foods and turning them into a business model.
If you had to launch a completely different business tomorrow, what would it be?
Medicine processing.
Which book or film that you have read or watched did you like?
Fikir Eske Meqabir by Haddis Alemayehu.
How do you spend your holiday?
I spend holidays with my family and friends.
Bemhreth Gezahegn
Founder and CEO of Gebeta Maps, a local map service provider.
Bemhreth Gezahegn was born in Dilla and raised in Addis Abeba. He graduated in software engineering and earned an MBA from Addis Abeba University. Gebeta Maps launched in 2022 with 12,000 Br and now has a working capital of 10 million Br.
What was your very first business idea – even if it failed?
A virtual kitchen platform similar to taxi-hailing services, but it required large capital and was abandoned.
What is the inspiration behind your startup?
There were no local businesses providing map services, so I aimed to replace Google Maps with a domestic product.
What was the most difficult thing when you started your business?
Gaining trust. Many thought we were reselling Google Maps services.
What is the most important quality or thing to be an entrepreneur?
Persistence.
What is the most important thing you have learnt in your entrepreneurship journey?
Focus on customer needs and improve gradually, rather than chasing perfection.
What is the riskiest decision you made that surprisingly worked out?
Starting Gebeta Maps and abandoning a more attractive project.
How do you define innovation in the context of your business?
Providing localised map services at lower prices, integrating geocoding, route optimisation, and directions.
If you had to launch a completely different business tomorrow, what would it be?
AI language models.
Which book or film that you have read or watched did you like?
Zero to One by Peter Thiel.
How do you spend your holiday?
I spend time with family.
Kibret Abebe
Founder and CEO, offering ambulance and emergency medical services.
Kibret Abebe was born in Addis Abeba and graduated in nursing from Jimma Science College. Tebita Ambulance launched in 2008 with 30,000 dollars.
What was your very first business idea – even if it failed?
This was my first business idea.
What is the inspiration behind your startup?
High road traffic injuries.
What was the most difficult thing when you started your business?
Financing. I had to sell my home to start the business.
What is the most important quality or thing to be an entrepreneur?
Finding purpose.
What is the most important thing you have learnt in your entrepreneurship journey?
The power of storytelling.
What is the riskiest decision you made that surprisingly worked out?
Selling my house to launch the business.
How do you define innovation in the context of your business?
Transforming emergency services into a sustainable business model.
If you had to launch a completely different business tomorrow, what would it be?
Photography.
Which book or film that you have read or watched did you like?
Yeteqolefebet Qulf by Mihret Debebe and The Blue Sweater by Jacqueline Novogratz.
How do you spend your holiday?
I spend holidays with family and neighbors.
Biruk Girma
Founder and CEO, connecting investors, entrepreneurs, advisors, and banks.
Founder and CEO, connecting investors, entrepreneurs, advisors, and banks.
Biruk Girma was born in Arjo, Wollega, and raised in Bonga and Wolkite. He graduated in mechanical engineering in 2016 and participated in BlueMoon’s entrepreneurship program. Sumuni launched in 2020 with 20,000 Br and has facilitated over 15 million Br in investments.
What was your very first business idea – even if it failed?
A poultry farm, followed by compost fertiliser manufacturing. Both failed.
What is the inspiration behind your startup?
I struggled to find financing and mentorship, so I created a platform to solve this problem.
What was the most difficult thing when you started your business?
Lack of finance and convincing investors.
What is the most important quality or thing to be an entrepreneur?
Critical thinking and persistence.
What is the most important thing you have learnt in your entrepreneurship journey?
Understanding the diverse interests of startup stakeholders – investors, entrepreneurs, and banks – is essential for success.
What is the riskiest decision you made that surprisingly worked out?
Partnering with Amhara Bank and PfC to provide loans up to one million Birr without collateral.
How do you define innovation in the context of your business?
Connecting the startup community through a social media platform.
If you had to launch a completely different business tomorrow, what would it be?
Fintech, insurance, or agriculture.
Which book or film that you have read or watched did you like?
Zero to One and Blue Ocean Strategy. Super Pumped: The Battle For Uber.
How do you spend your holiday?
I spend most holidays alone or with family.
Bisrat Fikru
Founder and CEO of Digital Equb Financial Technologies Plc
Launched in 2020, Digital Equb offers a digital equb (rotating savings and credit system) service. The platform has 30,000 active daily users and processes over five million Birr in daily transactions.
Bisrat was born in Addis Abeba and attended Lazarist Catholic Mission School. He graduated in communication technology from Addis Abeba University in 2016.
What was your very first business idea – even if it failed?
This is my first business, but I worked on a ride-hailing platform project for my university thesis.
What is the inspiration behind your startup?
My co-founder, Hailu Gebretsadik, shared the idea of a digital equb. We identified the flaws in the traditional system and decided to scale it digitally.
What was the most difficult thing when you started your business?
Lack of access to finance and trust from potential clients.
What is the most important quality or thing to be an entrepreneur?
Conviction. You have to believe in your idea. Doubting yourself leads to failure.
What is the most important thing you have learnt in your entrepreneurship journey?
The importance of teamwork. Even the best ideas fail without a strong team.
What is the riskiest decision you made that surprisingly worked out?
We refused to accept cash payments early on, even when clients requested it. It was risky, but going fully cashless made our service more efficient.
How do you define innovation in the context of your business?
Digitising equb to solve issues in the traditional system.
If you had to launch a completely different business tomorrow, what would it be?
I would launch an ecommerce platform.
Which book or film that you have read or watched did you like?
Zero to One by Peter Thiel. The Pursuit of Happyness, Jobs, and The Social Network.
How do you spend your holiday?
I spend holidays with family and relatives.
Almaw Molla
Founder and CEO of Coffee Resurrect
Launched in 2021, the startup upcycles coffee waste into products like coffee oil, flour, and fiber for personal care and food.
Almaw was born in Arat Killo, Addis Abeba, and attended Haramaya and Dire Dawa universities
What was your very first business idea – even if it failed?
A call center proposal that didn’t materialise.
What is the inspiration behind your startup?
Coffee waste is damaging the environment. I wanted to turn it into something beneficial.
What was the most difficult thing when you started your business?
Lack of expertise and mentorship in the field.
What is the most important quality or thing to be an entrepreneur?
Continuous learning, persistence, and not fearing failure.
What is the most important thing you have learnt in your entrepreneurship journey?
Leadership isn’t as difficult as it seems.
What is the riskiest decision you made that surprisingly worked out?
Mentoring aspiring entrepreneurs and investing time in others. It has paid off.
How do you define innovation in the context of your business?
Creating high-value products from waste, reducing environmental harm.
If you had to launch a completely different business tomorrow, what would it be?
Leather, cotton, or tourism ventures.
Which book or film that you have read or watched did you like?
The Apple Revolution by Luke Dormehl.
How do you spend your holiday?
I spend holidays with family.
Hasna Idris
Founder and CEO of Aras Package Plc
Launched with 300,000 Br, the company offers maternity care services, including food, health treatments, beauty care, and home decoration for new mothers.
Hasna was born and raised in Addis Abeba and attended school in Addis Ketema. She dropped out of college and moved to Turkey before returning to Ethiopia to start her business.
What was your very first business idea – even if it failed?
An event management company, but it didn’t work out.
What is the inspiration behind your startup?
My difficult childbirth experience motivated me to create a service to help other mothers.
What was the most difficult thing when you started your business?
Convincing my family, clients, and creditors about the idea.
What is the most important quality or thing to be an entrepreneur?
Perseverance.
What is the most important thing you have learnt in your entrepreneurship journey?
Endurance is essential to success.
What is the riskiest decision you made that surprisingly worked out?
Leaving my life in Turkey to return and start the business.
How do you define innovation in the context of your business?
This is the first maternity care service of its kind in Ethiopia.
If you had to launch a completely different business tomorrow, what would it be?
An ambulance service dedicated to pregnant women and new mothers.
Which book or film that you have read or watched did you like?
I enjoy Turkish TV series.
How do you spend your holiday?
I spend holidays with my family.
Leykun Yilma
Co-founder and Operations Manager
Tuba Books, launched in 2022, provides ebooks and audiobooks with over 150,000 application downloads and 10,000 sales.
Leykun was born in the capital and graduated in software engineering from Addis Abeba University.
What was your very first business idea – even if it failed?
This was my first.
What is the inspiration behind your startup?
Seeing books sold on the streets in Piassa made me realise the need for digital access to literature.
What was the most difficult thing when you started your business?
Convincing authors to trust the platform.
What is the most important quality or thing to be an entrepreneur?
Perseverance and patience. Entrepreneurship is a marathon.
What is the most important thing you have learnt in your entrepreneurship journey?
Marketing is as important as product quality.
What is the riskiest decision you made that surprisingly worked out?
Starting the business itself, despite family expectations to follow traditional business paths.
How do you define innovation in the context of your business?
Offering books in digital formats, making them more accessible and affordable.
If you had to launch a completely different business tomorrow, what would it be?
Another tech startup.
Which book or film that you have read or watched did you like?
Zero to One by Peter Thiel.
How do you spend your holiday?
I spend holidays with family.
PATHWAY PILEUP
A large pile of tree branches and foliage, recently cut down, is blocking the pedestrian pathway on A1 St., forcing people to walk on the road and increasing the risk of accidents. Urban planning and maintenance efforts are critical to ensure that pedestrian pathways remain clear and safe for use. The city administration has been working on improving sidewalks and road networks as part of corridor development projects. However, limitations such as inadequate intersections, missing sidewalk segments, and poor maintenance still persist.
RUSTY RELICS
Abandoned vehicles are parked in a construction site around Kazanchis, surrounded by debris and overgrown vegetation. Their owners seem to overlook that they could salvage the cars for some extra cash. Recycling old vehicles is crucial as it helps in recovering valuable materials like steel, aluminium, and plastics, reducing the need for new raw materials and minimizing environmental impact. The process typically involves dismantling the vehicle, draining hazardous fluids, and then crushing and shredding the remaining parts to separate and recycle the materials.
SNACK SHACK
A street-side food stall, next to a Kenema Public Drug Store sign around German roundabout, caters to people inside an unfinished construction site with open walls. Such spots play a significant role in the economy by providing employment and supporting local food producers. They cater to residents seeking quick and affordable meals, commuters grabbing a bite on their way, workers from nearby businesses or construction sites looking for a convenient lunch, and students in search of inexpensive and tasty meal options.
Fintech’s Blind Spot in Unlocking the Potential for Universal Inclusion
The world has made remarkable progress in advancing financial inclusion in recent years. In the decade beginning in 2011, the share of adults with access to financial services rose a whopping 50pc, to more than three-quarters. But, we still have a long way to go in creating a truly inclusive financial system. Beyond expanding access to financial products and services, we should ensure that these products and services work for all people, including the 1.2 billion people worldwide with disabilities.
The first generation of financial technology disrupted traditional banking by facilitating access for the underbanked (think mobile money and micro-loans). The next wave of innovation should go further, embracing “universal inclusion” as a basic design principle. Universal inclusion captures the idea that everyone deserves access to financial tools that meet their needs and improve their well-being.
We already have examples of what this might look like.
Consider tap-to-phone technology, which enables merchants to accept payments using their smartphones – no payment terminal needed. This functionality has obvious benefits for all buyers and sellers, from convenience to safety. But, it also enables blind or visually impaired individuals, who might struggle to count cash, to participate more fully in the digital economy. People with conditions affecting their mobility – such as arthritis, multiple sclerosis, Parkinson’s disease, and cerebral palsy – might also rely on tap-to-phone technology.
The same goes for voice-activated payments. They are convenient for all, but crucial for individuals with visual impairments, limited mobility, or literacy challenges. This is universally inclusive design at its best – so practical that everyone, disabled or not, uses it. The widespread adoption of such technologies makes them even easier for those with disabilities to use. Since 62pc of disabilities are invisible, asking for accommodations can be very difficult. But nobody will bat an eye about an “accessible” tool if they already use it.
Despite some successes, however, the prevailing approach to financial product development does not put nearly enough emphasis on inclusivity. This represents not only a moral failure, but also a missed economic opportunity. People with disabilities, together with their friends and family, represent 13 trillion dollars in disposable income. As lifespans increase, this group’s numbers – and spending power – are set to rise.
Beyond the direct returns of tapping this large and underserved market, financial services companies pursuing universal inclusion would become more attractive to other customers, especially younger generations. A 2018 study showed that 91pc of Millennials (born between 1980 and 1994) would replace a product they normally buy with an alternative from a “purpose-driven” company. Gen Z (born between the mid-1990s and the early-2010s) is also strongly inclined toward brands emphasising social values.
Financial institutions should embrace a new innovation framework built on three pillars to make the most of universal inclusion.
The first is a universally inclusive design approach, in which accessibility considerations shape solutions from the start. This would represent a major shift from today’s compliance-based approach, in which adjustments are often made after the fact to meet minimum accessibility standards. Its success would depend on ensuring that people with disabilities participate in every phase of the design process.
The second pillar of a new fintech framework is data. Measuring our progress on overall financial inclusion is important, but so is collecting detailed data that differentiates among groups or segments. Such data should go beyond access to cover the quality of services and changes in financial well-being that result from the industry’s products.
Lastly, clear accountability and reporting standards are essential. Regulatory frameworks should include incentives for financial services institutions to disclose their progress on universal-inclusion metrics, making these results as fundamental to their reporting as traditional financial indicators.
The benefits of universal inclusion extend beyond profit. The economy becomes more resilient and dynamic when all people can participate in it fully. And, efforts to meet the needs of one underserved group can lead to innovations that benefit all, a phenomenon known as the “curb-cut effect,” a reference to the sidewalk ramps that were designed for wheelchair users, but improved the lives of many others, from parents with strollers to delivery workers.
Rather than viewing accessibility as a barrier to overcome, we should recognise its potential as a catalyst for innovation and growth. Universal inclusion in financial services is not only about doing good; it’s about doing good business.
The Urgency of Global Debt Reform
High debt levels are once again setting off alarm bells around the world. In developed countries, attention is focused on the rapid increase in public debt, while developing economies are struggling to service their external obligations amid slowing growth and stagnating exports.
Despite their current challenges, most analysts believe that developed economies will avoid a full-blown crisis, owing to their ability to issue debt in their currencies and implement targeted fiscal and monetary measures. In the United States, for example, the fiscal deficit surpassed six percent of GDP this year and is projected to rise to eight percent or more in 2025. Even so, declining interest rates suggest that policymakers are well-positioned to address the issue, which received little attention during the 2024 election cycle.
By contrast, the outlook for emerging and developing economies appears increasingly bleak. In 2023, developing countries spent 1.2pc of their gross national income on interest payments, while debt service amounted to nearly six percent of export earnings in countries eligible for International Development Association (IDA) aid. The World Bank’s latest Debt Report warns that low-income countries face a “metastasizing solvency crisis.”
Several developing countries, including Zambia and Sri Lanka, have already defaulted on their external obligations, triggering a slow and painful process of debt restructuring and sweeping economic reforms. Many others are on the edge of a crisis – in Mozambique, for example, interest payments amounted to 38pc of export earnings in 2023. According to the World Bank, 52pc of low-income countries are at or near debt distress.
Since the end of World War II, the world has witnessed numerous financial crises stemming from the unique nature of sovereign borrowing. On one hand, government debt can reflect the pursuit of potentially high-return investments that cannot be financed by domestic savings alone. This was the case in the early 1960s, when South Korea borrowed up to 10pc of its GDP annually to enable productive investment. Those investments paid off handsomely, enabling the country to service its debt with ease and maintain stability despite sustained borrowing.
But, borrowing can also finance unproductive expenditures, such as excessive public employment or private consumption, which generate little to no return. Consequently, debt service grows without any corresponding increase in governments’ ability to sustain payments. This is rarely an issue for countries that invest in high-return projects. But when resources are misallocated, and debt-service costs mount without the means to cover them, a crisis becomes inevitable.
In such cases, international financial institutions (IFIs) – especially the International Monetary Fund – play a critical role in helping countries restore creditworthiness by providing financing and recommending reforms. The IMF specialises in assessing indebted countries’ macroeconomic outlook, pinpointing necessary economic reforms, and steering them back toward financial stability and sustainable growth.
IMF-recommended reforms typically involve expenditure cuts – limiting future pension increases, reducing civil-service salaries, and scaling back certain investments – alongside efforts to increase tax revenue. They often also include structural adjustments, such as modifying the exchange-rate regime, removing domestic price controls, and eliminating regulations that impede economic growth. Identifying the most urgent reforms is essential, as these measures often determine a country’s ability to promote growth and improve living standards.
Economic policy reforms become particularly important when a government lacks the resources to meet future debt-servicing payments or fund the investments needed to boost income and growth. In the absence of such reforms, heavily indebted countries risk falling back into patterns of excessive spending, undermining their growth prospects and resulting in recurring crises.
Regrettably, many well-meaning leaders and policymakers overlook the necessity of combining debt restructuring and new financing with economic reforms. Sympathy for the impoverished populations of indebted countries and acknowledgement of their overwhelming financial burdens often lead to calls for the IMF and World Bank to provide financial support without demanding structural adjustments. When international institutions succumb to such pressures, economic gains tend to be short-lived: growth stagnates, and debt-servicing difficulties return.
These challenges are compounded by the emergence of new major creditors, especially China, and the growing role of private-sector actors in sovereign lending. In recent years, China has overtaken the World Bank as the largest lender to many low-income countries. As a result, implementing economic reforms now requires the support of China and other creditors.
The protracted negotiations between creditors whenever sovereign debt must be restructured underscores the urgent need for reforms not only within heavily indebted countries but also in the international community’s approach to resolving these countries’ debt problems. Sri Lanka and Zambia were economically paralysed for years while creditors, including IFIs, struggled to reach restructuring agreements.
Traditional sovereign creditors, including the US and the European Union, should persuade emerging major lenders of the need for a faster, more effective restructuring mechanism. Without such a framework, the world’s poorest countries will remain trapped in a never-ending cycle of debt distress.
Pharma Supplier to Build 100 Million Dollar Automated Warehouse
The Ethiopian Pharmaceutical Supply Service (EPSS) plans to construct a 100 million dollars mega warehouse in a bid to modernise and centralise its pharmaceutical storage and distribution. The project was announced during a parliamentary audit report meeting last week.
Solomon Nigussie, deputy director general of EPSS, revealed that UNICEF designed the facility, while the Ministry of Finance (MoF) will manage funding with international backing. The 50,000sqm warehouse is set to be a fully automated, “hands-free” facility equipped with advanced temperature control and logistics technology, according to Solomon. The project is expected to be completed within two years at most.
EPSS operates 63 warehouses, 12 of which are rented, while the others are aging. EPSS Director General Abdulkadir Gelgelo (MD) stated that the new warehouse will address existing problems and improve storage standards mandated by the Ethiopian Food & Drug Authority (EFDA).
Awol Hassen, EPSS’s public relations head, stated that consolidating warehouses will boost efficiency by reducing management complexities.
During the meeting, Parliament’s Public Expenditure Administration & Control Affairs Standing Committee, led by Yeshimebet Demise and Arare Mosisa, expressed worry over warehouse conditions and the distribution of medicines.
EPSS distributes medicine and medical devices to 5,000 health institutions. Program medicines, funded by the Ministry of Health (MoH), account for 70pc of EPSS’s distribution, with a budget of 21 billion Br for the 2023/24 fiscal year. These include 163 essential medications like family planning and HIV treatments. The remaining 30pc are rotating fund medicines, budgeted at eight billion Br, covering chronic disease treatments and routine medical supplies.
Parliamentarians questioned EPSS about ongoing shortages of medicine and medical supplies in hospitals. In response, Abdulkadir stated that 69pc of program medicines are delivered directly to hospitals, but finance and logistics capacity limitations hinder the distribution of rotating fund medicines.
Abdulkadir said that EPSS receives a 2.5pc distribution fee from donor institutions to deliver program medicines. However, rotating fund medicines are not fully covered by this arrangement. “If hospitals pay for distribution, EPSS could expand its delivery services,” he said. EPSS recently acquired 147 vehicles from donor institutions to assist with transportation, according to him.
Solomon Abdela, a senior supply chain expert at the Ministry of Health (MoH), referenced an MoH study revealing that EPSS fails to supply approximately 25pc of rotating fund medicines. This shortfall forces hospitals to resort to expensive procurement methods, such as tenders, which inflate costs and strain budgets.
MPs criticised the lack of a barcode system for tracking inventory until the recent audit. Abdulkadir responded that implementing such a system would cost 174 million Br. He argued that an Enterprise Resource Planning (ERP) system, a software system that helps integrate various departments of an institution, must first be in place for barcodes to function. A pilot ERP trial began two years ago in select branches, costing nine million dollars and funded by global organisations, the MoH, and EPSS.
Full implementation of the 20-module ERP system, which integrates 20 departments within EPSS, started this fiscal year. Abdulkadir stated that the system will modernise medicine and medical device distribution across all warehouses and branches, allowing for better tracking of fund and program medicines.
The issue of expired medicines was also raised. Although EPSS reported a 0.39pc waste rate, below the Service’s one percent target and the World Health Organization’s (WHO) two percent to four percent benchmark, MPs criticised the loss of over 78 million Br in waste. Abdulkadir attributes this to the fact that some donors supply medicines with short shelf lives, which sometimes expire within nine months, contributing to the waste.
EPSS is also grappling with close to half a billion Birr unpaid credit from hospitals over the past five years. EPSS officials reported that nearly one billion Birr has been repaid, with the remaining debt primarily owed to health institutions in the Amhara and Tigray regional states.
State Minister for Health Frehiwot Abebe stated that 63pc of the total debt has been recovered. Abdulkadir said a draft proclamation for a drug fund and supplier system will create enforceable, contract-based procurement to hold all actors accountable, addressing the recurring credit build-up.
Amanuel Haile(MD), head of the Tigray Health Bureau, acknowledged improvements in the supply chain but stated that many health facilities in Tigray are unable to pay for medicine and supplies from EPSS.
The Ministry of Health (MoH) covered the regional state’s debt for the first quarter of the fiscal year, according to him. However, the collapse of community-based health insurance in the regional state left many without access to affordable medical care, argues Amanuel. With dwindling NGO support, Amanuel called for temporary debt relief and a swift relaunch of health insurance services.
Solomon mentioned that the Ministry is covering expenses for crisis-affected areas, such as the Borena zone during the drought. Amanuel admitted that health facilities’ budgets are insufficient, often lasting only one or two months.
The committee directed the Service to make further efforts to improve waste management, warehouse quality, and legal compliance. Yeshimebet instructed EPSS to submit a report within a month and provide quarterly updates until all audit issues are addressed.
Zinabu Bayu, a logistics expert, supported the planned mega warehouse project. While it may not be cost-effective initially, it will improve service delivery, according to him. Zinabu recommended that central hubs, like Modjo, be prioritised for the warehouse’s location. He says such locations would optimise logistics and customs processing. He cautioned against potential cyberattacks while appreciating the implementation of the ERP system.
Ethio telecom Expansion Stalls Over Funding, Land Costs
Ethio telecom’s ambitious plan to expand infrastructure and improve rural connectivity is facing major setbacks due to funding shortfall and high land lease costs. The state-owned telecom provider needs 1.14 billion dollars to deploy new mobile sites in 1,000 locations, including 496 rural areas, a figure exceeding its annual profits.
CEO Frehiwot Tamiru told Parliament’s Standing Committee for State-owned Enterprises Affairs that the investment required outpaces the company’s yearly earnings. “Despite the financial hurdles, we deployed 2,564 mobile sites in rural areas,” she said.
However, Members of Parliament (MPs) criticised the company for unreliable services, rural inaccessibility, internet outages, and high tariffs. Desalegn Chanie (PhD), MP-NaMA, questioned internet blockages in the Amhara and Oromia regional states, poor mobile data quality, and unclear billing practices. He also criticised recent tariff hikes.
Frehiwot defended the increases, attributing them to currency devaluation driven by macroeconomic reforms. She said that adjustments were made with low-income users in mind.
MPs voiced frustration over the lack of connectivity in remote districts. One MP from South Ethiopia Regional State reported that 19 districts remain without network access, describing the situation as critical.
“Women are dying over there,” he said, stating that residents in these areas cannot call for ambulances, putting lives at risk.
An MP stated that half of the 270 districts in the Jimma zone of Oromia remain unconnected, despite repeated requests from local officials.
“We have done what we could to bring the investment to the people,” said Frehiwot, addressing concerns from MPs about unresponsiveness and delays.
Balcha Reba, director general of the Ethiopian Communication Authority (ECA), criticised the rising land lease costs imposed by regional governments, calling them “unfair” and urging federal lawmakers to intervene. “These inflated costs are jeopardising Ethio telecom’s ability to meet connectivity goals,” Balcha warned. “Regional authorities must take swift action to address this issue.”
He hopes that the new Universal Service Fund (USF) regulation, pending approval from the Council of Ministers, will address rural connectivity gaps. The USF proposes a 1.5pc levy on telecom operators’ annual gross revenue, with funds managed by the Ministry of Finance (MoF). Contributions from operators, donors, and the government will finance rural expansion projects, with the ECA overseeing project selection and tendering.
“It will be a pay-to-play game for the operators,” Balcha stated, disclosing plans to target 104 of the 1,008 districts with network gaps.
Frehiwot stated that the company’s profit margins are insufficient to fund large-scale projects without external support. “We need investment help,” she said. The CEO cited access to land, electricity, and security as ongoing barriers.
Ethio telecom, which monopolised Ethiopia’s telecom sector for over a century, holds a 94.5pc market share, serving 80.8 million people. Mobile services account for 78.9 million users, while broadband services reach 43.9 million.
In the past fiscal year, the company’s revenue grew by 21.7pc to 93.7 billion Br, up from 71.5 billion Br in 2023, with a net profit of 21.7 billion Br. Its customer base expanded by 8.9pc, covering 85.4pc of Ethiopia geographically. Telebirr, Ethio telecom’s mobile money service, has 51.92 million users, handling 3.38 trillion Br in transactions, 73pc of which occurred last year.
Ethio telecom operates 8,530 mobile sites, with 47pc powered by generators, 21,827km of backbone fiber, and 4,744 fixed access networks. Despite this progress, the company faces problems, including foreign currency shortages, equipment theft and vandalism, and conflicts.
Ethiopia lags behind its neighbors in internet connectivity, with nearly 90 million people unconnected, compared to 33 million in Kenya and 27 million in Sudan. Kenya and Sudan have internet penetration rates of 29.5pc and 28.4pc, respectively.
Digital expert Endashaw Tesfaye from the United Nations Capital Development Fund (UNCDF) argues that Ethiopia needs more telecom operators to meet the rising demand. He suggests Safaricom’s increased involvement could help bridge connectivity gaps. Endashaw says that expansions into underserved communities require incentives.
“The government should introduce incentive packages for new telecom operators,” he said.
Endashaw advised Ethio telecom to assess risks and reduce debt burdens to attract investors as it prepares to sell shares to the public. Acknowledging Ethio telecom’s 65pc digital coverage, he says there is a gap between coverage and service quality. He says the service is plagued by persistent system outages and inefficiencies.
He recommends building resilient infrastructure and emergency plans to create a sustainable digital ecosystem. Endashaw says true success requires not only expanding services but ensuring efficiency, quality, and inclusivity.
He stated that regulators should strengthen their capacity, develop strategic investment plans, and pursue gradual improvements to enhance Ethiopia’s telecommunications landscape.
Traffic Management Overhaul Digitises Fines, Parking Fees
City transport authorities have launched a new digital traffic management system that has already registered over 600,000 vehicles. The system is expected to save more than 17 million Br annually by replacing manual pads used for issuing fines and collecting parking fees.
This digital upgrade, introduced last week, covers parking, fine enforcement, and overall traffic management, with a plan to modernise the city’s transport system.
Kibebew Mideksa, director general of the Addis Abeba Traffic Management Authority (TMA), stated that traffic fine payments under the new system will begin this week.
“Manual processes will be completely eliminated,” he said.
The system, developed by Infratech Software Service Plc, integrates with data from the Addis Abeba Driver & Vehicle Licensing & Control Authority (DVLCA), automatically registering vehicles when they receive a service or fine.
It also includes a digital parking system to eliminate manual payments and address illegal parking. The technology registers parked vehicles, calculates fees, and processes payments online. Drivers will use a mobile app to locate parking spaces, access information on electric vehicle charging stations and public restrooms, and navigate to their destination.
Upon parking, the app tracks time automatically, allowing drivers to view fees and pay online through an account managed by the TMA.
The new system is expected to reduce the role of parking operators, who will now focus on recording the start and end times of parking services. According to Kibebew, the system aims to minimise corruption and overcharging while improving efficiency.
The change will impact around 140 parking associations employing 13,000 people. Their income will now come from a percentage-based agreement with the Authority instead of collecting directly from drivers.
Alongside the system, the TMA is constructing 44 new parking stations, adding to the 45 already operational across the city. The Authority has also fined 180 building owners 100,000 Br each for not opening their underground floors for parking. Buildings are required to open their parking areas to the public, with licenses and penalties enforced for non-compliance.
The traffic system is managed by a committee representing the TMA, Transport Bureau, Innovation & Technology Development Bureau, and the DVLCA. As part of the rollout, 1,500 tablets have been procured for 1,250 trained traffic officers.
The platform also includes real-time accident reporting and automatic vehicle registration. Traffic police can use the tablets to identify wanted vehicles and communicate directly with drivers via mass text messages about road closures, holidays, and important updates.
The new digital traffic management system links a vehicle’s registration number to the owner’s phone, allowing owners to add or modify driver information. When a traffic fine is issued, both the driver and owner receive text notifications. The system also tracks repeated violations and registers demerit points.
Kedamawi Mulualem, CEO of Infratech, stated the system will improve traffic control and hold drivers accountable. “It integrates traffic management aspects from parking to accident reporting and communication,” he said.
The system enforces the Road Transport Traffic Control Regulation passed in August by the Council of Ministers. The regulation outlines traffic fines ranging from 500 Br to 20,000 Br, with drivers having the right to appeal.
Traffic offenses are categorised into three tiers with escalating fines. First-category offenses, such as distracted driving or carrying a child under 13 in the front seat, incur a 500 Br fine. Second-category offenses, including horn misuse, improper parking, and slow driving, carry a 1,000 Br fine. Third-category violations, like lane offenses, overloading, mobile phone use while driving, and seatbelt violations, result in a 1,500 Br fine.
Special violations, such as parking or stopping in prohibited areas, carry a 3,000 Br fine.
Demerit points are registered for each offense, and drivers accumulating too many points risk license suspension.
Yabibal Addis, head of the city’s Transport Bureau, believes the new digital system will enhance road safety and reduce congestion by enforcing traffic laws more effectively.
Biniyam Hailu, head of a parking works cooperative, said his association is not yet informed about the digital parking system. His cooperative, consisting of 11 members, manages parking for over 3,000 vehicles monthly, issuing between 3,000 and 6,000 tickets at 20 Br each.
However, Abiy Aleneh, a lecturer at Kotebe University of Education, says the city’s authorities should prioritise resources for essential services. He acknowledges that the system will increase revenue and simplify licensing. Abiy suggests public awareness campaigns and smarter infrastructure, such as cameras and digital tracking to prevent accidents and crime.
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