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Month: April 2025

Policymakers Trudge Down a Path of Punitive Taxation

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Benjamin Franklin famously quipped that “nothing is certain but death and taxes.” Yet, when taxes themselves threaten economic life, policymakers should reconsider their methods.

Ethiopia’s leaders seem keen to test this grim hypothesis, relentlessly increasing taxes on a dwindling pool of formal taxpayers. Rather than broadening the tax base, their heavy-handed approach risks strangling the economy and undermining their fiscal goals. They plan to mobilise no less than 1.5 trillion Br in federal taxes during the current fiscal year.

The current fiscal regime under Prime Minister Abiy Ahmed’s (PhD) administration represents the most aggressive tax move the country has seen in decades. Authorities argue that their approach is necessary because the tax-to-GDP ratio is worryingly low, around seven percent, far below the 15pc recommended by economic experts to sustain basic state spending in a low-income country. However, this diagnosis, although seemingly compelling on the surface, misses the deeper issue.

Historically, Ethiopia’s tax collection has always been weak. Despite multiple rounds of reform since the early 2000s, including introducing Value Added Tax (VAT) in 2003 and frequent adjustments to excise and income taxes, the tax-to-GDP ratio peaked at just 13pc in 2015 under the determined efforts of the late Prime Minister Meles Zenawi and former tax authority chief Melaku Fenta. Unfortunately, progress quickly reversed during Hailemariam Desalegn’s administration, plunging back to single-digit levels.

A narrow tax base, rampant evasion, and widespread non-compliance have consistently undermined tax mobilisation efforts.

Ethiopia’s population has more than doubled since 1991, growing from roughly 50 million to about 120 million today (although no one is in a position to state the actual figure). Yet, despite about 60pc being within the productive age range of 15 to 64 years, the vast majority — around 85pc — remain informally employed and outside the formal tax system. Rather than addressing this fundamental imbalance, the tax authorities continue to burden the already heavily taxed minority: formal employees and businesses.

Formal salaried workers face an extraordinary cumulative tax burden, up to 40pc of their income when direct and indirect taxes are combined. For instance, a middle-income earner making around 10,000 Br monthly loses about 20pc of their gross earnings to personal income taxes alone. Pension contributions shave off another seven percent, and VAT on essential purchases further shrink disposable income. Such steep rates typically exist in wealthier countries, not in low-income Ethiopia, where the per capita GDP is barely over 1,200 dollars annually.

Businesses suffer similarly. Corporate taxes stand at a hefty 30pc, worsened by numerous withholding taxes and cumbersome compliance rules. Even small enterprises that pass the modest turnover threshold of half a million Birr a year must enter the VAT system, enduring disproportionate bureaucratic costs compared to their modest revenues. This punitive tax environment and the arbitrariness of tax enforcers discourage businesses from expanding and push many to remain small, informal, and untaxed.

Economist Arthur Laffer famously illustrated that higher tax rates do not always translate into greater tax revenues. Past a certain point, excessive taxation reduces economic activity, discourages investments, and spurs tax evasion, ultimately shrinking overall tax collection. Ethiopia’s policymakers appear dangerously close to this tipping point.

Examples from other countries – rich and poor – demonstrate clearly how lower tax rates can boost revenues and stimulate economic vitality.

In the United States, Presidents John F. Kennedy and Ronald Reagan dramatically cut marginal tax rates, with Reagan famously reducing the top rate from 70pc to 28pc. Rather than collapsing revenues, the American treasury saw income tax receipts nearly double within a decade to almost 950 billion dollars by 1990. Economic growth surged, and employment soared.

Britain under Margaret Thatcher saw a similar story. Thatcher reduced the top marginal tax rate drastically, from 83pc in 1979 to 40pc by the late 1980s. Contrary to predictions of fiscal ruin, Britain’s economy grew robustly, compliance improved markedly, and tax revenues expanded, enabling a remarkable economic revival. Neighbouring Ireland experienced similar success. In the late 1980s, facing economic stagnation and high unemployment, its leaders simplified the tax system and slashed corporate tax rates to 12.5pc by 2000. This policy shift catapulted the Irish economy from Europe’s laggard to its fastest-growing country, doubling overall tax revenues as its broader tax base expanded rapidly.

Even Russia’s experience provides lessons. Vladimir Putin’s government replaced a complicated progressive income tax structure, very much like Ethiopia’s, with a straightforward 13pc flat rate in the early 2000s. Tax compliance immediately improved, revenues increased enormously, and Russia experienced robust economic growth and fiscal stability.

Ethiopian policymakers seem unaware of or unwilling to learn from these global lessons. Instead, they continue to impose higher taxes on a shrinking formal economic sector. Parliament’s recent move to introduce additional income taxes to fund emergency humanitarian needs, though seemingly noble, risks damaging taxpayers’ trust further and eroding compliance, paradoxically undermining broader revenue mobilisation goals.

The current approach reveals profound unfairness at its core.

Formal employees and registered businesses shoulder disproportionately high burdens, while vast economic sectors remain essentially untaxed. This inequity breeds resentment, discourages expansion in the formal sector, and keeps the tax base dangerously narrow. If the authorities genuinely seek sustainable revenue increases, they should abandon their punitive tax strategy in favour of a more balanced, fair, and compliance-friendly system.

Kenya, Ethiopia’s regional neighbour, provides a practical model for tax reform.

With broadly similar tax rates — 30pc corporate tax, 16pc VAT, and substantial excise duties — Kenya consistently achieves a tax-to-GDP ratio between 16pc and 18pc. Its relative success lies not in higher rates but in more effective tax administration, improved digital systems, stringent compliance mechanisms, and widespread taxpayer engagement. Kenya demonstrates that efficient tax collection depends on broad compliance and effective administration rather than punitive tax rates.

Bangladesh, by contrast, illustrates the consequences of ineffective tax administration coupled with punitive rates. Despite similar taxation structures, Bangladesh’s tax-to-GDP ratio remains below eight percent, showing how administrative dysfunction and low compliance severely restrict revenue mobilisation.

Ethiopia now faces a similar predicament of dysfunctions in its tax administration, a state of reality that presents a critical choice for its leaders.

Policymakers can persist in their current high-tax, low-compliance strategy, inevitably leading to fiscal stagnation and a worsening economic crisis. Alternatively, they can adopt a proven approach of lower tax burdens coupled with robust administrative reforms. Experience from other countries confirms that lower, simpler, and fairer taxes can boost compliance, stimulate investment, and sustainably increase overall revenues. Ethiopia’s leaders would do well to heed these global lessons and recognise that sometimes, lowering taxes is indeed the smartest investment a government can make.

For a heavily agrarian and low-income economy, modest tax rates combined with efficient and fair administration could yield substantial improvements in tax mobilisation. Reducing tax burdens, simplifying tax rules, and broadening the base through targeted administrative reforms is not only sound economic practice but also an existential necessity for Ethiopia. This approach would address immediate fiscal pressures, stimulate economic growth, encourage formal business activity, and restore taxpayers’ trust.

The Ararat Connection

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You don’t need to travel to Old Jerusalem to know that its quarters are clearly marked: Jewish, Christian, Muslim, and Armenian. The last, while Christian, stands apart: home to the Armenian Apostolic Church and a community that has preserved its distinct heritage for centuries.

It was there, in the early 1920s, that Crown Prince Teferi Mekonnen, later Emperor Haile Selassie I, encountered forty orphans: survivors of the Armenian genocide. Moved by their plight, he arranged for their royal adoption and brought them to Addis Abeba in 1924. They became known as the Arba Lijoch (40 children), and under the guidance of the legendary Kevork Nalbandian, they formed Ethiopia’s first official orchestra.

Nalbandian went on to compose the country’s first national anthem, Ethiopia Hoy Des Yibelish (Ethiopia be Joyous), performed during Haile Selassie’s coronation on November 2, 1930. His legacy endured through his son nephew Nerses, who helped shape modern Ethiopian music.

As musical director of the National Theatre, Nerses Nalbandian mentored icons like Tilahun Gessesse, Alemayehu Eshete, and Bahta Gebrehiwot. His stirring composition Africa, Africa Hagerachin (Africa our country) coincided with the founding of the Organization of African Unity, a cultural crescendo to a political turning point. Today, the Nalbandian name lives on not only in music but in a family-run pharmacy that quietly preserves its heritage.

That legacy remains visible across Addis, often tucked into the fabric of daily life. A few weeks ago, I came across a painting of the St. George Armenian Church near Ras Mekonnen Bridge at an exhibition in the Hilton Addis. The artist, Selam Amsalu, had captured the twilight mood of the cathedral in graceful, expressive strokes. Over coffee with her and a young poet, Rediet Abebe, we discussed the painting and the story behind its subject.

On our way back, we stopped at the church; its twin flags, Ethiopian and Armenian, fluttering above its grey-stone façade. Selam photographed it from the same angle as her painting, and the comparison revealed the magical way an artist’s vision reimagines reality.

Just blocks away, near St. Mary’s Church, stands another Armenian institution: the Ararat Club. Nestled in one of the city’s oldest neighbourhoods near Seba Dereja (70 stairs), it’s more than a social club. It houses the Armenian school and a theatre, its facilities modest but resonant with decades of community life.

The area, nostalgic for me, recalls university days: an era of intimate bookstores, student hangouts, and clever anecdotes. One story still makes the rounds: a shopkeeper who’d absorbed so many student conversations that he once counselled a freshman by quoting Maxim Gorky, though he’d never read him. It was just something he overheard and memorised.

The Ararat Club takes its name from the mountain now in Turkish territory, sacred in Armenian lore as the resting place of Noah’s Ark. Though it no longer lies within Armenia’s borders, it remains deeply symbolic: a cultural and spiritual landmark in the Armenian imagination. Likewise, the club itself has become a refuge and meeting point for Addis’s dwindling Armenian community.

On one weekend visit to my favourite Hilton pastry spot, a poster on the Novis Supermarket notice board caught my eye: a Zumba dance class, led by a well-groomed young man with unmistakable Armenian features. His name was Vahe Tilbian.

A fifth-generation Ethiopian Armenian, Vahe is a dancer, instructor, and embodiment of modern Addis. When we spoke on the phone, I wasn’t sure he spoke Amharic. It turns out his fluency rivals mine; he is as Arada as they come, born and raised in the city’s Piassa district.

Attending his Zumba session at the Ararat Club was an unexpected joy. Entering through the cozy restaurant and climbing the creaky wooden stairs, I arrived at a circular hall filled with music and movement. Most of the dancers were women, a mix of expats and locals. Vahe led us with infectious energy, his choreography blending Afro, Latino, and Ethiopian rhythms.

Despite the weight gap between me and my more agile partners, I soon caught on; and danced with joy I hadn’t felt in years. Even more rewarding: my blood pressure, which had stubbornly remained in the hypertensive zone, dropped to normal levels after a few weeks. The exercise, the energy, the fun; it was the medicine I didn’t know I needed. Having so much fun and learning the intricate dance moves and skills was like an icing on the cake.

The Armenian contribution to Ethiopia goes well beyond the arts. In 1972, Dr. Arshavier Terzian, a medical scientist from Armenia, founded the first private medical laboratory in Addis Abeba. Arsho Medical Laboratories revolutionised diagnostics in a country with limited medical infrastructure. I remember, as a child, how my parents trusted only Arsho for reliable lab results. Dr. Terzian, like the Nalbandians, built something that outlived him, something essential.

Sometimes, tragedy seeds new beginnings. A documentary I watched during the European Film Festival, Aurora’s Sunrise, depicted the horrors of the Armenian genocide through the life of Aurora Mardiganian. A survivor turned silent film star; she portrayed her trauma in the 1919 film The Auction of Souls while pursuing the American dream.

Likewise, the Arba Lijoch (40 children), once abandoned orphans, became national pioneers in their new homeland. The Armenian presence in Ethiopia, though numerically small, has always loomed large: quietly shaping music, medicine, art, and even humour.

As our Zumba session wound down, we cooled off to My Love by Soul for Real, a soulful close to an invigorating hour. The dance, somewhere between ballet, Sufi whirling, and tai chi, ended in a hush of gratitude. We clapped, smiled, and thanked Vahe, whose radiant grin warmed the room. It’s the same quiet light passed down from generations of Armenians who made this city their home and left it better for their presence.

My love, do you ever dream of

Candy-coated raindrops?

You’re the same, my candy rain

The Activism Gets Funded But Not the Women Beneficiaries

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Gender activism has become so well-funded that it can almost afford to forget its original purpose. Over the past decade, international NGOs and donor-funded programs working on women’s empowerment have grown dramatically. Yet, despite substantial financial investment and widespread visibility, deep-rooted structural barriers to gender equality remain essentially unchanged.

Many of the issues come from the way these programs are conceived and funded. Donor organisations frequently shape projects according to their own priorities rather than addressing the practical needs of the communities they wish to serve. A prevalent example is the proliferation of women’s entrepreneurship programs, designed to help female business owners. While these initiatives promise empowerment through microloans and business training sessions, they rarely address the larger systemic issues such as property ownership, gendered labour divisions, and restrictive cultural norms.

Programs focusing on entrepreneurship are attractive to donors because they produce quantifiable outcomes, such as the number of women trained or businesses established. This fits neatly into annual reports. However, the deeper issues, such as limited access to credit or markets, workplace harassment, or the heavy burden of unpaid domestic labour, rarely appear in donor reports. Real-life struggles remain hidden underneath polished success stories.

Take the anecdote of Ethiopia’s gender equality awards, often given to high-achieving women in business or politics.

These awards make headlines, promoting individual accomplishments. Yet, they frequently overlook the underlying systemic issues that prevent most women from achieving similar success. The result is a superficial celebration that does little to dismantle barriers faced by ordinary women.

The parliamentary quota system is similarly illustrative. Initially celebrated as a major win for gender equality, it increased women’s representation. However, questions persist about what tangible outcomes this representation has delivered.

Have these women legislators succeeded in passing meaningful laws to challenge oppressive structures?

Too often, the mere presence of women in positions of power is treated as the solution itself, despite the reality that many of these women remain constrained by, and sometimes benefit from, the systems they are supposed to reform. Gender-based violence initiatives funded by donors usually prioritise awareness campaigns rather than addressing the source. Economic dependency, a lack of legal protections, and deeply ingrained societal attitudes often remain unchallenged, making such initiatives largely symbolic rather than transformative.

Another fundamental problem with donor-driven activism is the dependency it creates on external funding. Projects operating within the short-term development cycles of international aid often prioritise easily measurable outputs over long-term systemic outcomes. When funding dries up, as the recent unfolding of USAID has illustrated, these projects often disappear, leaving behind little lasting impact.

The pattern of short-lived initiatives funded by international donors has been evident repeatedly. Organisations come and go with grant cycles, and communities see a marginal mark. Structural change, which requires sustained effort and local ownership, frequently takes a backseat to the demands of donor reporting cycles.

Who truly benefits from donor-driven gender activism?

Often, the most beneficiaries are not the intended recipients, but rather the organisations and their donors. High-ranking officials, foreign consultants, and conference organisers convene in luxury venues, discussing empowerment in a detached, almost theoretical, and sometimes theatrical manner. The women at the centre of these discussions remain noticeably absent, appearing only as anecdotes or statistical references.

The spectacle of empowerment conferences shows this disconnect vividly. These lavishly funded gatherings feature expensive catering, polished workshops, and plush accommodations. They offer excellent opportunities for donor organisations to showcase their “impact” to funding entities abroad. However, real outcomes for women on the ground remain minimal.

The power imbalance inherent in donor-driven gender activism further exacerbates the issue. Donors, who control financial resources, often dictate agendas based on their own interests, rather than those of the women they are meant to benefit. These interests typically align with maintaining funding streams, favouring superficial, easily quantifiable projects rather than dealing with more profound structural inequalities.

Real empowerment requires addressing economic inequality, educational disparities, and marginalisation. Unfortunately, the current global gender agenda appears more focused on crafting feel-good narratives for international audiences. This approach overlooks the reality that Ethiopian women continue to face poverty, limited educational opportunities, and systemic marginalisation. True empowerment will come when Ethiopian women are seen not as passive recipients of external assistance but as active participants in their development. It involves supporting women’s initiatives, encouraging community-led solutions, and promoting genuine self-organisation.

The current model of donor-driven activism has transformed empowerment into a marketable commodity. Conferences, awards, and glossy reports have become the currency of international development, traded on the global stage for prestige and continued funding. The struggle for women’s rights and equality risks becoming overshadowed by performances that emphasise symbolism over substance.

It is time to shift the conversation and recalibrate priorities. Empowering Ethiopian women should move beyond donor-driven projects that treat gender equality as a checklist. Sustainable change will require addressing the underlying causes of inequality and involving women as active, central participants in their struggle for justice.

Why African Leadership Matters in Geoengineering

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As climate disasters proliferate and intensify, interest has grown in solar radiation modification (SRM), a group of large-scale interventions to lower global temperatures by increasing the amount of sunlight reflected away from Earth. To be clear, the risks and benefits of SRM remain uncertain. But that is all the more reason to design a thoughtful policy approach to these emerging and controversial geoengineering technologies.

This is particularly true in Africa, where SRM efforts could have potentially major economic and social implications, diverting attention or funding from other urgent priorities, such as expanding energy access and supporting a just transition. The continent’s policymakers and academics should therefore ensure that discussions about SRM in Africa are guided by a set of principles that emphasise transparency and informed decision-making, and shed light on the biases, power dynamics, and governance gaps surrounding this potential tool.

Research on solar radiation modification is still in its infancy, focused mostly on modelling and small-scale experiments. The most studied option is stratospheric aerosol injection (SAI), which involves releasing large amounts of sulfur particles into the upper layer of the atmosphere. The natural analogue of this process – a volcanic eruption – has been shown to decrease temperatures. But the possible environmental and socioeconomic risks associated with SAI, including its effects on everything from precipitation to human health, are not well understood.

Given such uncertainty, African leaders should push for a transparent and equitable approach to researching and governing SRM.

For starters, that means recognising the asymmetrical power dynamic between those funding research in this area and those working to increase oversight of it. This gap will only widen if governments, NGOs, and philanthropic organisations do not start to engage with the fact that private-sector entities are starting to develop SRM. Without a full understanding of the technology’s implications, public authorities will not be prepared to establish clear rules for its potential testing and deployment. This could lead to climate-vulnerable countries and communities being sidelined and bearing the brunt of any adverse consequences.

To some extent, this is already happening. Over the past two decades, actors from the Global North – both proponents and opponents of SRM – have dominated the field. Efforts to pursue new research in Global South countries and seek their policy perspectives are encouraging, but remain insufficient. To move beyond colonial forms of engagement, it is essential to facilitate knowledge sharing, rather than pushing for predetermined outcomes. Global South countries can and should forge a responsible path forward for SRM governance, while ensuring that mitigation and adaptation remain top priorities in global climate policy.

African governments are acutely aware of the difficulty of balancing climate-related investment and economic development. Trapped in a cycle of debt distress, many are struggling to restore fiscal stability, finance counter-cyclical measures to put their economies on a more sustainable trajectory, and adapt to the growing climate threat. A key concern for African stakeholders is that there are still more questions than answers about the consequences of SRM, raising questions about whether its effects will ultimately be more helpful or harmful. At the same time, it may well divert resources from other investments that are more likely to drive long-term economic growth and development.

A series of dialogues organised by the African Climate Foundation and the Alliance for Just Deliberation on Solar Geoengineering came to many of the same conclusions, including that SRM must not exacerbate inequalities and undermine climate action, and should be governed accordingly. The meetings also highlighted the need for better information sharing and capacity building in African governments, civil society, and academia concerning SRM, as many of the continent’s leaders lack knowledge about these technologies.

Developing an effective climate strategy – from accelerating the uptake of renewables to decarbonising industry and responsibly exploring controversial technologies like SRM – requires in-depth knowledge of the topic at hand. Multistakeholder dialogue and grassroots engagement – essential components of any geoengineering strategy – require it. Rather than simply arguing for or against SRM, these efforts should focus on collecting diverse perspectives and obtaining local input by increasing transparency, debating potential risks, and emphasising that no single technology is a panacea.

While African countries undoubtedly have more immediate concerns than SRM, policymakers and stakeholders on the continent should become better prepared to engage with this rapidly evolving field. The design and governance of SRM will play a crucial part in determining its impact, and developing a nuanced understanding of these early-stage technologies across Africa can help inform long-term decision-making.

As global warming accelerates, engaging with SRM at the regional, national, and local levels will be crucial to creating an inclusive, transparent, and accountable solar-geoengineering ecosystem on the continent.

Development Finance Needs an Entrepreneurial Mindset

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The fourth United Nations International Conference on Financing for Development, to be held in Seville, Spain, from June 30 to July 3, will consider a hotly debated topic: how development-finance institutions (DFIs) can mobilise more socially beneficial private investment in the countries where they operate.

Many have pointed to the shortage of “bankable projects” as the main barrier to mobilising private-sector capital. They are not wrong. Under the traditional demand-led business model, DFIs can invest only in companies that want to raise capital and meet certain financial and impact criteria.

But a new report by ODI Global shows that some DFIs are taking a more proactive approach when a development need is not being met by a suitable business that seeks capital. They are starting commercial ventures of their own. Earlier this year, for example, British International Investment (of which one of us is CEO) sold Ayana Renewable Power, an Indian energy company that BII founded in 2018, for 2.3 billion dollars. In less than a decade, Ayana added, or was in the process of adding, a renewable-energy capacity of 4.1GW to a country that desperately needs it.

Creating a new business from scratch, such as Ayana, is at one end of the spectrum of more entrepreneurial approaches identified by the report. This also includes setting up new intermediaries and forming joint ventures with existing firms to push them in a more development-oriented direction.

While some observers lament that blended finance has not scaled as rapidly as hoped, others are concerned that it has sacrificed development impact to mobilise private capital. But, impact and scale are not in opposition. The huge investments needed to decarbonise middle-income economies are certainly effective. And the 12 ventures featured in ODI Global’s report have already achieved significant scale, deploying more than four billion dollars of capital from DFIs and raising three billion dollars from private investors.

That said, sponsoring new commercial enterprises is more about impact than mobilising as much private capital as possible with the fewest public dollars, partly because it is riskier than the standard DFI model. The absence of businesses in a market segment implies that the returns on offer are relatively unappealing. But these investments may only require a longer timeframe. In such cases, DFIs and other development institutions often have the patience to wait for a business to prove itself.

The ventures that ODI Global studied are on the path to profitability, but it is admittedly a long, narrow road for some (Ayana attracted private co-investors unusually quickly). DFIs should therefore take this route only when they identify an urgent unmet development need and have exhausted other possibilities.

The potential for achieving development goals through DFI-sponsored ventures does not receive enough attention, especially from government shareholders, whose support is integral to developing the new mandates and tools that such efforts would require. Tellingly, the organisations responsible for the ventures in ODI Global’s report – BII and Norfund (the Norwegian DFI) – are exceptionally flexible and can support long-term horizons for risk-taking. BII also has the ability to take a controlling stake in companies, whereas most DFIs can take only a minority stake.

To be sure, the leaders of DFIs are often uncomfortable with this idea, arguing that they know how to choose management teams to support, not how to run companies. But they should not undersell themselves. DFIs employ investment professionals who can identify a market opportunity and evaluate a business plan. After deciding to create a new venture, they can hire talent with complementary skills, as BII and Norfund have done.

Despite internal concerns about staffing, it is the organisational constraints preventing DFIs from becoming entrepreneurial that are the more pressing problem. Shareholders should change the rules under which DFIs and development banks operate to allow them to establish companies. They should also develop solutions, similar to the World Bank’s Private Sector Window, that increase their risk-bearing capacity. But even if they do not, DFIs can overcome these obstacles by finding creative ways to share the risks and responsibilities of generating, rather than merely responding to, investment opportunities.

They would surely have the support of foundations and other impact investors who want to use catalytic and risk-tolerant financing to promote social good.

One of the best ways for DFIs to advance countries’ development aspirations is to create investment opportunities in critical sectors that have been, and will likely continue to be, unattractive to private investors. Moving beyond the traditional demand-led model would increase their potential for impact, especially after many governments made massive cuts to foreign aid. Those governments, in particular, should do all they can to support this change.

Promises of Prosperity Fade as Economic Reforms Fuel Plight

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Since 2018, Ethiopia has pursued an ambitious economic transformation under Prime Minister Abiy Ahmed (PhD), who promised prosperity through broad economic policy reforms. Despite optimistic rhetoric, the results have proven more worrisome than transformative. Rampant inflation, acute foreign currency shortages, mounting external debt, and a frequently shifting regulatory environment have cast doubt on the economic life.

Once hailed as Africa’s emerging economic powerhouse, Ethiopia drew praise for its robust growth rates and ambitious development projects. Today, however, the economy shows signs of deepening instability, raising difficult questions about the efficacy of its recent reforms.

When Abiy’s Administration announced its departure from decades of state-led control in favour of market liberalisation, the international community welcomed the shift. However, what followed has been marked by erratic policy implementation rather than structured economic policy reforms. Frequent regulatory adjustments have created an unpredictable environment, deterring potential investors and unsettling domestic businesses. Such uncertainty undermines the very confidence market liberalisation seeks to establish.

In recent years, Ethiopia has secured financial support from the International Monetary Fund (IMF), initially in 2019, with the support continuing into 2024. Intended as a stabilising measure, reliance on IMF funding instead revealed persistent fiscal vulnerabilities. Rather than reflecting sound fiscal management, repeated bailouts indicate a troubling dependency on external financial lifelines.

The introduction of the Ethiopian Securities Exchange (ESX) in January this year was celebrated as a major step toward financial modernisation. Yet, its limited success depicted broader systemic weaknesses. Low investor participation and liquidity challenges have kept the Exchange from becoming the economic beacon initially promised. Successful financial markets depend heavily on transparent and stable regulatory frameworks, elements conspicuously missing in the current economic environment.

Reforms in the banking industry intended to modernise financial institutions have stalled mainly, impeded by bureaucratic inefficiencies and outdated procedures. Banks continue operating under cumbersome regulations that restrict efficiency and innovation, stifling potential growth. Genuine reform demands substantial institutional restructuring, not superficial changes.

The agricultural sector, the foundation of the economy, also manifested the policy shortcomings. State interventions intended to modernise agro-processing and improve rural finance have achieved marginal success. Smallholder farmers remain dependent on outdated techniques, helming a bureaucratic burden without sufficient institutional support. Meaningful agricultural reform should move beyond rhetorical commitments toward comprehensive and sustained investment and policy clarity.

The anticipated industrial transformation, often hailed by officials, has also fallen short. Persistent infrastructure deficits, including unreliable power supplies, have severely limited the growth of the manufacturing sector. This has prevented the country from capitalising on potential industrial opportunities, further undermining economic diversification efforts. Neither efforts to transition to renewable energy sources, no less steered by a controversial ban on gasoline and diesel vehicle imports, have succeeded where ambitious policy initiatives have faltered.

The reality of underfunded infrastructure and inadequate planning has rendered these initiatives largely symbolic, rather than impactful.

Macroeconomic data show the growing disconnect between policy promises and the reality of life. GDP growth, once consistently robust, now exhibits marked instability driven by mismanagement and unpredictable policymaking. Fluctuations in growth rates increasingly appear less the result of strategic economic initiatives than the consequences of sporadic and unsustainable public investments.

The decision last year to shift to a market-determined exchange rate dramatically devalued the Birr, fueling an inflation rate that occasionally surpassed 30pc. The sharp depreciation severely impacted citizens, sharply eroding savings and living standards. Dwindling foreign exchange reserves have reached critically low levels, exacerbating economic uncertainty. Unofficial market rates consistently reflect an even grimmer reality than official statistics suggest.

The external debt, now exceeding 50pc of GDP, unveils severe fiscal imbalances. New loans, consistently portrayed as necessary for development, appear increasingly unsustainable. Current negotiations within the G20 Common Framework, intended to ease debt burdens, risk merely postponing inevitable economic consequences without addressing underlying structural issues.

Fiscal policy has also drawn criticism for contradictory practices. Despite repeated pledges of austerity and fiscal discipline, public expenditures remain high. Simultaneously, inefficient tax collection systems and a bloated public financial management framework impeded effective budget implementation. Income inequality has widened immensely, accompanied by rising social tensions.

From a geopolitical perspective, Ethiopia has failed to leverage its strategic position in the Horn of Africa. Domestic instability, compounded by violent conflicts in the Amhara, Oromia and Tigray regional states, has undermined investor confidence and disrupted vital international partnerships. The narrow export base and outdated trade policies further isolated the country from global economic integration opportunities.

Daily reports of financial turmoil have become commonplace, characterised by persistent inflation, currency volatility, and monetary instability. These are manifestations of market reforms undertaken without solid institutional foundations, which frequently produce disastrous outcomes. Institutional weaknesses remain pervasive, affecting everything from banking regulation to legal frameworks, making policy reforms ineffective in practice.

Political instability and widening socioeconomic disparities add further complexity to the economic challenges Ethiopia faces. Economic reforms implemented without adequate planning or institutional support risk perpetuating these problems, creating conditions ripe for a more profound crisis.

As the upcoming national elections approach, the country confronts tough choices about its economic future. Continued pursuit of current policies could risk more profound instability, while meaningful policies targeting economic stabilisation will require substantial recalibration. Fiscal prudence, transparent governance, and consistent regulatory frameworks emerge as critical factors in reshaping the dire economic reality.

Public Purpose Meets Private Initiative in the Battle to Fix Society’s Fragility

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These are times of economic uncertainties, political polarisation, deep-rooted social inequalities, and ongoing public health crises. They are problems demanding more innovative and collaborative approaches. Governments alone can no longer shoulder the full burden of evolving citizen expectations, when traditional methods of delivering public services face increasing strain.

Partnerships between government agencies and nonprofit organisations are emerging as vital responses, essential for encouraging innovation, improving efficiency, and ultimately enhancing quality of life.

Innovation in public service involves far more than adopting new technologies. At its core, innovation means finding novel and practical solutions to persistent social issues, such as homelessness, food insecurity, and access to healthcare. It encompasses methods to boost service efficiency, improve citizen engagement, build public trust, and implement preventative programs in public health and education. Innovation means identifying better, equitable, and sustainable ways to serve communities.

Nonprofit organisations have long played important roles in addressing social needs not met by either markets or the state. More recently, their function has evolved from mere service providers to strategic partners actively teaming up with government agencies. Their importance lies in their community connections and the trust they inspire. Embedded within communities, nonprofits possess profound knowledge of local needs, problems, and aspirations. This local understanding and cultural nuances allow them to engage communities effectively, gathering crucial feedback to improve service delivery.

Nonprofits offer agility and flexibility, often lacking in bureaucracies. They are better equipped to test novel ideas quickly, pilot new projects on a smaller scale, adapt to changing circumstances, and refine solutions without the procedural hurdles that can stall innovation in government agencies. This flexibility enables nonprofits to respond swiftly and creatively to community needs.

They attract passionate individuals with specialised expertise dedicated to their missions. Whether the focus is mental health, youth development, environmental conservation, or refugee resettlement, these organisations leverage deep knowledge to enrich public programs. Nonprofits also advocate effectively for marginalised populations, ensuring their concerns inform policy decisions, contributing to more equitable and responsive public services.

Nonprofits serve as valuable incubators for piloting creative approaches. They can test and refine new models on a smaller scale, reducing initial risks. Successful pilot programs, validated through rigorous evaluation, often supported by public data analysis, can then be scaled up using state resources. For instance, a nonprofit successfully developing a job-training program for former inmates could partner with the Ministry of Labour to expand the program nationwide.

This does not mean that states do not have distinct advantages crucial for a broad societal impact. Their agencies have the scale and mandate necessary to implement system-wide programs reaching large populations. They also command substantial financial resources from taxes and other revenues, enabling sustained funding for large-scale initiatives. States hold legislative and regulatory authority, shaping the policies and laws guiding social interventions.

State agencies hold and manage vast data infrastructures and analytical capacities, which help identify trends and evaluate large-scale programs, essential for evidence-based policymaking.

The power of innovation emerges when states and nonprofit organisations combine their respective strengths strategically. Effective partnerships move beyond traditional service contracts, involving nonprofits from the outset in designing and developing policies and services. Incorporating nonprofits’ localised insights with state resources ensures solutions meet real-world needs. Co-creation encourages designs centring on human needs, increasing the likelihood of successful outcomes.

Partnerships also encourage the sharing of resources and expertise beyond funding. The mutual exchange of knowledge, ethical data sharing, best practices, and skilled personnel enriches both sides. Nonprofits benefit from broader datasets under the state’s custody and stable funding streams, enabling longer-term planning. In turn, states gain from nonprofits’ specialised skills, local insights, and community trust.

Cultivating a culture of continuous learning further strengthens these partnerships. Regular communications, joint training opportunities, shared evaluations, and cross-sector collaborations with academia, businesses, and community stakeholders build dynamic ecosystems of innovation. Partners learn from each other’s successes and failures, continuously refining their approaches.

The public health sector demonstrates the effectiveness of these partnerships. Nonprofits’ community trust, outreach capabilities, health education, and culturally competent care enhance state-led public health initiatives. Nonprofits help state agencies create effective health campaigns, increase vaccination rates, manage chronic diseases, and gather community feedback to refine strategies. This could ultimately improve overall public health outcomes.

Nevertheless, creating and maintaining effective partnerships presents its own issues.

Differences ranging from organisational and bureaucratic culture to unstable funding, power imbalances, and concerns about data sharing may create tension. Addressing these requires deliberate strategies. A clear understanding, facilitated through liaisons within state agencies, transparent communication protocols, and mutual respect grounded in shared goals, can help. Building these foundations enables partnerships to thrive despite inherent differences.

These relationships are no longer optional; they are essential for addressing the intricate challenges of the modern era. By strategically leveraging each sector’s unique strengths, enabling mutual learning, and committing to common goals, partnerships facilitate continuous innovation. Such cooperations produce solutions that are effective, efficient, and deeply connected to the communities they serve.

When the Lens Crosses a Line

Posted on by Digital Editor

Over two years ago, on our first wedding anniversary, my husband and I wanted to do something meaningful. We decided to recreate our wedding as a quiet celebration of love, growth, and everything in between with our first child growing inside me.

We spared no expense. We hired one of the most sought-after photographers in town, paying nearly 300,000 Br to preserve this moment in time. We stood together, smiled, and let a stranger witness our joy through the lens.

When the photos came, they were beautifully large framed, edited, and carefully wrapped. But there it was: a glaring logo and phone number, stamped etched onto every photograph. Our intimate moment, branded like an ad. Even before we got the photos ourselves, our friends and family had already seen, shared without our permission on the photographer’s social media pages. Two years later, our images are still being used to promote someone else’s business.

In an age where personal images travel farther than ever, privacy is becoming increasingly fragile. The first breach of privacy doesn’t happen online, it often happens at home. That smiling portrait hung in the living room, meant to honor a milestone, now feels like a branded billboard. And when we later had our baby’s photo taken, we watched the same story unfold: our child’s face, on a stranger’s page, under a logo we never agreed to carry.

What’s supposed to be a treasured keepsake becomes a marketing tool. Photographers are increasingly embedding branding into everything: wall portraits, albums, digital copies. These details, inserted without consent, turn clients into unwitting advertisers, often in their most personal spaces.

Even after buying the pictures at high prices, we remain constant advertisers inside our own living room. Our photos hang in our house, and every guest who sees it also sees a brand we never agreed to promote. And we are not the only ones. I see these famed photographers’ logos in most households angering families.

To be fair, photographers have every right to protect their intellectual property and build their brand. Discreet branding, particularly when agreed upon, helps them compete and ensures their work is recognized. But there is a fine line between promotion and intrusion, and many have blurred it.

A recurring issue is that clients aren’t given a choice. Clients aren’t being asked; they’re being assumed. Branding is treated as standard, not optional. Some photographers even suggest clients enjoy being featured online, as though it were an honor to be used as proof of their prestige. But joy turns to frustration when families, like ours, find themselves involuntarily turned into marketing material.

This isn’t about photographers protecting their work. Copyright law already gives them that right. They own the photo but not the right to use that photo however they like, especially for commercial promotion. That requires consent from the client.

And it’s not just ethically problematic; it’s legally questionable too.

Last year, Ethiopia enacted its first comprehensive Personal Data Protection Proclamation, inspired by the European Union’s General Data Protection Regulation (GDPR). Under this law, images are considered personal data. Using a photograph for promotional purposes without explicit consent can now be considered a violation. Ethiopia’s Constitution also guarantees the right to privacy, extending to personal and family life.

Elsewhere, legal frameworks are even clearer. The GDPR mandates informed consent for any commercial use of personal data, including photos. The U.S., while state-specific in its laws, often protects individuals through “right of publicity” provisions. Globally, the Universal Declaration of Human Rights enshrines privacy as a fundamental right.

But even where the law is silent, ethics should speak loudly. Adding a logo to someone’s family portrait without permission is like engraving your initials into their wedding ring. It’s an act of ownership over something that isn’t yours. It turns professional service into a transactional relationship that benefits only one party.

The fix is simple. Photographers should present clear contracts outlining how images may be used. Clients should be offered the option to opt in – or out – of promotional use. Branding, if requested, should be subtle: on the back of a frame, within a printed album, or included discreetly in metadata; not across the image itself. And when children are involved, even greater care is required.

This is where professionalism matters

There is growing demand in Ethiopia for better regulation of personal data and image rights. Until lawmakers catch up with laws and implementation, the responsibility falls on both photographers and clients to set respectful boundaries.

The lens should capture memories, not claim ownership of them. In the end, a family photo should be a source of joy not a reminder that our privacy was collateral in someone else’s marketing plan.

The camera may belong to the photographer, but the moment belongs to the client. Until stronger laws are passed in Ethiopia, it’s up to us the public and professionals with integrity to reset the norm.

Photos are personal. Memories are not marketing tools. And homes are not ad spaces. Photographers have the right to grow their brand but not at the expense of privacy, consent, and trust.

The House That Deceit Built

Posted on by Digital Editor

A strange paradox continues to surface: what might happen if lying were to vanish entirely from human life? If all communication were filtered through unrelenting, unvarnished truth, the initial impression might be one of clarity. Yet, such a world could quickly descend into a form of chaos more destabilizing than the intricate web of deceit currently navigated. The soothing fictions and gentle evasions so often scorned may, in fact, function as essential adhesives in maintaining a delicate social balance.

Brutal honesty, stripped of nuance or grace, could cut more deeply than any well-crafted lie. The idea of a built-in lie detector – a little internal ping or buzz, a signal whenever someone strayed from sincerity – holds a peculiar allure. This fantasy intensifies in the presence of individuals who disguise manipulation as vulnerability, draping falsehoods in the cloak of victimhood. Countless articles and videos are dedicated to deciphering deception through physical tells.

The averted gaze, the subtle nervous tremor, the blink-and-you-miss-it micro-expression; these are the signs many hopes will reveal hidden truths. But those methods often fail when the potential deceiver is intimately familiar. Emotional proximity blurs the signals. Belief becomes not a conclusion drawn from evidence, but a defense against the emotional toll of betrayal.

Deception rarely announces itself as a blatant falsehood. Often, it arrives as a whisper of a promise never intended for fulfillment. Or a carefully curated, strategically edited half-truth masquerading as transparency. Sometimes, it takes the form of a confession wrapped in an expertly rationalized explanation; so convincing that, viewed from the right angle, it could almost be forgiven.

It is a bewildering thicket of partial truths, self-deception, and narratives conveniently shaped to fit. Navigating such entanglements means enduring the pressure to take sides in conflicts where the truth is murky and shifting; forced into an either/or choice in a world that stubbornly insists on existing in infinite shades of gray.

Moral clarity feels out of reach. Diplomats in close social ecosystems, whether among friends or family, know well the exhausting pull of this middle ground. There exists an aching desire for harmony, sincere regard for those on both sides of a conflict, and a fragile hope that good intentions guide each party.

Declaring one side wholly wrong often feels emotionally untenable and intellectually simplistic. While some events do fall into stark moral binaries, most are shaded in grays. Motives intertwine; perspectives collide. Finding a way to relate to, or at the very least understand, aspects of each differing perspective is an unavoidable reality.

Understanding becomes a form of emotional labor no one truly volunteers for yet is constantly required to perform. It is a draining tightrope walk, a constant, delicate balancing act between extending empathy and maintaining a clear, objective sight.

These internal negotiations now exist alongside chilling developments in the broader world. A slow, creeping skepticism has taken root. It alters not only how interactions unfold but how intentions are perceived. With each new tale of calculated fraud or targeted cruelty, an open-hearted approach to the world seems increasingly naive, even hazardous.

One particularly disturbing account tells of a scam involving an elderly person seeking help with a note, one laced with a chemical intended to disorient or incapacitate the unsuspecting helper. Such stories don’t just shock; they reshape foundational instincts. Where once a request for help might have been met with immediate compassion, now an instinctive wariness intrudes. Even acts of kindness, like lending a phone to a stranger, become fraught calculations.

These are weighed against the risk of exploitation. There are those who have offered trust, welcoming others into their homes, only to be met with theft or betrayal. These lived experiences do not fade easily. They linger, altering future behavior in subtle but powerful ways.

In one familiar scenario, a stranger requests to borrow a phone. Despite the apparent sincerity, the response becomes a quiet falsehood: a protective reflex, born from accumulated caution and memory. Perhaps the emergency was real. But the decision, guided by fear rather than malice, reflects a transformation in how safety is prioritized.

“Better safe than sorry.” Has become the motto of the day.

The terrain of everyday life now feels precarious. Deception appears less an occasional aberration and more a fabric woven through both personal and public life. Discernment grows more difficult, not due to lack of awareness, but because of emotional entanglements and a growing inability to distinguish fact from carefully shaped narrative. Simultaneously, the rising tide of calculated scams and betrayals compels a retreat behind emotional fortresses.

In the process, instincts once guided by kindness increasingly yield to defensiveness. This transformation may be the quietest tragedy of all: that in guarding against deception, many now find themselves participating in it. Not with grand, malicious lies, but with small untruths, offered in the name of safety. A shift is underway, not just in behavior but in outlook.

A subtle hardening of spirit sees caution as wisdom, and vulnerability as risk. This slow, painful loss of innocent trust between individuals and within society, may prove to be among the most painful consequences of living in such profoundly complex times.

Ethiopias Capital Market Sets Sights on Talent Strategy

Posted on by Digital Editor

A new strategy to strengthen the human capital foundation of Ethiopia’s emerging capital market is taking shape. Led by FSD Ethiopia in partnership with iCapital Africa Institute and the Nairobi Securities Exchange, the initiative is focused on building the skills, expertise, and institutional capacity needed to support the Ethiopian Capital Market Authority (ECMA).

The second round of consultations took place on April 23 at Best Western Hotel, drawing key stakeholders including ECMA Director General Hana Tehelku and FSD Ethiopia CEO Hikmet Abdella, as well as representatives from government, academia, the private sector, and development agencies.

Established in 2021 under the Capital Market Proclamation, ECMA has made progress in laying a regulatory foundation for securities trading. However, a critical shortage of qualified professionals threatens to stall implementation. The country currently has only a few hundred individuals trained in securities law, governance, or market operations.

The Human Capital Development Strategy (HCDS) 2025–2030 aims to close this gap. It rests on three pillars: developing skilled professionals, building strong institutions, and enabling a wider ecosystem. Plans include establishing a Capital Markets Training Institute (CMTI), accrediting training providers, and embedding capital markets education into 100 TVETs and 30 universities. The goal is to certify over 5,000 professionals and reach five million people through investor literacy programmes.

“We are not built by compliance alone. We’re built by people, and sustained by skilled, visionary communities,” said Hana Tehelku. She noted ECMA’s progress training over 700 professionals and its focus on areas like digital finance and blockchain.

ECMA’s work complements broader reforms under Ethiopia’s Home-Grown Economic Reform agenda, including the upcoming launch of the Ethiopian Securities Exchange. A regulatory sandbox introduced in 2024 also encourages fintech innovation, helping to lay the groundwork for a dynamic, inclusive market.