Prime Minister Touts Growth as Subsidies Soar, Poverty Deepens

Posted on March 23, 2025March 23, 2025 by Digital Editor

Prime Minister Abiy Ahmed (PhD) appeared before Parliament last week to deliver a narrative filled with abundant optimism, stressing impressive economic growth over the past eight months. Yet, beneath the surface of these numbers lay severe financial strain, widespread deprivation, and unabated conflicts that threaten the country’s stability and welfare.

The Prime Minister opened his address by presenting encouraging revenue figures, announcing that the government had collected 580 billion Br during the reported period. However, optimism quickly gave way to reality, as he acknowledged that the government’s spending had overshadowed these gains.

“Our expenses burdened our revenues,” Abiy bluntly admitted, pointing to a range of subsidies and expenditures that have weighed heavily on the federal budget.

Fertiliser subsidies alone reached 84 billion Br; fuel subsidies amounted to 72 billion Br; social safety nets demanded 22 billion Br; and, pharmaceuticals and edible oil consumed another 350 million Br. The Prime Minister argued that these extensive subsidies were necessary but costly, contributing to the challenges of managing public finances. The economy struggles particularly due to its low tax-to-GDP ratio, which remains under seven percent, roughly half that of neighbouring Kenya’s 16pc.

“It’s one of the lowest,” he conceded. “We’re still struggling to make it grow.”

Experts estimate that if his administration had to determine whether to collect taxes matching Kenya’s ratio, the federal government would have raised no less than 2.78 trillion Br.

One major issue complicating fiscal balance is fuel subsidies. At 101 Br a litre, they have nearly doubled from last year’s figures. A full phase-out is scheduled in the next year, sparking fears among many consumers that this swift removal will exacerbate living costs and adversely affect vulnerable populations.

Economist Arega Shumete (PhD) remains concerned over the government’s subsidy strategies, noting misallocation that often benefits urban dwellers disproportionately, particularly those in Addis Abeba, instead of supporting broader rural populations.

“The government’s expenditure is confused,” said Arega.

This confusion extends beyond subsidies to critical sectors like education and health. Parliamentarians have voiced alarm over substantial budget cuts in recent years. The education budget plummeted from 123 billion Br to 55.8 billion Br in the current fiscal year, a 55pc reduction. Health sector funding shrank from 51 billion Br to 22.6 billion Br during the same period, another 56pc decrease.

“It’s unstrategic,” Arega told Fortune, warning of potential long-term risks to human capital and social stability.

Despite these troubling reductions, Prime Minister Abiy’s Administration has pushed forward with salary increases for members of the public service, particularly targeting those in lower-income brackets. Those earning around 1,100 Br monthly have received the largest raises, with adjustments ranging from 332.7pc down to just five percent for higher earners making approximately 20,468 Br monthly.

The wage adjustment, however, adds a considerable 91.4 billion Br to the public expenditure, financed partially through a recently secured half-billion-dollar loan from the World Bank, part of a broader 1.5 billion dollar International Development Association (IDA) package.

Approved by Parliament less than two months ago, the Finance Minister, Ahmed Shide stated that the loan would support social safety nets for vulnerable households, including the civil service. Yet, even this wage hike has struggled to address everyday realities many civil servants face.

Tigist Adane, a 42-year-old primary school teacher, embodies the struggle that millions face. Earning 9,000 Br gross monthly salary, she finds basic necessities increasingly unaffordable. Prices for staple items like teff, now at 15,000 Br a quintal, cooking oil at 1,600 Br for a five-litre container, and onions at 110 Br a kilogram have forced her to cut back drastically.

“My life has been worsening,” Tigist told Fortune.

Forced to relocate after her home was demolished for a city corridor project, she now contends with rising transportation costs, school fees, and housing expenses.

The gap between official optimism and citizens’ lived experiences is apparent. Despite the Prime Minister touting improved economic indicators, praising an 8.4pc projected GDP growth primarily driven by agriculture, industry, and service sectors, the bleak realities persist. Once celebrated for double-digit economic expansion, Ethiopia now faces undeniable evidence of deteriorating social conditions, echoed Desalegn Chane (PhD), an MP representing the National Movement of Amhara (NaMA).

Desalegn flagged before a quietly listening parliamentary floor data from the Global Multidimensional Poverty Index, which puts Ethiopia as home to 86 million multidimensionally poor people, roughly 7.8pc of the global total.

“People’s lives are worsening,” Desalegn lamented, directly challenging the Prime Minister’s optimistic narrative.

Abiy defended his Administration’s performance, stating foreign exchange revenues yielded over 14.9 billion dollars over the past eight months. Commodities exports accounted for 4.5 billion dollars, service reached 4.7 billion dollars, remittances brought in 3.7 billion dollars, and foreign direct investments totalled around two billion dollars. Imports, however, were substantial at 10.5 billion dollars, primarily driven by capital goods.

While such statistics might suggest economic vitality, scepticism lingers.

Arega, the economist, warned against accepting official data uncritically, recalling previous discrepancies in poverty assessments by the World Bank and the Ethiopian Statistical Service (ESS), which underestimated the country’s poverty rate.

“They held off the data to save face,” Arega said. “There is always the urge to make one look good by stating increasing economic growth despite realities proving otherwise.”

These economic contradictions are further compounded by deteriorating security and rising food insecurity. Ethiopia now ranks fourth globally in acute hunger, trailing Nigeria, Sudan, and Yemen. Nearly 15.8 million Ethiopians face severe food shortages, exacerbated by a devastating three-year drought, subsequent flooding, macroeconomic instability, and reduced humanitarian aid. Infrastructure destruction from civil wars, particularly in the northern Tigray region, has worsened poverty levels, with regional states such as Oromia, Amhara, Somali, and Afar affected by ongoing conflicts. The rising cost of fertilisers, coupled with shrinking farmland due to urbanisation, threatens agricultural productivity and rural livelihoods.

This year, the federal government allocated substantial resources — 1.3 billion dollars and 156 billion Br — for fertilisers imports and subsidies, respectively. Nonetheless, soaring global prices and currency depreciation have caused costs for farmers to skyrocket. Diammonium phosphate (DAP) fertilizer now costs 7,000 Br to 8,000 Br a quintal, while urea ranges from 5,000 Br to 6,700 Br.

Last year, the federal government spent a billion dollars on fertiliser, with subsidies reaching 15 billion Br. This year, subsidies have jumped to 84 billion Br, a staggering 253pc increase.

“We’re providing the highest subsidy in our history,” Sophia Kassa(PhD), state minister for Agriculture, said in a recent media briefing.

Badiho Birmeji, a 50-year-old farmer from Meki, in the Oromia Regional State, who supports six children, farming maize and wheat on 20hct, faces a dire dilemma. Fertiliser prices doubled this year, forcing him to halve his purchases and risk lower yields.

“It’s not just about producing enough for the market,” Badiho said. “It’s also about our own survival.”

His situation is a telltale story of the precarious conditions confronting millions of farmers who, despite government subsidies, struggle under relentless price pressures and uncertain harvests.

For Abebaw Desalew(PhD), an MP-NaMA, additional alarms are emerging over the widespread shortages caused by subsidy mismanagement, including frequent fuel shortages that force vehicles to wait days for fuel access. Wage hikes intended to alleviate civil servants’ hardships have proven insufficient, where double-digit inflation and escalating rents are the norms.

Edible Oil Runs Dry as Beans Go Global

Posted on March 23, 2025March 23, 2025 by Digital Editor

The hum of machines has grown quiet in the busy processing plants on the outskirts of Addis Abeba. Factories that once churned out edible oil and animal feed are shutting down, caught in a storm triggered by soaring soybean prices. Over the past two months, soybean costs have surged by as much as 70pc, reaching unprecedented levels of around 8,500 Br a quintal, wreaking havoc across industries dependent on this crucial crop.

Manufacturers and exporters have begun raising alarms, urging swift government intervention. In a recent letter to the Ministry of Industry, the Ethiopian Edible Oil Manufacturing Industries Association, representing 60 domestic companies, complained about a startling 50pc price hike within two months. The sharp increase, coupled with severe supply shortages, has put immense pressure on these manufacturers, forcing several companies to suspend production and lay off their workforce.

Mohammed Yousuf, chairman of the Association, described the situation facing processors as dire. At least seven plants have already suspended their operations, unable to cope with the drastic price surge.

“Many businesses have been compelled to lay off workers,” Mohammed said, stating the widespread impact on thousands of jobs and fragile supply chains.

Soybeans, increasingly coveted on international markets, are being exported raw before reaching domestic manufacturers. Those active in the edible oil industry, which depends heavily on soybeans as the primary input for roughly 85pc of its production, argue that they have become a victim of these exports. The Association has called for an immediate but temporary halt to the export of raw soybeans, hoping such a move could stabilise the local market and help domestic processors.

Prices for edible oil products have inevitably risen alongside soybeans, recently hitting up to 1,600 Br for five litres. Soybeans are vital for edible oil, with one quintal producing up to 10Ltrs. The remaining product — oilseed cake — is equally lucrative and widely sought after internationally, particularly in China and Kenya. This demand has made soybean farming attractive but strained local supplies.

Genene Lemma, a major shareholder of a processing facility in Burayu, Sheggar City, is one of many businessmen impacted by the rising prices. His plant, which could process up to 400Qnts a day, has been forced to suspend operations entirely due to the rising prices and shortage. Despite having regular customers, his company had yet to establish export channels. Shortages in the local market have left him unable to maintain steady production. His workforce of 100 employees remains idle, kept on payroll in anticipation of improved market conditions.

“We’ve temporarily suspended operations,” Genene told Fortune, sharing the industry’s pent-up frustration. We’ll have to wait until prices stabilise.”

Industry experts echo these concerns and advocate for policy reforms.

Addis Garkabo, former general manager of the Ethiopian Oil Manufacturers Association, is one of the people with an understanding of the industry pressing for a strategic policy shift. He observed the rapid growth of manufacturers, from 26, mostly small-to-medium companies, to 38, dominated by large-scale businesses. With feed processors also expanding, soybean demand continues to outstrip domestic supply.

Addis argued that exporting raw soybeans is detrimental to the economy, noting that global soybean giants prioritise processed exports because of their high-profile margins.

“There is a need for a strategic shift,” Addis insisted.

The authorities agree with this assessment, pushing for raw soybean export bans unless value is added.

Abebaw Admas, head of export product competitiveness at the Ministry of Industry, is unhappy with existing trade policies, allowing raw soybeans to be sold internationally at prices equal to processed soybean cakes, discouraging manufacturers.

International market volatility complicates matters further. Global soybean prices recently plunged by about 30pc to 450 dollars a ton, yet the authorities here have set the minimum export price at 550 dollars. This decision hopes to protect foreign exchange revenues and discourage exports below domestic production costs. However, exporters have criticised this policy, blaming it for making them uncompetitive in the international market.

Mesfin Abebe, senior advisor to the State Minister for Trade & Regional Integration (MTRI), defended the government’s pricing strategy. He argued that despite the international price drop from last year’s 650 dollars a ton, soybeans from Ethiopia remain in demand due to their organic nature. According to Mesfin, the authorities setting floor prices reflects domestic market realities.

“They should have been selling at 740 dollars to match their domestic prices,” Mesfin said.

Between July and October this year, Ethiopia exported over 10,000tns of soybeans, earning around six million dollars in export revenues. Last year’s figures were substantially higher. Over 152,000tns were exported, generating 91 million dollars. The export decline is partly blamed on domestic price surges, which have left exporters struggling financially.

Edao Abdi, a prominent exporter and president of the Ethiopian Pulses, Oil Seeds, Spices Processors & Exporters Association, blamed banks for inadequate support. His request for a loan exceeding 100 million Br has been stuck in administrative limbo for months, severely undermining a planned 10 million dollars export deal.

“We’ve only managed to export one-tenth of our initial plan,” he told Fortune, warning that such financial constraints could undermine the federal government’s goal of earning 700 million dollars annually from soybean exports.

Agricultural officials, however, point to improved conditions for soybean farmers who had long struggled with weak market access and declining prices.

Esayas Lemma, head of crop development at the Ministry of Agriculture, described farmers as victims of market instability but noted their recent improvements in profitability. Expanded soybean cultivation areas, now covering around 839,240hct, produced approximately 19 million quintals this fiscal year, an increase of four million quintals from the previous year.

Soybean production has grown robust from in the decade beginning in 2014. Experts credit this growth to increased cultivation area, better yields, and supportive policies. Around 15million harvest was recorded last year, with Amhara, Oromia, and Benishangul-Gumuz regional states being the leading producers. The country has witnessed key shifts – notably the rise of Amhara Regional State as a major soy region, with over 145,000 soybean farmers.

Getu Ayalew, 60, who lives in Jawi Wereda, West Gojjam Zone of the Amhara Regional State, is one of these farmers. He has enjoyed notable gains this season. He grows maise, sesame, and soybeans and sold his entire harvest of 40Qtls for around 8,000 Br a quintal, an impressive improvement over last year’s mere 3,000 Br a quintal.

“It’s a good season for us,” he said.

Agricultural economist Assefa Tilaun (PhD) cautioned against excessive optimism, warning farmers that the soybean market remains unpredictable. Historically, unstable market conditions have driven farmers away from soybean cultivation, leading to disputes over unsold crops. While the recent resurgence in soybean prices benefits farmers, Assefa advised them to remain cautious and adapt production strategies carefully.

“Farmers should be prepared,” he warned.

Assefa and other industry experts strongly advocate for prioritising processed soybean exports. He argues that exporting raw soybeans reduces national gains, urging a broader shift toward processed, value-added products. Such an overhaul, he insisted, is crucial for Ethiopia’s soybean sector to flourish sustainably.

Regional agricultural expert Enana Abebe from the Agricultural Bureau in the Amhara Regional State echoed the positive sentiment but cautioned that production costs, particularly for fertilisers and machinery, have risen sharply, up nearly 60pc compared to the previous year. She saw farmers enjoying better markets but simultaneously burdened by these increased costs.

“Farmers are experiencing better markets, but production costs have also risen in tandem,” she said.

The expansion in farming, however, has not translated into greater availability for processors and exporters, who remain stuck in shortage-induced turmoil. The feed processing industry, too, faces persistent difficulties, exacerbated by inflation and limited supplies.

According to Biniam Dereje(DVM), general manager of Elf Manufacturing & Commercial Processes, a major animal feed producer 64Km from Addis Abeba, the industry is absorbing the financial strain for now, hoping for better days.

CBE Fixed Rate Defies Market Trends as Private Banks Jostle for Scarce Forex

Posted on March 23, 2025March 23, 2025 by Digital Editor

While most commercial banks slightly adjusted their exchange rates upward last week, the state-owned Commercial Bank of Ethiopia (CBE) has kept its buying rate fixed at 124 Birr for a dollar for nearly four months, making it the clearest outlier in the market.

Between March 17 and 22, the average buying rate across the largest private banks was around 128 Br to 129 Br, while selling rates slightly exceeded this range, settling around 129 to 130 Br. The National Bank of Ethiopia (NBE), adjusted its weighted average upward to 129.46 Br, revealing ongoing attempts by regulators to align the Brewed Buck with broader market conditions. Birr has continued its slide notably against the US Dollar (Green Buck) over the past week, exposing widening gaps in foreign exchange rates among major banks.

The most noticeable difference emerged with ZamZam Bank, which posted a buying rate of 130.8 Br, much higher than the CBE and its private competitors. This has increased the differential between ZamZam and the CBE to around 5.5pc, sharply contrasting the 0.81pc margin recorded between the lowest and highest buying rates only a few months ago.

The market stratification has resulted in a three-tiered system.

At the bottom, the CBE has remained steadfast at its 124 Br mark, unmoved by market pressures or currency fluctuations. A cluster of private banks, including major players like Awash, Zemen, Wegagen, Abyssinia, and Dashen, have positioned themselves centrally, cautiously increasing their rates to around 128 Br. At the top end, ZamZam Bank stands alone, setting higher rates and pushing the market’s average upward.

According to market watchers, amid the persistent liquidity constraints, the widening gap unveiled increased competition among banks to secure scarce foreign exchange, particularly the dollar. ZamZam’s aggressive rate-setting may signal an intensified push to attract foreign currency inflows, differentiating itself from the more conservative positions taken by other banks. Industry insiders acknowledge that banks operate under substantial regulatory oversight, with the Central Bank closely monitoring rate adjustments to prevent volatility.

Private banks often tread carefully, opting for incremental adjustments rather than abrupt shifts, staying largely aligned with official guidance, albeit informal. The cautious environment has heightened the visibility of ZamZam’s pronounced moves.

The CBE’s refusal to adjust its exchange rate could indicate its unique position as a state-owned entity that is less driven by competitive pressures to attract foreign currency deposits. Maintaining a lower buying rate has positioned itself as the market’s most conservative player. However, some analysts speculate that such prolonged inertia could also signal internal policy rigidities or strategic choices designed to serve broader monetary policy objectives.

Despite the increased divergence among banks, the overall market has witnessed only a moderate depreciation of the Birr, consistent with broader global trends of dollar strength and domestic economic headwinds. Nonetheless, this modest weakening disguises the underlying dynamics of heightened competition and strategic positioning among financial institutions, which could have broader implications for the financial stability and policy direction.

The Central Bank’s incremental upward adjustment of its rate signalled an official recognition of market realities but has not triggered uniform responses among private banks. Instead, it appears to have given room for some banks to selectively recalibrate rates according to their liquidity needs and competitive strategies. The differentiated response demonstrated the delicate balance banks should maintain between regulatory compliance and the economic imperative to secure adequate foreign exchange resources.

In aggregate terms, averaging the recent rates showed private banks have coalesced around a midpoint buying rate near 128.5 Br and a selling rate around 129.5 Br for a dollar, excluding extreme outliers. ZamZam Bank’s higher rates, which regularly shift slightly based on market demand, have consistently marked the upper boundary of this range.

If current trends persist, the widening gap between ZamZam Bank and the CBE could evolve into an important indicator of confidence and liquidity in the financial sector. Analysts warn that sustained divergences could eventually expose deeper policy conflicts or market fragmentation, prompting either regulatory intervention or adjustments by banks to respond to imbalances.

For now, the Birr’s depreciation remains gradual, but the differences in exchange rates among major financial institutions have become increasingly pronounced. Whether this stratification results in greater market fragmentation or pushes banks toward convergence will likely depend on evolving regulatory responses.

Preventing War Far Cheaper Than Paying Its Deadly Price

Posted on March 23, 2025March 23, 2025 by Digital Editor

Getachew Redda, head of the Tigray Interim Regional Administration (TIRA), at least up until last week, is no ordinary politician.

Witty, articulate, and boldly confrontational, he seldom hesitates to criticise his political rivals within the Tigray People’s Liberation Front (TPLF). Known for his liberal persuasion, he has always been an odd fit within the traditionally left-leaning TPLF leadership. Yet, despite his intellect and charisma, his tenure at the helm of TIRA has been all but free from troubles and contentions.

During a recent press conference at the Sheraton Addis, far from his base in Meqelle, Getachew maintained his typical humour, joking with journalists even as he levelled grave accusations against what he characterised “a few but influential” lots within the TPLF and the Tigray Defense Forces (TDF). He openly accused high-ranking party members and Tigray TDF commanders of conspiring with Eritrea to reignite hostilities in the troubled region.

This claim, shocking as it was, resonated deeply. If true, a fresh conflict could drag in other interested parties, plunging the already fragile Horn of Africa region into wider turmoil.

The warning was swiftly echoed by international envoys based in Addis Abeba. Representatives from the United States Embassy, alongside embassies from 24 countries and the European Union (EU) delegation, called urgently for calm and restraint. Their message was unequivocal: a return to violence would be catastrophic.

It is a timely call, and if heeded, it could save lives.

The discord between Getachew’s faction and the group led by TPLF’s Chairman, Debretsion Gebremichael (PhD), has been brewing for over a year. Initial disagreements over the slow implementation of the Pretoria Peace Accord sparked the dispute, which has escalated into a severe power struggle, with each faction vying fiercely for dominance.

Alongside Getachew are allies in Beyene Mikru and Kindeya Gebrehiwot, a forestry professor turned politician. Debretsion’s camp includes powerful figures such as Alem Gebrewahid, Fetleworq Gebregziabher, and Ethiopia’s former spy chief, Getachew Assefa. Sebhat Nega, TPLF’s patriarch, reportedly supports them from afar. He lives in the United States.

Getachew and his deputy, Tsadikan Gebretensay (Let. Gen.), formerly Ethiopia’s army chief during the late 1990s war with Eritrea, have notably withdrawn from their offices in Meqelle. Their absence signals deep fractures in the Pretoria Accord, the agreement designed to silence the guns and stabilise the Tigray Region after a devastating two-year warfare.

The instability in Tigray State intersects dangerously with broader geopolitical ambitions. Prime Minister Abiy Ahmed (PhD) recently made clear his government’s desire for maritime access, arguing about the country’s frustration at being landlocked despite having a population of over 100 million and commanding one of the largest economies in the region.

Ethiopia lost its coastline after Eritrea’s independence in 1993, a condition long lamented by the Ethiopian intelligentsia and political leaders who believe direct access to the sea could boost economic growth by up to 30pc.

Such aspirations could turn volatile. Eritrea’s Red Sea coastline sits tantalisingly close — less than 100Km from Ethiopia’s borders. Any attempt to negotiate access, through leases or territorial swaps, immediately raises questions about potential conflict if diplomacy fails.

The environment is already tense.

Ethiopia accuses Eritrea of undermining peace efforts in the Tigray Region, while Eritrea views Ethiopia’s growing ties with the United Arab Emirates (UAE) and its maritime ambitions with suspicion. The tensions are complicated further by Eritrea’s involvement in neighbouring Sudan’s internal conflict, supporting the Sudanese Armed Forces (SAF) against rival factions, some allegedly backed by TDF elements.

Historically, the Horn of Africa’s conflicts rarely remain localised.

Egypt and Saudi Arabia maintain considerable influence over Eritrea, while those from Qatar, Turkey, the United States Britain, and the EU all have interests in regional stability.

Yet, global attention on the Horn of Africa region has waned since Russia invaded Ukraine, inadvertently providing regional leaders and emerging middle powers greater freedom to manoeuvre without immediate international pushback.

These dynamics present severe risks. Should the federal government directly intervene in the TPLF’s internal conflicts, Eritrea could exploit the instability, supporting whichever faction most undermines Ethiopia’s maritime ambitions. Such a scenario risks spiralling into a broader conflict, endangering the fragile peace established by the Pretoria Accord.

Ensuring Ethiopia’s internal stability means addressing crucial governance issues. TIRA needs to hold regional elections as soon as possible to reconstitute the regional council and send legislators to the federal parliament.

Thousands of internally displaced people languish in overcrowded camps, and security issues threaten the fragile demobilisation and reintegration process. Armed forces other than the federal army still remain within Tigray State, including Eritrean forces, despite the Pretoria Accord tasking the federal government to ensure this would not be the case. The longer these issues linger unresolved, the higher the prospect for violent conflict to resume.

A renewed conflict would be catastrophic. The earlier war in the north, one of the 21st Century’s deadliest, caused more than half a million deaths and left millions displaced. Humanitarian agencies estimate over five million people still require urgent assistance. The economic damage has been immense, with reconstruction costs projected at around 20 billion dollars. Ethiopia is already burdened by ongoing violence in the Amhara and Oromia regional states, compounding national strain.

Preventing further escalation is paramount. A World Bank study discovered the economic logic of investing in conflict prevention rather than bearing the astronomical costs of war and post-war reconstruction.

Using historical data from 1975 to 2014, the study shows that countries experiencing civil wars suffer GDP growth losses of around 8.5 percentage points in the first year of conflict and continue to lag behind economically for decades.

Interventions after conflict erupt are costly. Peacekeeping missions, humanitarian aid, and reconstruction expenses frequently run into billions of dollars. However, preventive strategies—mediation, diplomacy, and support for local governance—are markedly cheaper.

According to the World Bank, limited early interventions in high-risk countries could generate annual savings of about 2.5 billion dollars, substantially cutting costs associated with large-scale humanitarian missions and reconstruction.

The human costs of war are devastating. The study estimates more than 200,000 refugees typically flee civil war zones in the conflict’s first year, with numbers rising dramatically as conflicts persist. The emotional and social scars persist across generations, fuelling long-term instability.

Critics may question the certainty of preventive investments, noting that conflicts do not always erupt as predicted. Yet the potential cost of ignoring early signs vastly outweighs the expense of occasional false alarms. Early, targeted efforts, such as diplomatic engagements, local peace initiatives, or support for transparent governance, cost much less than comprehensive post-conflict interventions. Even small-scale interventions can dramatically reduce the risk of conflict, saving lives and preserving economic stability.

The logic is clear. Ethiopia’s current tensions present precisely such a moment for proactive international engagement. Prime Minister Abiy declared last week that Ethiopia “has no desire to invade Eritrea for the Red Sea,” despite his country’s maritime ambitions. The international community should take him at his word, facilitating diplomatic channels to avert war.

The Horn of Africa cannot afford another catastrophic war. It is a truth worth investing in.

Selling Hope in an Age of Desperation

Posted on March 23, 2025March 22, 2025 by Digital Editor

Visiting a bookstore, browsing an online marketplace, or walking through Addis Abeba’s Abrehot Library recently, we may notice the overwhelming number of self-help books promising to fix our lives. Bookshops, street vendors, and online retailers alike offer titles urging readers to “think positively,” “take control,” and “unlock success.” The abundance is not random. It mirrors our times, revealing shared anxieties such as poverty, insecurity, and uncertainty.

Over recent decades, the self-help industry has become a massive global business, encompassing books, seminars, online courses, and coaching. In 2008, the industry was valued at about 11 billion dollars annually. It is projected to balloon five times larger by 2027. Its popularity depends on the promise of equipping individuals with essential tools for personal growth, happiness, and success. But beneath its appealing exterior lies a darker reality.

The industry thrives by capitalising on vulnerability. Rarely do people seek self-help when their lives are going well; instead, they turn to these products in times of crisis, searching desperately for solutions. The business model depends on people’s desire to change their circumstances, offering them a sense of control. In an era when personal worth is often measured by one’s ability to succeed individually, the belief that mindset alone can transform lives holds powerful appeal.

Nonetheless, while self-help provides hope, it also exploits this vulnerability.

Napoleon Hill’s “Think & Grow Rich,” first published in 1937, remains a bestseller, even though Hill himself had questionable business practices and lacked solid credentials. His formula promising prosperity without evidence established the template many still follow.

Research suggests that less than 20pc of self-help books rely on solid empirical evidence. Most are authored by individuals without qualifications in psychology or behavioural science. Such absence of scientific validation would trigger serious concerns in any other industry, yet the self-help sector remains unregulated, lacking quality control and accountability. Beyond questionable credentials, self-help can lead vulnerable people into other problematic industries.

Alternative medicine, fad diets, and multilevel marketing schemes (MLMs) target the same audience of those seeking transformation. Self-help primes individuals for exploitation by industries promising rapid change and wealth.

Many prominent self-help figures, from motivational speaker Tony Robbins to psychologist Jordan Peterson, have been linked to controversial products and industries. MLM companies frequently market self-help content, creating networks of cross-promotion. This pattern directs vulnerable consumers toward costly and often ineffective solutions. These offerings suggest that personal failure can be reversed simply through the next expensive seminar, book, or coaching session, establishing a financially profitable cycle for industry insiders.

At the core of widespread dissatisfaction, however, lie societal realities that cannot simply be wished away through individual “mindsets” or “paradigm shifts.” Poverty, inadequate education, and limited healthcare access are fundamental causes of personal struggles for many. Self-help offers little meaningful help for these systemic problems, shifting responsibility onto individuals by suggesting personal effort alone guarantees success.

This “bootstrap mentality” implies anyone can overcome adversity through hard work, positive thinking, and discipline. Although personal responsibility is important, such a narrow mindset prevents recognising external barriers. Encouraging self-reliance alone overlooks collective social efforts needed to address deep-rooted societal issues.

When self-help strategies fail, the industry typically avoids accountability. If a recommended method does not yield results, the blame is shifted to individuals. They did not try hard enough, goes the circular reasoning. Sadly, this exacerbates feelings of inadequacy, reinforcing self-blame and encouraging further spending on self-help materials.

The industry tends to obscure the truth. Methods marketed by self-help experts most benefit those already enjoying power, privilege, and resources. For the majority, poverty and insecurity remain profound barriers that cannot simply be removed through attitude adjustments or mental strategies. By claiming universal effectiveness, self-help ignores these realities, presenting prosperity as achievable through individual effort alone, despite structural inequalities that limit genuine opportunities.

Self-help promotes a narrow definition of success, often centred around personal wealth, status, and individual happiness. Real prosperity, however, typically emerges from collective efforts and shared societal advancement. By prioritising individual achievement, the industry supports a worldview emphasising personal gain over broader social welfare. Ultimately, self-help fails to address the problems it claims to address. Rather, it reflects broader systemic issues, profiting from individuals’ insecurities while lacking robust evidence to support its methods. It advances individualism at the expense of recognising broader economic and social dynamics contributing to personal struggles.

In today’s testing social landscape, self-help offers a seductive illusion of empowerment. Yet, true solutions to personal and societal challenges demand collaborative approaches and collective action. Effective change requires addressing fundamental issues such as economic inequality, educational access, and healthcare availability. Rather than placing the burden solely on the individual, progress relies on shared responsibility and community-driven solutions.

Sweat, Smiles, and Saddle Sores A Change in Perspective

Posted on March 23, 2025March 22, 2025 by Digital Editor

When I received my newly prescribed reading glasses, I was intrigued by their dual function. The lenses were segmented: the upper half for reading, while the lower half protected against UV rays and screen glare from PCs and mobile devices. Additionally, they had photochromatic properties – remaining transparent indoors and darkening when exposed to UV light. Given that Addis Ababa’s UV index is typically high, such precautionary measures are necessary. Interestingly, these glasses reminded me of how reality itself shifts depending on perspective.

Being on the higher side of the BMI scale did not just stop at being a minor nuisance for me when my Blood pressure readings bordered towards stage one hypertension. Though I did not exactly have any physical symptoms, consistent readings were a cause for alarm. If one’s BP readings persist in stages one & two for an extended period, the situation potentially dictates the start of a lifetime of medication.

However, the doctors did not want me to start medication right away prescribing an interim monitoring period involving a major lifestyle change. This includes a total exclusion of salt from the diet, less consumption of caffeine, a rigorous exercise regimen and techniques of employing relaxation to minimize the damage that comes from tense and stressful events.

I was very much averse to resorting to medication so I set out implementing the lifestyle changes advised by my physician. The challenge, however, was making exercise enjoyable. While gyms offer comprehensive fitness programs, they are not exactly everyone’s cup of tea. Many people start with enthusiasm, only to lose interest over time. Some prefer morning runs, while others, like a friend of mine, take to cycling.

I once ran into him at Mamo Kacha in CMC after his regular Sunday ride. Clad with his full biking apparel and gear with his beloved macchiato on hand. He had just completed an astounding 70-kilometre ride from CMC to Burayu and back, yet his countenance revealed neither fatigue nor misery. Instead, he radiated joy and genuine satisfaction, completely immersed in something he loved to such an extent that he was indifferent to the exhaustion.

For my friend pedalling through the Addis landscape along winding roads, rolling hills, steep climbs and diving descents was just a good time. His enthusiasm resonated with the adventurous and outgoing side of me, planting a seed in my mind: exercise should be fulfilling, not just obligatory. One thing was for sure, going to an indoor gym and working on a bench press and treadmill and squatting was not for me.

With that realization, I reconsidered my options. Remembering my past horseback riding experiences, I checked if the Balderas Horse Club near my home had reopened after renovations. It had. Excited, I planned my weekend visit, reminiscing about previous adventures: a three-hour ride from Jan Meda through the Kebena forest and a galloping session at Beka Ferda Ranch, near Gurura around the French Legasion area.

After a light snack of English cake and coffee, I took a short drive to Balderas. The club’s wrought iron insignia, featuring two horses, bore the small Amharic inscription: “The Palace Administration Equestrian Club.” This historical connection testifies to the enduring legacy horse riding has among the royalty and noblemen in Ethiopia.

Inside, I was welcomed by a well-maintained facility and attentive staff. I moved over to the riding area and waited for the staff to make the horse ready. Mounting my horse, a rush of endearing familiarity overcame me – the rhythmic sound of hooves, the firm grip of the harness, the dry yet gentle feel of the saddle. I was back in my element. Is it not great to be trotting again and how free it feels.

I booked my horse for a one-hour ride during which I tried to revive the skills that I garnered from my brief riding escapades about a year ago. Like all motor skills, my riding skills albeit moderately basic did not quite leave me. Midway, I switched horses, as the first one showed signs of fatigue. Addis’s intense sun and my own weight must have taken their toll. I was already sweating profusely and the sun was not making it any easier with the notorious Addis UV radiation at play.

Despite the heat and exhaustion, I relished every moment. Just as my biker friend did not mind the physical toll of his maneuvers, I was at a height of good mood and enjoyed every moment of it. My sweat-drenched polo and the cramps on my thigh were my trophies. I returned home for a shower and a nourishing meal, feeling accomplished.

My fitness adventure took another unexpected turn when I noticed a flyer at Novis Supermarket in the Hilton Addis, advertising a Zumba class. Curious, I called the instructor who invited me to the Ararat Armenian Club on Monday. Stepping into the historic halls of Arment School, I was greeted by my enthusiastic and charismatic instructor. I found myself in a room full of energetic women, spanning ages from their twenties to past their fifties. Initially, I was the odd one out. But within minutes I felt welcomed, the atmosphere eased any self-consciousness I had. No one questioned the portly gentleman who joined the class.

The high-quality sound system, vibrant lighting, and rhythmic beats of Latino, African, European, and Ethiopian music set the mood as we warmed up. Our charismatic instructor led with graceful, effortless movements, making the class entertaining and physically demanding. Before I knew it, I was immersed in something extraordinary. Within fifteen minutes, I was drenched in sweat, yet exhilarated. I did not realize how intensive the dance maneuvers were until I felt the lingering cramps in the evening and the day after.

Here I am enjoying the Zumba dance among perfect strangers whom I did not know a few weeks ago. It was as strange as it was fun and I could not have imagined such a reality existed. It was a gateway to a new perspective, an entirely unchartered territory and an amazing kaleidoscope of possibilities.

After a few weeks of horseback riding and Zumba, I visited the clinic for a BP checkup. To my surprise, my once-stubborn reading of 140/100 had miraculously dropped to 120/85. While dietary changes, like cutting out salt, played a role, the impact of engaging, enjoyable physical activity can never be underrated. What started as a health concern evolved into an enriching experience.

Meeting new people, acquiring new skills, and finding joy in movement were the icing on the cake. All it took was a shift in perspective, proving that sometimes, the key to transformation lies not in rigid discipline but in discovering what truly brings fulfilment. It is incredible how a slight change in perspective can reap benefits in leaps and bounds.

Ethiopia’s Taking a Page from Kenyas Market Playbook Can Pay Off

Posted on March 23, 2025March 22, 2025 by Digital Editor

The launch of the Ethiopian Securities Exchange (ESX) in January this year marked a landmark event in Ethiopia’s financial history. It arrived at a time when Kenya had already established itself as an Eastern African financial powerhouse through the Nairobi Securities Exchange (NSE).

Decades of structured reforms, regulatory vigilance, and new products helped turn the NSE into one of the region’s most vibrant capital markets. Ethiopia’s goal is to adopt and adapt similar strategies, while respecting the realities of its economy.

Historically, Ethiopia’s financial sector has been dominated by banks holding 96pc of total financial assets. That dominance gave businesses few avenues to raise funds besides bank loans, often saddling them with liquidity shortages and high borrowing costs. By creating the ESX, the authorities hope to open up equity and debt markets, making it easier for firms to tap capital for expansion. This aligns with the Homegrown Economic Reform agenda, designed to modernise the economy and attract foreign investors.

Although the authorities recently revised the credit growth caps by four percentage points from 14pc, which was first introduced in 2023, many businesses still struggle to secure adequate financing. Officials see the new Exchange as a vehicle to reduce these constraints and enable a more dynamic financial ecosystem.

Policymakers’ ambitions also include diversifying its economy beyond agriculture, which has long been prone to weather shocks and price swings. The ESX could help smooth out some of these vulnerabilities by channelling capital toward the industrial and service sectors. Small and medium enterprises may be among the biggest beneficiaries, finally gaining broader financing options.

Economic growth is projected to hit 8.4pc by 2026, which gives policymakers confidence that the timing is right for a capital market. Yet, limitations remain. Macroeconomic concerns, such as inflation and external debt, can scare off investors. Real estate occupies a large share of the economy, heightening the risk of sectoral downturns spilling over. The banking system’s liquidity limits could also constrain early trading on the Exchange. As the regulator, the Ethiopian Capital Market Authority (ECMA) should demonstrate that it can enforce unambiguous rules and protect investors. Without such trust, the ESX may struggle to gain momentum.

The Exchange’s establishment through a public-private partnership (PPP) model demonstrates a shared commitment between government and private stakeholders to ensure sustainable market development. This partnership could boost investor confidence, as it signals that policy and commercial interests are aligned. If managed well, the PPP structure could allow expertise and capital from both sides to guide the Exchange’s long-term growth.

Kenya’s track record illustrates how well-crafted policies and capable oversight can stimulate capital market growth.

The Kenyan economy, expected to expand by around five to 5.5pc in 2025, draws on a range of sectors, including agriculture, telecommunications, and infrastructure, that underpin the NSE. Market capitalisation reached 16 billion dollars in February 2025, partly due to investor confidence built up over the years. The Capital Markets Authority (CMA), created in 1989 to oversee development and align regulations with IOSCO standards, is at the core of Kenya’s framework. A risk-based monitoring model lets the Authority focus on areas most susceptible to misconduct, encouraging innovation and boosting confidence.

Another turning point for the NSE was its demutualisation in 2014, transforming it from a member-owned institution into a more transparent, profit-driven entity. Kenya also upgraded its technology, automating equity trading in 2006 and debt trading in 2009, while improving its Central Securities Depository. These changes curtailed settlement risks and slashed transaction costs, drawing in domestic and foreign investors alike. Over time, the NSE introduced new products, including Real Estate Investment Trusts (REITs), derivatives, Exchange-Traded Funds (ETFs), and electronic Initial Public Offerings (e-IPOs). This variety attracted different types of investors and gave companies more avenues to raise capital.

Kenya’s strategy of opening its market to global participants injected liquidity and broadened the investor base, though it also entailed safeguarding domestic interests.

The NSE now features 65 listed companies from the banking, manufacturing, telecommunications, and agriculture sectors. Government bonds remain a cornerstone, offering stable returns and benchmarks for the broader fixed-income market. Corporate bonds add an alternative for firms seeking capital, though typically at higher yields than sovereign debt. Collective Investment Schemes, such as unit trusts, have widened market access by letting retail investors pool funds, while REITs have helped finance real estate development in a country hungry for housing.

This progression displays how a capital market can anchor economic growth.

Ethiopia hopes to follow suit. A robust regulatory framework is the starting point, as investors expect transparency in trading practices, disclosure rules, and dispute resolution. The ECMA could adopt a risk-based approach modelled on Kenya’s, first channelling its resources to the highest-risk segments. Financial literacy campaigns may help ordinary citizens grasp the benefits and pitfalls of market participation, building a healthy retail investor base.

Compensation mechanisms or insurance schemes to protect investors from broker insolvency or fraudulent practices could go a long way toward boosting confidence.

Beyond regulation, the authorities should create incentives for participation. Kenya offered tax breaks and discounted listing fees in its early days to motivate companies to go public. Ethiopia could replicate such tactics, lowering barriers to listing and encouraging issuers to tap the new Exchange. Foreign investors may bring crucial liquidity, but local authorities might limit ownership in sensitive sectors or introduce gradual caps to safeguard domestic interests. Striking this balance is essential to ensure the ESX grows without triggering unintended consequences.

Technology will likely be another pillar of success. Efficient trading systems and reliable clearing can reduce operational hiccups and settlement delays. To broaden access, particularly for potential investors outside major cities, they might look at e-IPOs or mobile trading platforms. Distributed ledger technology could also help streamline registration and settlement, lowering costs and boosting transparency. Getting these systems right from the start can prevent growing pains later.

Product diversity stands out as a lesson from Kenya’s playbook. A government bond market can anchor the ESX with stable yields and a benchmark for corporate debt. From there, Ethiopia might branch into corporate bonds, ETFs, REITs, and possibly Islamic finance offerings. Including microfinance institutions and cooperatives in the broader ecosystem could further integrate smaller savers. The result could be a capital market that supports corporate financing and promotes financial inclusion.

None of this can happen without trained personnel and capable institutions.

Regulators, brokers, and issuers all need expertise in capital markets. Partnerships with the African Development Bank, the United Nations Development Programme, Financial Sector Deepening Africa, or Kenya’s CMA could jump-start capacity building. Well-structured training programs and knowledge transfers might help Ethiopia avoid missteps in its early development. Experts also point to the importance of specialised teams within the ECMA to handle complex products, ensuring the market evolves smoothly as it diversifies.

The ESX’s launch undoubtedly opens a new chapter in Ethiopia’s economic story. Diminishing dependence on traditional banking channels could stimulate corporate growth and state-led infrastructure or social development initiatives. Yet, success will depend on macroeconomic stability, prudent regulation, and a willingness to adjust policies as conditions evolve. Foreign investors eyeing the Ethiopian market will want reassurance that the rules are clear, contracts are honoured, and risks are well-managed.

Kenya’s experience confirms that capital markets can adapt, even through bouts of volatility, if anchored by solid oversight and responsive innovation. The Nairobi Securities Exchange has faced market swings but continues to refine its framework and expand product offerings. Ethiopia can study Kenya’s approach — especially how it balanced liberalisation with protective measures — while tailoring its own policies to local priorities.

This venture also aligns with a broader regional trend toward financial integration. If Ethiopia’s market matures, the possibility of cross-border listings or linkages with other African exchanges grows more realistic. Such connections might eventually grant Ethiopian businesses and investors access to deeper liquidity pools, spurring more cross-border financing. But for now, the focus should remain on making the ESX an efficient, trustworthy, and liquid market at home.

Building that trust will take time. Investors will watch closely for how regulators handle early cases of misconduct or disputes, and whether disclosure standards match international norms. Early successes, such as smooth listings or bond issuances, could help set a positive tone. If authorities can navigate this rollout effectively, through prudent regulation, technological investments, and partnerships, then January 10, 2025, may be remembered as the day Ethiopia took a bold step toward a more diverse, resilient, and globally connected financial future.

Ethiopia’s experiences will not mirror Kenya’s in every detail. Nor should it be as domestic realities — from inflation rates to political considerations — will shape the ESX. Still, Kenya’s story of deliberate reforms and market openness can serve as a useful guide for what can go right when the authorities commit to transparency, innovation, and steady oversight. The distance between where Ethiopia stands now and where Kenya’s NSE has arrived shows the challenges and the possibilities.

If Ethiopia seizes this opportunity, the ESX could evolve into a pillar of national development, channelling investment to sectors that need it most and offering new horizons to businesses and citizens alike.

Will the Dollar Continue to Fall?

Posted on March 23, 2025March 22, 2025 by Digital Editor

Although I no longer live and breathe the markets on a daily basis, I have never forgotten some key lessons I learned early on as an economist working in the financial industry: it is much easier to be wrong than right.

Consider one of the big, early surprises of 2025. Late last year, following Donald Trump’s election victory, the US Dollar was steadily rising, reflecting widespread expectations of relatively robust US economic growth, additional fiscal stimulus, and new or somewhat higher tariffs that supposedly would strengthen the dollar further. Instead, the dollar has been declining sharply.

Something else I learned early on is that given the size and depth of the foreign exchange market – where all known information gets priced in very quickly – it pays to be sceptical of overwhelming consensus views. Often, some element of the consensus outlook proves rather questionable. For example, I found it odd that so many forecasters saw tariffs as pro-dollar and unlikely to be overly disruptive to the US economy, despite being a net negative for US consumers.

Then there is the fact that some of Trump’s closest economic advisers have spoken openly about the need for other currencies to be stronger. That is why they have been pushing some new version of the famous 1985 Plaza Accord, whereby Japan and Germany agreed to strengthen their own currencies against the dollar to placate the United States. The “Mar-a-Lago Accord” is supposed to do the same.

What seems clear to me is that the Trump Administration is focused on US manufacturing and its own definition of competitiveness, neither of which offers much basis for expecting a persistently strengthening dollar. True, the usual counter-argument is that tariffs are needed because the dollar’s strengthening cannot be stopped, given the “exceptional” US economy’s unrivalled merits. America is “exceptional.” It boasts deep, liquid financial markets and cutting-edge technology, and it is preeminent in security matters and superior to its peers in terms of overall growth.

If the dollar’s relative weakness in 2025 is merely a price correction, these fashionable arguments will likely re-appear and carry it upward again. And yet, there are cyclical, structural, and even systemic factors that may make continued dollar weakening more likely.

On the cyclical front, recent high-frequency data point to a near-term softening of the US economy, with the closely watched Federal Reserve Bank of Atlanta’s GDPNOw tracker forecasting negative growth for the first quarter of this year. Of course, it is too early to know whether this will be borne out. But, while it could be simply a temporary or technical artefact of the data, it is hardly the only warning sign. The latest business and consumer confidence surveys also give cause for concern.

Even people outside of the financial industry are becoming more unsettled about future inflation. The latest University of Michigan five-year inflation expectations survey (one of my own favoured indicators) shows a rise to 3.9pc, the highest in more than 30 years. If this trend persists, watch out.

Some analysts argue that this index is not as reliable as it once was, owing to changes in the survey methodology and the suspicion that Democratic voters are more inclined than Republicans and independents to respond. But, professional pollsters know how to account for such discrepancies, and unless the actual calculation is somehow more biased toward Democrats, this argument is unconvincing.

Many more commentators are suddenly talking about US stagflation, and owing to Trump’s erratic and aggressive behaviour. Other countries are not simply standing still. As I noted last month, policymakers in many countries – especially in Europe, but also in China – recognise that they must make changes to reduce their economies’ dependence on the US.

All these developments in the US and globally can account for the dollar’s recent decline. But, there is also a more fundamental issue apart from what might otherwise be a “cyclical” decline. If Trump persists with tariffs and they do raise US inflation and create knock-on effects in the real economy, the longer-term equilibrium value of the dollar is likely to be less than it might have been. This, too, would warrant an adjustment in the price of the greenback – and perhaps a rather large one, if Trump keeps doubling down on his current approach.

That brings us to the systemic dimension.

There is a long-running academic debate about why the dollar’s strength has persisted for so long, with some arguing that its value goes hand in hand with US power as a security guarantor and the dominant player in the post-World War II multilateral institutions. If the US is now abandoning these roles, others will be forced to stand up for themselves, and the dollar’s unquestioned dominance could finally come to an end.

The Real Estate Industry Faces Its Toughest Test Yet

Posted on March 23, 2025March 22, 2025 by Digital Editor

The real estate market is bracing for a transformative shift. Last year’s landmark legislation (Proclamation No. 1357) is set to reshape an industry long beleaguered by a lack of oversight and wavering consumer trust. The law, now supplemented by a draft regulation spanning five parts and 20 articles, seeks to instil accountability, transparency, and quality in construction, with industry officials and developers weighing in on its implications.

On March 1, 2025, officials from the Ministry of Urban Development & Construction and the Addis Abeba City Housing Development Administration Bureau convened a meeting with managers of real estate firms in Addis Abeba. Their objective was straightforward. They wanted to gather feedback on how the proposed rules could influence the market. At a time when rapid urban expansion and soaring property prices have become everyday realities, the discussion could not have come at a more critical moment.

The new legal framework targets some of the long-standing issues that have plagued the real estate industry. For years, transactions have been marred by uncertainty, and the absence of a rigorous regulatory regime has left buyers and investors vulnerable. The lawmakers’ approach, articulated in articles five of the law and four of the draft regulation, spells out financial and technical requirements designed to enforce enhanced discipline among developers. Under these provisions, developers should provide proof of land lease ownership, demonstrate a robust organisational structure, and ensure that meet minimum size requirements of 1,500Sqm or a stipulated number of units for properties acquired through negotiations.

These conditions extend to the project’s planning and execution. Before a permit can be granted, developers should present a construction schedule and a detailed project study. The new licensing process also includes a set completion date, with extensions permitted only twice, except under extraordinary circumstances. Foreign investors are not left out of the picture; they are required to satisfy a minimum capital requirement in line with the investment law to qualify.

Perhaps one of the most defining shifts in the law is its emphasis on ensuring project completion before transferring properties to buyers. Under the new rules, a property has to be at least 80pc complete before developers can hand it over to buyers, unless the buyer explicitly agrees to an earlier transfer. Basic infrastructure such as electrical wiring, plumbing, mechanical systems, and sanitary works should be in place. This requirement addresses a persistent source of disputes where unfinished properties have been transferred, leading to considerable frustration among buyers.

To further enhance consumer protection, the legislation strictly prohibits misleading promotional claims and the collection of upfront payments before securing a building permit. Developers are now obligated to share comprehensive details about construction materials and architectural designs with buyers, thereby encouraging greater transparency in an industry that often operates in the shadows.

A noteworthy requirement in the new law is the encouragement for forming homebuyer associations. These associations are hoped to act as watchdogs by monitoring construction progress and tracking funds. In theory, this arrangement should enhance transparency and safeguard buyers’ interests. However, some developers have expressed concerns. They fear that active homebuyer associations might inadvertently complicate project timelines, particularly if they demand modifications that depart from approved plans or lack a full understanding of construction processes.

Financial oversight is a central pillar of the new regime. It introduces stringent measures for developers who sell units before a project is fully built. In such cases, developers deposit buyers’ payments into controlled, closed bank accounts. They should also provide indisputable proof of ownership, and resale of the property is strictly forbidden until construction reaches completion. The draft regulation goes even deeper into the specifics of fund management. It mandates that all pre-sale proceeds be placed in these controlled accounts, with withdrawals allowed only when specific project milestones are met.

For projects that have amassed more than 80pc of their sales revenue, no property may be sold or transferred until the project is fully complete. Once finished, funds are released in stages — 20pc, 40pc, and the final 80pc — corresponding to various construction phases. The phased release of funds is designed to ensure that money is used exclusively for the project and not diverted to other, unrelated expenses.

Critics argue, however, that such strict financial controls could complicate the financing for developers, particularly in situations where quick liquidity is necessary or unexpected costs emerge. The tight regulations might also create opportunities for under-the-table transactions, though proponents maintain that the overall benefits of consumer protection far outweigh the potential drawbacks.

Compliance with local building codes and zoning laws is another critical area under the new rules. Developers who fail to meet quality standards, misuse site allocations, or collect unauthorised advance payments face severe consequences. Licenses can be suspended for up to 90 days or revoked outright. In cases where a developer is found guilty of fraud, unauthorised money collection, or false advertising, the law mandates a ban from real estate activities for a year. The draft regulation emphasises these measures as vital to enhancing accountability in the market.

The new law is designed to make Ethiopia more attractive to foreign investors. By clarifying land access rules and outlining specific financial guarantees and incentives for large-scale projects, the authorities seem to want to eliminate the regulatory uncertainty that has long deterred international capital. This initiative could promote partnerships between foreign and local developers, paving the way for knowledge transfer and economic growth.

Dispute resolution under the new system is intended to be swift and efficient. Complaint committees at regional and city levels are empowered to handle grievances, ensuring that issues are resolved promptly without overwhelming the judicial system. If homebuyers are dissatisfied with construction quality, they have the option to approach the relevant complaint committee. This body will investigate the matter and issue recommendations, a process designed to restore trust and maintain the integrity of the real estate market.

Yet, the successful implementation of these measures will depend heavily on effective oversight and public awareness. Regulators should be adequately trained, and members of the public should be informed of their rights under the new regime. Additional resources and staff may be required to monitor compliance in regions outside major urban centres, areas where regulatory enforcement has historically been weak. This includes everything from scrutinising developers’ financial documents to verifying that construction milestones are, indeed, met.

Beyond addressing the immediate concerns of consumer protection and financial oversight, the law is expected to contribute to the broader urban policy goals. The country is experiencing rapid development, and housing shortages have driven up property prices, making affordability challenging. By enforcing standardised procedures and curbing speculative practices, the law could potentially stabilise or even reduce housing costs over time.

However, if the new rules are too burdensome, developers risk passing on the extra costs to buyers or, worse, abandoning projects altogether. The delicate balance between regulation and market flexibility will be a key challenge for policymakers in the coming months.

Trumps War on Foreign Aid, the Rise of Transactional Diplomacy

Posted on March 23, 2025March 22, 2025 by Digital Editor

President Donald Trump’s decision to gut USAID — effectively dismantling 42pc of the global humanitarian aid system and jeopardising millions of lives — has reignited the debate over the effectiveness of foreign assistance. With many developing countries trapped in a seemingly inescapable cycle of aid dependency, it is increasingly clear that the dominant model is ill-suited to today’s economic and geopolitical realities.

But, many of the alternatives being pondered in the Age of Trump offer no real solution, either.

Foreign funding has long been a key driver of global development, shaping economic trajectories in often overlooked ways. The United States itself relied on foreign financing during its War of Independence, and China’s industrial boom was partly driven by Japanese soft loans. Japan, too, sought World Bank financing to build the power plants that fueled its rapid growth. Even the United Kingdom (UK) turned to the International Monetary Fund (IMF) 11 times between 1956 and 1977 – more frequently than today’s most aid-dependent African economies. And, in the late 1940s, Spain turned to Argentine handouts after being excluded from the Marshall Plan.

Even the mobile payment platform M-Pesa, long a symbol of African self-reliance on innovation, got its start with the support of an aid grant.

Until the late 1970s, most IMF loans went to what are now considered advanced economies, with nearly 72pc of IMF lending directed to these countries in the 1960s alone. But over time, the most dynamic and enterprising economies managed to break free from aid dependency, and development assistance dwindled, eventually becoming a negligible fraction of global financial flows.

Today, the foreign direct investment passing through the Netherlands alone each year is roughly 15 times the global aid budget. With a few exceptions, like the Asian Tigers in the late 1990s or Greece and Portugal in the 2010s, the past few decades have shown that aid dependency is not inevitable.

But, accelerating economic development requires a sustained global effort. Regrettably, wealthy countries’ commitment to the traditional aid paradigm – as outlined in the Addis Abeba Agenda and championed by the European Union (EU) – has always been tenuous at best. This is evident in their failure to meet their 1970 pledge to allocate 0.7pc of their gross national income (GNI) to development assistance. Within three years of setting that target, OECD countries’ average contribution had already fallen to 0.2pc of GNI. In 2023, it was 0.37pc.

As emerging economic powers like China and the United Arab Emirates (UAE) assume a larger role in shaping the rules of the international system, a more transactional approach to aid – explicitly tying development assistance to business interests and geopolitical objectives – is gaining traction.

This signals a reversion from today’s aid paradigm to the era when aid was primarily driven by explicit self-interest. At gatherings like the St. Petersburg International Economic Forum, policymakers call for a new multipolar age in which developing countries in Africa and elsewhere would be able to assert their sovereignty, engage with “development partners” on their own anti-colonial terms, and no longer serve as a “Graveyard” for Western aid projects.

Western policymakers seem oblivious to these developments. While they mourn the humanitarian fallout from USAID’s demise, such as the escalating famine in Sudan, Russia and other powers are busy cutting strategic deals. For example, even as 60pc of Uganda’s HIV budget hangs in the balance, its government is forging new energy and infrastructure partnerships with the UAE. But, few expect rising economic powers like China and the UAE to assume traditionally Western roles like distributing antiretrovirals and menstrual pads or defending press freedom and judicial independence.

Although they may occasionally make such gestures for optics, they have no intention of reshaping recipient countries’ institutions or pushing for systemic reforms.

The St. Petersburg model of development cooperation is narrower, more explicitly transactional, and far less institutionally intrusive than its Western counterpart. It makes no lofty promises. Instead, it operates as a kind of portmanteau diplomacy – a blend of strategic gifts, investments, and land acquisitions, unburdened by grand ambitions or the risk of losing credibility when such promises fall short.

Trump’s transactional mindset aligns seamlessly with this paradigm shift. But, while proponents of the portmanteau model present it as a pragmatic approach to development, their claim that it creates a faster escape route from aid dependency veers into utopianism. China’s assistance of this type has done little to accelerate Zimbabwe’s economic development; if anything, it has deepened the country’s reliance on aid.

To be sure, the Western paradigm has failed to live up to its promises. But its likely replacements offer little cause for optimism. Lacking the vast development-consulting industry that has grown around the Western model, emerging powers remain unwilling to engage in the institutional oversight needed to create localised alternatives. There are no drawn-out deliberations or endless hand-wringing, as is often the case with Western aid. When the going gets tough, countries like China simply walk away.

In my home country, Ghana, the transactional aid model has resulted in abandoned Chinese-built dams and failed Indian-backed gold and sugar refineries. While activists like me have long criticised the European aid model for being co-opted by a cabal of local and Western insiders, the new wave of projects financed by emerging powers has been even more damaging.

But, regardless of the aid model, the fundamental challenge facing low-income countries remains unchanged: unlike Asian and European countries that successfully moved beyond aid dependency, countries like Ghana continue to grapple with a political elite seemingly incapable of effective policy leadership. Consequently, other domestic actors, such as the vibrant civil society watchdogs in Ghana and Kenya, should rise to the occasion and monitor development spending to ensure better coordination, prioritisation, and efficiency.

Activists celebrating the potential emergence of a post-imperial, agency-driven, multipolar aid system would do well to remember that economic progress will remain out of reach as long as civic disempowerment persists. Until we confront this fundamental challenge head-on, no aid paradigm will be able to put developing countries on the path to economic independence.

The Convenience Trap

Posted on March 23, 2025March 22, 2025 by Digital Editor

Over the weekend, I watched a mother I know closely hand her children a bag of chips and packed juice for lunch. She isn’t the type to welcome feedback on her parenting, but I couldn’t stay silent. Before I could say anything, she quickly reassured me that these were organic, healthy choices providing variety. I was alarmed that she genuinely believed highly processed snacks and sugary, artificial juice offered the necessary nutrients for her children.

In today’s fast-paced world, processed and packaged foods have become the norm for many families. Convenience often takes precedence over nutrition and food safety. Well-intentioned parents, believing they are making the best choices, opt for pre-packaged foods over home-cooked meals.

This trend is particularly visible in Addis Ababa, where affluent urban families increasingly turn to imported packaged foods, assuming they are superior to freshly produced alternatives. But the reality is far from reassuring. Packed and processed foods carry risks ranging from contamination and undisclosed additives to a lack of nutritional value; making them an unhealthy choice, especially for children.

Many believe that packaged foods undergo strict quality control and are therefore safer and more nutritious than fresh foods. This assumption has led to a heavy reliance on imported options. Parents spend exorbitant amounts purchasing these products from flight attendants, shops, and travellers, convinced they are cleaner and healthier.

Yet the reality is starkly different. Packed foods often contain preservatives, stabilizers, dyes, and high levels of added sugars or salts that compromise their nutritional value. Unlike fresh produce, which retains its natural vitamins and minerals, processed foods lose essential nutrients during production. Even when manufacturers artificially add vitamins and minerals, they rarely match the benefits of those naturally present in whole foods.

In Ethiopia, food safety concerns extend beyond processing. The country’s Food and Drug Authority has limited oversight, making it difficult to determine contamination levels in locally processed and packaged foods.

In my household, we once relied on processed and packed teff for convenience. But to our shock, we discovered strands of steel and plastic gloves mixed into the flour when we were refining it. Our supposedly pure teff was consistently adulterated with rice, without our knowledge or consent. The experience forced us to buy the grain and have it processed ourselves.

These contaminants pose serious health risks. Metallic particles and plastic residues can cause digestive issues and long-term health complications. Even when not immediately harmful, their presence exposes deeper issues: poor quality control and weak food safety regulations.

The assumption that imported-packed foods are safer than locally packaged is flawed. Even in the United States, where the Food and Drug Administration (FDA) regulates food production, certain levels of contamination are legally allowed. The FDA sets “defect action levels,” which define the maximum levels of natural or unavoidable defects in foods that do not pose an immediate health hazard.

For instance, the FDA allows up to one rodent hair per hundred grams of peanut butter. Up to sixty insect fragments per hundred grams of chocolate are permitted. A maximum of 45pc mould count in tomato products is allowed before action is taken. Up to twenty maggots in canned mushrooms per hundred grams are allowed. Small amounts of rodent faeces are tolerated in wheat and other grains.

These incredibly unappetizing allowances exist because eliminating all contaminants is highly costly and impractical in large-scale food production. Even in well-regulated nations, packed foods are not free from contamination and health risks.

Another common misconception among urban families is that American-made foods are the gold standard of safety and nutrition. Some go to great lengths to stock their kitchens with U.S. imports, believing they are making a healthier choice.

One of my relatives, for example, filled their luxurious pantry with expensive imported foods for their children. However, when my husband and I introduced them to an app that scans and rates food and cosmetic products based on ingredient safety, their perspective changed overnight. To their shock, many of the items they assumed were “healthy” and “safe” were flagged as hazardous due to high levels of additives, preservatives, carcinogenic dyes, artificial flavours, and chemical contaminants.

Fresh foods always offer a significant advantage over packed and processed alternatives. Unlike packaged foods, fresh ingredients do not undergo extensive processing that strips them of nutrients or introduces harmful chemicals, toxins, and foreign objects.

The appeal of packed foods often lies in convenience. Some families, unaware of the dangers, fall for aggressive marketing tactics, putting themselves and their loved ones at risk. Busy schedules make home-cooked meals seem like a luxury, but the long-term health consequences of processed foods – including obesity, diabetes, hypertension, and heart disease – far outweigh the short-term ease of preparation.

Raising awareness about food contamination and the dangers of processed foods is crucial. Ethiopian consumers must be informed about the realities of both locally packed and imported foods.

While packed and processed foods are often marketed as safe and nutritious, they carry significant risks. No processed food no matter its origin is entirely free from health concerns. The best approach is to prioritize fresh foods that offer better nutrition and fewer contaminants.

Ethiopians are fortunate to have access to fresh, minimally processed food. Instead of relying on packed foods, families should embrace home cooking and traditional diets. Real food prepared from fresh ingredients wins not just our taste buds but also our precious health.

Shining Light on Small Businesses

Posted on March 23, 2025March 22, 2025 by Digital Editor

The bustling streets of Addis Abeba now carry a heavier weight for business owners. The cost of doing business has been steadily rising, with new mandates adding to existing pressures. Take, for instance, the seemingly simple task of painting a shop’s exterior. If your establishment happens to face a main road, the requirement is a uniform grey. It is a small detail, but an added expense nonetheless. That’s just the beginning.

Beyond the paint, businesses are required to install specific lighting and transition to LED advertising displays, each demanding financial outlays. Perhaps the most talked-about regulations are those concerning operating hours and nighttime illumination. Businesses must now keep their lights on throughout the night, even when closed, and remain open until 9:30 PM. These rules have sparked considerable debate.

Who will shoulder the burden of the increased electricity bills? Will the government step in with subsidies, or will struggling business owners be left to bear the expense alone? Perhaps a shared responsibility, a “going Dutch” scenario, could be a possibility, but the details remain unclear, adding another layer of uncertainty.

However, the more fundamental question is: why must a business owner stay open until 9:30 PM if they do not wish to? Consider a small shop owner, a mother or father who treasures those early evening hours to connect with their family after a long day. They could also be someone with personal commitments, hobbies that bring balance to life or simply require rest. Unless we are talking about essential services like hospitals or pharmacies, the necessity of a uniform closing time feels arbitrary. While a lively city atmosphere may be desirable, should it come at the cost of business owners’ autonomy and well-being?

These mandates, though introduced months ago, recently resurfaced in my mind during a conversation with a friend. We were discussing the exciting, yet often daunting, prospect of starting a business here in Addis Ababa. We often find ourselves discussing entrepreneurial ideas, and brainstorming what we could bring to the market, but for various reasons, our plans rarely materialize. This time, however, felt different. We decided to take the plunge.

Naturally, our research involved speaking with business owners to understand their realities. Their responses were mixed. Many admitted they were in business out of necessity, with few other options. A common sentiment was slow sales and the constant struggle to break even – an experience visible in the many shops we pass daily, where owners sit waiting for customers who seldom arrive.

However, there are also stories of resilience and quiet success. We met a woman who runs a small electronics shop, the sole source of income for her family. With two children, a monthly rent of 30,000 Birr and a husband unable to work due to illness, her business is not just a livelihood; it is survival. In situations like this, perhaps our perception of “profit” needs an adjustment. If a business can cover all the essential bills and the hefty rent, isn’t that a form of success in these difficult times?

Interestingly, even those managing to stay afloat would voice complaints about the slow pace of business. A persistent unease lingers – a sense that things could, and should, be better. Some warned us against starting a business altogether, painting a picture far less glamorous than we might imagine. Sometimes, this advice comes from a place of genuine care, a desire to protect us from potential hardship. But for someone brimming with entrepreneurial spirit, and eager to contribute to the economy, such warnings can be discouraging.

My friend and I have made a conscious decision. We refuse to be disheartened by tales of failure. We actively seek encouragement; focus on the possibilities rather than the pitfalls. We understand the risks involved, and we know there’ll be stumbling blocks along the way. But we would rather try and fail than not try at all. But we would rather try and fail than not try at all. And in the vibrant, challenging, and ever-evolving landscape of Addis Ababa, that in itself feels like a victory.

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Month: March 2025