ብሔራዊ ባንክ የውጭ ምንዛሬ ግብይት ሥርዓትን የሚቀይር አውቶማቲክ የንግድ ሥርዓት ሥራ ላይ አዋለ

Posted on January 28, 2026 by Digital Editor

የኢትዮጵያ ብሔራዊ ባንክ በንግድ ባንኮች መካከል የሚደረገውን የውጭ ምንዛሬ ግብይት ሥርዓት ሙሉ በሙሉ የሚቀይር አውቶማቲክ የንግድ ሥርዓት በይፋ ዛሬ ሥራ ላይ አውሏል።

በኢትዮጵያ የሰነድ ሙዓለ ንዋዮች ገበያ (ESX) ውስጥ እንዲካተት ተደርጎ የተቀረጸው ይህ አዲስ ቴክኖሎጂ፤ ባንኮች ቀደም ሲል ይጠቀሙበት የነበረውንና በስልክ እንዲሁም እጅ በእጅ በሚከናወኑ ሰነዶች ላይ የተመሠረተውን ኋላቀር አሠራር በዲጂታል አማራጭ የሚተካ ነው። ይህ አዲስ የግብይት መድረክ ፈቃድ ያላቸው የንግድ ባንኮችና በብሔራዊ ባንክ ዕውቅና የተሰጣቸው ተቋማት ብቻ የሚሳተፉበት ሲሆን፤ ግብይቱም በባንኩ ጥብቅ የቁጥጥር ማዕቀፍ ውስጥ ሆኖ ወደ ተዓማኒና በገበያ መርህ ወደሚመራ ሥርዓት እንዲሸጋገር ለማድረግ ያለመ ነው።

የብሔራዊ ባንክ ገዥ እዮብ ተካልኝ (ዶ/ር) የሥርዓቱን መጀመር አስመልክተው በሰጡት መግለጫ፤ መድረኩ የውጭ ምንዛሬ ተመን በገበያ ፍላጎትና አቅርቦት ላይ ተመሥርቶ በቅጽበት እንዲወሰን የሚያስችል ከመሆኑም በላይ ግልጽነትና ሕግን የተከተለ አሠራር እንዲሰፍን የሚያደርግ ወሳኝ እርምጃ እንደሆነ ገልጸዋል።

አዲሱ ቴክኖሎጂ ባንኮች የየራሳቸውን የመሸጫና የመግዣ ዋጋ በዲጂታል ሥርዓት ውስጥ እንዲያስገቡ የሚፈቅድ ሲሆን፤ አልጎሪዝም-ተኮር በሆነ አሠራር እጅግ ተወዳዳሪ የሆነውን ዋጋ በቅጽበት በማዛመድ ግብይቱን ያከናውናል። በተለይም በዓለም አቀፍ የፋይናንስ ገበያ ውስጥ ተቀባይነት ያላቸው እንደ ብሉምበርግ ቢ-ማች ያሉ መድረኮች የሚጠቀሙበትን ማንነትን የማይገልጽ (Anonymization) የግብይት ስልት በመከተሉ፤ የንግድ ድርድሮች ከቅድመ-ግምት ነፃ ሆነው እንዲከናወኑ ያስችላል ተብሎ ተስፋ ተጥሎበታል::

የባንኩ ገዥ “የዚህ ሥርዓት ተግባራዊ መሆን የሀገሪቱን የፋይናንስ መሠረተ ልማት ለማዘመን በሚደረገው ጉዞ ውስጥ ትልቅ ምዕራፍ” ብለዋል። “ቴክኖሎጂው በገበያው ውስጥ ያለውን የመግዣና የመሸጫ ዋጋ ልዩነት ከማጥበቡም በላይ፤ በብሔራዊ ባንክ አማካኝነት የሚከናወነውን የክፍያ ሥርዓት (RTGS) በማቀላጠፍ ግብይቶች በቅጽበት እንዲጠናቀቁ ያደርጋል።”

በተጨማሪም ብሔራዊ ባንክ የግብይት መዝገቦችንና የቀጥታ የንግድ እንቅስቃሴዎችን በቅርበት ለመከታተል የሚያስችል ሙሉ ሥልጣን ተሰጥቶታል።

ይህ አዲስ አሠራር የውጭ ምንዛሬ ገበያ መመሪያዎችንና የሥነ-ምግባር ደንቦችን ጨምሮ በታደሱ ሕጎች የሚመራ ነው።

ኢትዮጵያ ይህን የዲጂታል የውጭ ምንዛሬ ግብይት መድረክ ተግባራዊ ማድረጓ፤ እንደ ኬንያ፣ ናይጄሪያ እና ጋና ያሉ ሀገራት ባለፉት አሥር ዓመታት ውስጥ የጀመሩትንና የፋይናንስ ዘርፋቸውን ነፃ ለማድረግ የሚያስችላቸውን ተሞክሮ ወደ ሀገር ውስጥ ለማስገባት ያላትን ቁርጠኝነት የሚያሳይ ተደርጎ ተወስዷል።

Ministry Eyes Trust Fund to Reverse Education Finance Decline

Posted on January 26, 2026January 28, 2026 by Digital Editor

The education sector, battered by inflation, dwindling foreign aid, and declining public investment, may soon see a new financial lifeline.

Drafted by the Ministry of Education, a national Education Trust Fund aspires to mobilise domestic resources to supplement a shrinking budget and curb the erosion of education quality across the country. The Trust Fund would hope to collect contributions mainly from state-owned enterprises, a dedicated education tax, and profit allocations from major public investments, disclosed a strategy document produced by the Ministry of Education.

According to federal education officials, the Trust is not a substitute for the regular education budget but will reinforce it, seeking to reverse a steep drop in external aid and household spending that has left Ethiopia with some of the lowest per-student costs in Eastern and Southern Africa.

Nearly 90pc of recurring costs go to personnel, yet their value has declined 17pc over five years. Over 40pc of schools across the country still lack basic amenities such as electricity, water, and libraries, while dropout rates range between 15pc and 20pc, and a third of school-age children remain out of school, with rural, pastoralist, and conflict-affected areas hit hardest.

The plan proposes that companies such as Ethiopian Airlines Group and Ethio telecom would contribute up to two percent of their annual profits, with the Airlines posting over seven billion dollars in revenues in 2023/24, and Ethio telecom generating 560 million dollars. A one percent profit levy on top corporate taxpayers, which generated 300 billion Br in 2025, would also feed the Trust. Pension funds would allocate two percent of annual growth, while other sources would include government grants, diaspora and community donations, and corporate social responsibility spending.

The Trust Fund would operate independently, under the ministries of Education and Finance, and be overseen by a board comprising government officials, education experts, the private sector, and civil society. Authors of the Trust document foresee that funds would be pooled and allocated based on need, with an emphasis on disadvantaged regional states, low enrollment, and infrastructure gaps. Transparency measures such as public reports, independent audits, and digital tracking are planned.

“The strategy follows a fund implementation policy and is built on research carried out by the Ministry of Education,” said Abrham Mengistu, an executive team leader at the Ministry of Education for project management, partnership and resource mobilisation. “It clearly shows the need for a sustainable education financing mechanism. The Ministry of Finance will collect funds after parliamentary approval.”

Education advocates welcome the plan.

Yohannes Benti (PhD), president of the Ethiopian Teachers’ Association, believes the Trust addresses long-standing concerns about how to finance improvements.

“The policy question was settled earlier, but the real challenge was how to put an education fund into practice,” He told Fortune. “This strategy responds to that gap. Teacher training needs steady investment that current budgets cannot support.”

Leaders of the Ethiopian Disabled Associations Federation, with 38 member groups, were unaware of the strategy but called it “a necessity.” Only 19 schools exist for disabled students, and donors’ cuts back on support have forced the Association to consider the closure of some of the schools.

“It’s very important and comes at the right time,” said Abayneh Gujo, head director. “If these schools receive financial and other support, they can do much more for the students. This strategy is long overdue but crucial.”

Abayneh urged companies to see contributions as a social duty.

Ethiopia runs one of Africa’s largest school systems, with roughly 40,000 to 42,000 general-education schools in pre-primary, primary, middle and secondary education. Enrolment in general education jumped from about 7.1 million students in 2000 to approximately 27 million by 2022. Nearly one in three school-aged children remained out of school.

Pre-primary education reveals progress and inequality. Gross enrolment ratios in pre-primary range from more than 120pc in Addis Abeba and close to 90pc in Harari to below 15pc in Afar and under 10pc in Somali regional states. Nationally, most pre-primary children attend “O”-class programs attached to government primary schools, while formal kindergartens remain largely an urban phenomenon.

These structural pressures are colliding with a tightening fiscal envelope.

Of the federal budget for the fiscal year 2025/26, education receives 240 billion Br, below 10pc of total federal spending.

This decline is not new. Over the past five years, education spending has steadily lost relative weight. Around 2020/21, education absorbed roughly 24pc of national government expenditure and close to 4.5pc of GDP, exceeding the global “Education for All” benchmark of 20pc of public spending. By 2021/22, UNESCO data put education spending at 4.07pc of GDP and about 23pc of government expenditure. By 2022, the GDP share had slipped to 3.74pc, and the education share of total expenditure had recently fallen toward the low-20s.

Nominal budgets tell a misleadingly positive story. The national education budget increased from about 180.2 billion Br in 2022/23 to 200.4 billion Br in 2023/24, an increase of roughly 11pc. Yet, high inflation erased those gains, resulting in an estimated 14pc decline in real terms. A UNICEF review of the 2024/25 budget reported an 18.8pc nominal increase but only a 1.3pc real rise, noting that real education spending has fallen by roughly one-third since 2020/21.

Part of the shift is seen in changing budget architecture. A growing share of education financing is now channelled through regional budgets rather than the federal Ministry of Education. In 2023/24, regional states accounted for about 72pc of total education spending, up from 64pc a year earlier. While this supports decentralised delivery of general education, it also means the federal education line appears smaller even as the overall system needs expand.

The consequences are visible on the ground. High pupil-teacher and pupil-classroom ratios persist in many regional states, uncovering shortages of classrooms and trained teachers. Recurrent spending, dominated by salaries, leaves limited room for textbooks, learning materials and school feeding programs. Pastoralist and sparsely populated regions face higher per-student costs that are not fully offset by formula-based transfers, widening equity gaps.

Conflict-affected areas, particularly in the north, require large sums for school rehabilitation, replacement of materials and psychosocial support, costs that lie largely outside the regular budget envelope.

Policy ambitions continue to outpace resources. Ethiopia’s current education sector plan targets universal pre-primary access, improved completion rates and expanded secondary enrolment, but official statistics show many indicators remain below target. With education spending now drifting below the international benchmark of four to six percent of GDP, budget briefs and sector reviews converge on a blunt assessment.

Education experts warn that without reversing the decline in real spending or mobilising additional domestic and external financing, the school system will struggle to meet its own goals, even as millions of children remain out of the classroom.

Alemayehu Teklemaryam (Prof.) of Addis Abeba University’s Inclusive Education Department cited severe funding shortages for teacher training, salaries, labs, and libraries. He noted South Korea’s education tax on all citizens as a model and argued that companies and individuals should contribute based on their earning capacity.

“Education is not just an investment; it pays back in the future,” he said.

He insisted on the importance of proper management and timely action.

“Everyone contributing to this fund is fulfilling their social responsibility,” he said. “This strategy is very important and needs to be implemented without delay.”

TAX REFORM INTO OWN BOTTLENECK

Posted on January 25, 2026January 28, 2026 by Digital Editor

Inside Berhan ena Selam Printing Enterprise on Adwa Street, queues have become a feature of tax compliance. Businesspeople arrive with letters from local revenue offices, some on first application, others on their third or fourth follow-up, all seeking the same thing. QR-code receipt pads are now required to stay in business.

What was meant to modernise the tax system has, instead, exposed a structural flaw in the reform’s execution. The centralisation of receipt printing, designed to tighten oversight and curb evasion, has collided with limited capacity, weak inter-office coordination, and infrastructure gaps that businesses say they cannot control. Restaurants close during power cuts because QR-based registers stop working. Contractors complete projects but cannot get paid without receipts. Firms that comply with tax demands find themselves suspended between regulation and paralysis.

Officials insist the disruption is temporary. The Ministry of Revenue disclosed that more than 2.1 million QR pads have been printed out of 2.2 million ordered, leaving over 2,000 taxpayers waiting. Printing now runs around the clock. New machinery has doubled output. But the lived reality diverges from the aggregate numbers. Businesses report waits stretching into months, files repeatedly resubmitted, and little clarity on when, or where, pads can be collected. Inspections have found misplaced receipts across several regions, requiring costly reallocation, including air transport.

The policy intent is clear with digital receipts as a bridge toward a more transparent and technology-driven tax system. The sequencing is not. Centralisation preceded capacity assessment. Manual systems were constrained before digital alternatives proved reliable. Electricity dependency was overlooked in an economy where outages remain routine. Tax advisors warn that QR codes alone will not close compliance gaps without an integrated, real-time reporting system that routes sales directly to tax authorities. Others question who ultimately bears the cost of printing and distribution, a point the policy leaves opaque. For now, businesses are advised to buy cash register machines costing upwards of 40,000 Br, an expensive workaround in a reform meant to simplify compliance.

A Digital Fix Becomes a Bureaucratic Trap

Posted on January 25, 2026January 28, 2026 by Digital Editor

In recent months, traders have flocked to the Berhan ena Selam Printing Enterprise, on Adwa St., hoping to obtain the mandatory QR Code receipts. Many have arrived carrying official letters from local tax offices, urging the printing of receipts, some for their initial requests, others for subsequent phases, and a number simply seeking to reissue or verify previous requests. At the printing offices, the atmosphere has grown tense, with clients expressing frustration and, at times, anger as they vie for attention in the hope of securing their receipts.

Those travelling from cities as far-flung as Debre Berhan, Shashemene, Gonder, and Wollega describe days spent queuing, enduring emergency printing schedules, and, all too often, returning home empty-handed. Many traders remain silent, unwilling or unable to challenge the system, and are left with little recourse as the backlog mounts. Some business owners have found themselves unable to sell goods during power outages because QR-based register systems depend entirely on electricity.

Across the country, the rollout of QR code receipts, designed to bring the country’s tax system into the digital era, has instead left many traders and business owners frustrated and exhausted. The new system, intended to modernise receipt issuance and clamp down on tax evasion, has placed a new burden on businesses. They now find themselves caught in a web of delays, bureaucracy, and unyielding technical requirements.

While regional and federal tax officials have issued warnings and set deadlines, businesses argue that their current predicament is less about reluctance to comply and more about being caught in an institutional deadlock not of their making. Centralising receipt printing has exacerbated these delays.

Among the many affected is Yordanos Goushe, a former journalist who now runs two businesses, a restaurant and a cosmetics manufacturing enterprise. Yordanos is the CEO and founder of Malaika African Grill, a restaurant on Egypt St., in the Mekanisa neighbourhood, which she has operated for over four years. She is also the founder of Secret Organic Entrepreneurs Mentorship, a TV show on EBS, and CEO of Ethiopian Skin Beauty Secret, which she has run for more than a decade.

Last year, Yordanos paid 2.5 million Br in taxes and purchased five receipt pads. She needs the QR code receipts for her restaurant and cosmetics business, but she says the delay is less urgent for the cosmetics side, which operates mainly by order.

“For my restaurant, receipts are mandatory,” she told Fortune.

Yet she has had to temporarily close her restaurant, not for lack of customers but because power outages made her QR code-based register inoperable.

“I close the restaurant when the electricity goes off because I fear a penalty, and I’ve had to do that many times,” Yordanos told Fortune. “A restaurant is a very fast-moving business.”

Her restaurant, which employs 10 staff, serves African cuisine and caters to the diplomatic community, located close to the African Union and embassies. Last week, she was anxious about being penalised for issues beyond her control, as these disruptions undermine her business. Her establishment is in an area designated for development and is subject to ongoing land lease issues, which compound her difficulties.

Yordanos keeps a receipt from Commercial Bank of Ethiopia (CBE) as proof of the 5,000 Br she paid to the state-owned printing enterprise. However, this payment should be submitted to the Ministry of Revenue and approved before printing can proceed. Each time she approached the end of her receipt supply, she feared the looming threat of business suspension and the subsequent need to start over.

Over the past year, Yordanos encountered information gaps while awaiting her receipts. Even after recent follow-ups, she found herself still waiting for an appointment date, with no receipts issued. Last week, the printing press gave her a Telegram channel username so she could track updates for those on the waiting list.

“When we go to the tax office, we don’t get direct responses, but we still trust the system,” she said. “Customers need my services, and it isn’t acceptable to stop serving them because of receipt issues.”

The situation is not unique to the hospitality industry.

According to the Ministry of Revenue and its affiliates, orders for QR pads climbed to over 2.2 million. Although 2.1 million QR pads were printed, distribution did not keep pace. The initial target was increased to 2.5 million, further straining the printers, whose daily output had been 10,000 pads until recently wchich is 20,000. Of 291,435 taxpayers who placed orders, 289,291 received their receipts. The remaining 2,144 are still waiting.

Berhanu Abebe, director of Tax System Optimisation & Regional Support, insisted that the printing of QR code receipts is almost complete, save for some teething problems during the transition period. He describes the initiative as a foundation of government plans to tackle illegal activity and to modernise tax administration by leveraging new technology. The plan was shared with all regional and municipal administrations to ensure its implementation across the country.

The Ministry of Revenues awarded the printing contract to Berhan ena Selam Printing. The initial deal was for 700,000 receipt pads to be printed by February of last year, but this proved insufficient as demand quickly rose. According to Berhanu, who chairs the QR Reciepts Implementation Task Force, demand soon surpassed expectations.

“QR code receipts are not required for all taxpayers,” he told Fortune. “They’re mostly intended for use when cash register machines malfunction or for those who don’t have such machines.”

In some withholding tax cases, they are mandatory. Tax officials’ goal is to promote the widespread adoption of cash register machines, using QR receipts as an alternative for specific sectors such as consultants and construction.

Berhan ena Selam Printing Enterprise’s daily output was eventually doubled with the acquisition of new machinery, following a coordinated effort between the Federal Tax Authority, the government, and the printing office. Importing the new machine and getting it running took about three months. During this period, the QR Reciepts Implementation Task Force was set up under the State Minister of Revenue, bringing together experts from the Ministry and the printing enterprise to manage the process.

However, it was not enough for taxpayers like Temesgen Gebre, who works for a construction firm. He visited Berhan ena Selam Printing Enterprise last week to collect QR code receipts. Seven months earlier, he had placed an order for the receipts, met the requirements, and submitted the paperwork. Up until last week, he had received nothing. Wary of jeopardising his business, he prefers not to disclose the company’s name, which is involved in city administration projects and residential housing construction.

He recently completed a contract but has not been paid because he was unable to issue the required receipts. The shortage of receipts meant to him that various clients, including city government offices and private construction firms, currently withhold 2.35 million Br. However, his company remains responsible for paying hundreds of employees, many of whom are paid daily due to the nature of construction work.

“In the construction sector, there is no money to keep waiting,” Temesgen told Fortune. “If the money is withheld, we can’t pursue another project.”

He saw how his peers in the construction sector face the same problem. Despite their ongoing tax obligations, their businesses are stalled.

“All matters aside, I shouldn’t even be here,” he said. “I should be at the sites. I understand that repeated visits don’t bring receipts.”

Temesgen acknowledged that problems are to be expected during transitions, but believes a stronger commitment from the authorities is necessary. Initially, Temesgen thought he might have made an error, so he rechecked his submission multiple times. After being told at the revenue office that his order was incomplete, he resubmitted all documents a month ago. Still, nothing changed. The process remains as opaque and slow as before.

“The revenue bureau should issue a letter for immediate action,” said Temesgen.

Classified as a medium taxpayer, Temesgen generally trusts the good faith of tax officers, but he feels recent office visits have become less helpful as staff are overwhelmed. He now finds himself appealing directly to senior officials, trying to resolve matters quickly.

“They told me to wait a week, but by then my work had already been disrupted because it needed a budget,” he said. “In construction, you have to pay today for the work done today.”

According to Berhanu, while printing is now continuous and runs round the clock, occasional machine malfunctions still cause interruptions. The leading causes of ongoing delays, says Berhanu, are incomplete or incorrect data submitted by businesses, late orders, and weak coordination among affiliated tax offices.

Implementation has been hampered by logistical hurdles and inconsistent compliance by regional offices, despite a shared understanding of the new policy. In some cases, businesses were slow to order receipts, compounding the issue. Following a temporary suspension of implementation, the Revenue Minister, Aynalem Nigussie, convened review meetings with 11 supervision teams. Inspections revealed misplaced receipt pads in multiple regions, except Tigray, Gambella, and Benishangul-Gumuz regional states that have not yet been inspected.

The frustration is not limited to businesses in the capital. In the Amhara National Regional State, local revenue offices are working to distribute QR receipts, often relying on air transport due to time and security constraints. Similar problems are reported elsewhere.

The Ministry took direct control of transporting receipts from the printing press to local tax offices. In high-risk or remote areas, receipts were flown. Receipts were airlifted to Mekelle, Kombolcha, Bahir Dar, and Gonder, and customs and revenue officials used eight vehicles to distribute them further. Even so, getting pads to district-level offices, especially in rural areas, remains difficult.

“Some pads didn’t reach their intended destinations and were returned to the centre,” Berhanu said. “We corrected this through reallocation, even using air transport despite the cost.”

Supervision teams concluded that only a stronger commitment would ensure receipts actually reach taxpayers.

Berhanu disclosed that over 16,000 pads were still pending due to data errors and information gaps. He urged taxpayers to use their order numbers and TINs to check their publication status before collecting receipts, stating that most complaints result from incomplete applications.

Dawit Kejela, a former auditor at the Ministry and now a private tax advisor, sees the present difficulties as part of an inevitable transition. He argued that, despite the merits of the transition, the economy is not yet fully equipped to handle such technological change. The more pressing question now, he says, is how the next printing round will be managed.

Dawit believes high costs are at the root of many distribution problems, with taxpayers travelling long distances only to discover their receipts have not yet reached their local revenue offices. Unlike the old system, the Ministry oversees every stage, from registration to the final handover of receipt pads.

“If the Revenue Ministry handles printing itself, the cost will be too high,” he said. “If taxpayers are expected to cover it, that also needs to be clearly stated.”

Dawit questioned whether the Ministry’s shift from manual to QR-code receipts alone can meaningfully fight fraud and illegal activity. Although the Minister announced that the issue would be resolved by June last year, Berhan ena Selam Printing Enterprise was unable to meet demand, making it impossible to invalidate past practices as planned fully. In previous years, receipts were printed locally with the approval of the relevant revenue bureaus. Only later was the process centralised.

“Capacity should have been assessed at the beginning, not after deciding on centralised printing,” Dawit told Fortune. “If Berhan ena Selam Printing Enterprise had regional operations, these problems would not have occurred.”

A senior manager from Berhan ena Selam Printing Enterprise declined to comment on receipt printing, as it falls under the Ministry of Revenue’s purview. However, he insisted that the Printing Enterprise has the “capacity” to see the task through.

He now advises his clients to buy cash register machines, despite their cost of more than 40,000 Br, rather than wait indefinitely for QR receipts. Delays are also caused by a lack of timely communication between taxpayers and tax officers, leaving some applicants waiting up to a year.

Dawit urged the Ministry consider adopting an integrated tax system similar to Kenya’s, where sales are reported directly to the authorities in real time, reducing the need for manual audits and interventions.

For now, as the centralised receipt system struggles to keep pace with demand, business owners like Yordanos and Temesgen can only wait, their enterprises disrupted by a process intended to streamline and support them. Their stories speak to a wider reality faced by thousands of businesses, caught between the promise of reform and the realities of implementation.

“Businesses need receipts urgently for bids, loans, or withholding purposes,” Dawit said. “But they can’t receive them because the printings haven’t been supplied.”

Ethiopia Inc Drives Consolidation While Liberalisation Remains Tightly Managed

Posted on January 25, 2026January 28, 2026 by Digital Editor

From a distance, Ethiopia looks like a country finally prising open its economy. Licences for mobile operators have been sold, a capital-market law passed, foreign banks invited, subsidies pared, and a distorted exchange rate nudged towards reality, at least ideally. Ministers talk the language of “liberalisation”, promising open markets, competition and the retreat of arbitrary power.

However, watch where the money flows, and another pattern appears. While the periphery deregulates, the core is requisitioned by the state and placed under Ethiopian Investment Holdings (EIH), a sovereign holding company incorporated in 2021.

EIH has swallowed more than 40 state-owned enterprises, from airlines and banks to telecoms, utilities, logistics firms and fertiliser projects. Last year, the Fund posted 2.05 trillion Br in revenue and 262.7 billion Br in pre-tax profit, an 88pc jump. Managers value the portfolio at 45 billion dollars, equal to 12pc of the country’s GDP, with annual revenue of 18.5 billion dollars, numbers that would flatter many a midsized economy.

But “Ethiopia Inc.” rests on a narrow base. One airline to rule them all, the Ethiopian Airlines Group (EAG), Africa’s champion carrier, is the gravitational centre. It earned 7.6 billion dollars in revenue in fiscal year 2025 as global travel rebounded. In 2023, its profits neared 800 million dollars. Transport and logistics, therefore, supplied 66.8pc of EIH’s pre-tax earnings. Shipping is the second pillar. The Ethiopian Shipping & Logistics Services Enterprise (ESLSE) hauled in 46.8 billion Br of revenue and 9.3 billion Br of profit in the first half of 2024/25, helped by freer foreign-exchange rules. Yet, the Addis-Djibouti railway, run by Ethiopian Railway Corporation (ERC), still bleeds cash. One logistics success subsidises another’s loss.

Finance is the next profit pool, contributing 14.95pc of the total. At its heart sits the Commercial Bank of Ethiopia (CBE), which mobilised more than two trillion Birr in deposits in 2025 and earned 36 billion Br in pre-tax profit, a 170pc leap. Insurance adds ballast. Ethiopian Insurance Corporation (EIC) collected 13.3 billion Br in premiums in 2024/25 and posted a 1.6 billion Br profit despite a 138pc surge in claims. Scale, not sophistication, appears to be the secret.

Telecoms is the cash cow. Ethio telecom booked 162 billion Br in revenue in 2024/25, up 72.9pc. Its mobile-money arm, Telebirr, processed 2.38 trillion Br in transactions. Electricity tells a similar story, where the Ethiopian Electric Utility (EEU) raised revenue by 50pc to 45.4 billion Br after tariff hikes, while Ethiopian Electric Power (EEP) pulled in 75.4 billion Br as new dams came online. Fuel supply may look dull, but it prints money. The Ethiopian Petroleum Supply Enterprise (EPSE) pocketed 36.5 billion Br in gross profit in 2023/24, accounting for 73pc of revenue generated by EIH subsidiaries that year, acting as a buffer for the federal budget, until oil prices swing.

Beyond these flagships lies a long tail of stragglers. Manufacturing and mining units, such as Ethio Engineering Group (EEG) and Ethiopian Mineral Corporation (EMC), are loss-making. Agriculture and agro-processing contribute a meagre 2.64pc of profits in a country where farming still employs most people. The Ethiopian Sugar Industry Group (ESIG) continues to drown in debt and outdated kit. All told, Ethiopian Airlines, CBE, Ethio telecom and Petroleum Enterprise generate more than four-fifths of EIH’s profits.

However, valuing the behemoth is guesswork. Most subsidiaries do not publish detailed accounts, and the Ethiopian Securities Exchange (ESX) has yet to start operation. A partial share sale by Ethio telecom in 2025 — 10.6 million shares at 300 Br — signalled only a modest valuation relative to its cash flow. Assumptions about the airline and the fuel supplier are only that – assumptions – because no market price exists.

Be this as it may sound, EIH is more than a holding company but a fiscal device for the federal government. In the first nine months of 2024/25, it paid 98 billion Br in taxes, cushioning a Treasury wrestling with debt restructuring and an IMF programme. The state is both a shareholder and a beneficiary, a dual role that sharpens incentives but blurs accountability.

The next act depends on privatisation and governance. EIH plans to list Ethio telecom, ESLSE and EIC on the ESX. Handled well, listings could impose disclosure standards, discover prices and widen domestic ownership. Botched, they might invite asset-stripping and politicised pricing. Policymakers are betting that by selling slices of its crown jewels, they can build a capital market from scratch, using the proceeds to patch weaker firms. Whether competence can spread beyond one airline, one bank and one oil importer is untested.

For now, EIH, under the managment of Brook Taye (PhD), the third boss of the sovereign fund, is a paradox of a portfolio of striking scale but fragile balance. Its numbers proclaim success while its structure whispers caution.

This could be by design. When Meles Zenawi, the late prime minister, spoke in the mid-2000s of building a “lily-white capitalism”, he envisaged markets tolerated only up to a point. Under the Revolutionary Democrats, ownership was fragmented across federal governments, regional states and party endowments. The Prosperity Party, which succeeded them, is stitching the pieces back together. Assets are not being relinquished but consolidated under one roof.

The model on the slides appears to be Singapore’s Temasek, a commercial holding company operating at arm’s length from politics.

Ethiopia’s contemporary reformers seem to be opening margins to lure investment while keeping the core under state control, ensuring rents flow to the public purse — and, critics say, helping the ruling party consolidate its grip on power. Private capital is courted, but usually as a minority partner or downstream contractor. This is not classical privatisation but the financialisation of state ownership.

The tension is clearest in potash, fertiliser and aluminium. EIH has struck deals, including a 2.5 billion-dollar fertiliser plant with Dangote Group, a memorandum of understanding with RUSAL for a one billion-dollar smelter, and storage depots and industrial parks.

From a development perspective, such ventures could bring exports and jobs. But, from an investor’s perch, they blur the line between the regulator and the competitor. Markets tolerate state participation while detesting opacity.

Opacity is rife with the EIH, which has yet to publish its consolidated statements. Asset transfers were never externally audited, and governance decisions occur behind closed doors.

However, EIH’s board includes the Planning Minister Fistum Assefa, the Education Minister Berhanu Nega (PhD), the Central Bank Governor Eyob Tekalegn (PhD), and the Investment Commissioner Zeleke Temesgen (PhD). They can approve mergers, capital restructuring and liquidations without cabinet sign-off. In theory, that may shield decisions from meddling. In practice, it could concentrate economic power in a narrow apex.

The IMF has flagged the omission as a missed benchmark, warning of hidden liabilities. Without transparency, neither citizens nor creditors can judge risks or subsidies. For domestic firms, the field tilts. State-backed giants enjoy privileged access to credit, foreign currency and land. Losses are socialised while private failures are not. The result is a protected core and a precarious fringe. Political scientists call this state capitalism, or in starker terms, authoritarian capitalism.

In such systems, prices move and capital flows, but within parameters set by an executive that brooks limited scrutiny. China shows such a model can deliver growth when exports and discipline align. Russia shows how it can ossify when rent-seeking prevails. Where Ethiopia’s version will land remains uncertain. The Prosperitians face a choice.

EIH can become a genuine and transparent holding focused on areas where private money still fears to tread or morph into an all-devouring empire, crowding out the entrepreneurship the country needs. A mandate with sectoral limits, published accounts, arm’s-length regulation and co-investment schemes could crowd in private capital. Absent that, liberalisation may widen the pie while consolidation chokes off the appetite to bake it.

Doors to Ethiopia’s economy are ajar, but the keys remain in the state’s hands. Investors will decide whether that is a reassurance or a red flag.

A Safety Net Emerges in Budding Capital Market

Posted on January 25, 2026January 28, 2026 by Digital Editor

The nascent capital market is inching toward maturity, with regulatory authorities introducing institutional mechanisms to insulate small investors from volatility and operational uncertainties often associated with early-stage market ecosystems.

A proposed Compensation Fund Regulation from the Ethiopian Capital Market Authority (ECMA) marks a new development shielding small investors from losses due to fraud or operational failures. A draft regulation, the Compensation Fund Regulation, would set a maximum payout of 100,000 Br for eligible investors who suffer financial harm while trading securities, a measure intended to boost confidence as the capital market infrastructure takes shape.

The Authority has licensed 15 capital market service providers, including investment banks, securities dealers, and investment advisors. Of these, eight are non-bank-affiliated investment advisors. Their combined subscribed capital exceeds 3.5 billion Br, with paid-up capital totalling nearly 1.5 billion Br, a sign that the capital market is expanding, even as regulatory oversight and investor protections evolve.

The regulation stipulates that the Authority may collect unclaimed dividends from shareholding companies and, if claimed later, pay them out to shareholders through the fund mechanism. The initial capital injection for the Compensation Fund Office will come from the government, though the draft omits any mention of the amount. Over time, contributions from regulated market participants will keep the fund solvent, with penalties for late payments to be specified in a forthcoming directive. The same directive is expected to detail the exact contribution formula.

The proposed regulation places the burden of funding the scheme on capital market service providers and the Securities Depository & Clearing Company, which will be required to contribute to the fund. The draft authors are determined to compensate investors for losses resulting from service providers’ or the Exchanges’ failure to meet contractual obligations. Investors who are entitled to dividends but do not receive them on time may claim compensation, as may those who lose money because their funds have not yet been credited to their account or because a provider collapses before a transaction is completed.

However, once the investment is fully transferred to the investor, the fund no longer covers losses.

The rules draw a sharp distinction between small investors and large institutional players.

Excluded from coverage are banks, insurance firms, microfinance institutions, savings and credit cooperatives, as well as collective investment vehicles, pension funds, capital market service providers, and domestic and foreign investors.

According to Sirak Solomon, a senior capital market advisor at ECMA, the rationale is plain.

“Large investors are expected to conduct proper due diligence before investing and are less likely to be defrauded,” he told Fortune. “These are responsible for their own investment decisions and should act carefully.”

The fund’s focus is to offer a backstop for small and retail investors whose savings are at higher risk. Even for small investors, the coverage is tightly defined.

“Compensation is only available if losses are suffered before the investor takes ownership of their assets,” Sirak said.

He stated that the scheme’s primary function is to safeguard client funds that are still vulnerable during the transaction process.

Market players who fail to make timely contributions to the fund will face fines, with details to be ironed out in the directive now under preparation. The contribution levels are not specified in the regulation, an omission that has drawn industry attention.

Habtamu Eshetu, the country’s first individual Securities Investment Advisor licensed by ECMA and the CEO of Ethio Capital Solutions, welcomed the fund’s creation but voiced concern about fairness in the payment structure.

“Obliging all participants to pay the same amount would be unfair, as some face higher risks than others,” he said.

Habtamu argued that contributions should reflect a participant’s exposure and be set following an investigation. Sirak agreed that the contribution methodology will be clarified in the directive and is still under review.

Retail and small investors should act quickly if they wish to benefit from the fund. The regulation requires that compensation claims be submitted within six months of the date on which a provider, exchange, or clearing company fails to meet its obligations.

Not everyone is convinced the scheme will make a difference in practice.

Segni Ambaw, a veterinarian who bought shares in Ethio telecom, sounded sceptical about the Authority’s ability to enforce its own rules. He cited Ethio telecom’s failure to issue official share certificates to shareholders as evidence that investors’ interests are not always protected, despite regulatory intent.

“While the regulation may improve the image of the capital market and create the perception that it is safe for retail investors, I question the Authority’s resolve to implement what is written on paper,” he said.

Others, like Mered B. Fikre Yohannes, CEO of Pragma Capital Investment Advisory, take a more optimistic view.

“Retail investors are large in number and should be the main participants in the market,” he told Fortune.

Mered believes that providing compensation guarantees will “build confidence and encourage broader participation.”

The regulation also allows the Authority, under Hanna Tehelku, to invest assets collected for the fund, but limits such investments to low-risk, diversified assets. All returns, including income, dividends, and interest, would be channelled back into the fund itself. However, this provision raises fresh concerns about inclusivity.

“Some individuals prefer not to benefit from interest-based or prohibited investments,” said Mered, arguing that the regulation should specify where the fund’s money is invested and how its income is managed. “The Authority should serve all citizens, regardless of religious or social background.”

Businesses Wait as Tax Rulings Lag in Addis Abeba

Posted on January 25, 2026January 28, 2026 by Digital Editor

Addis Abeba’s Tax Appeal Commission is facing increasing pressure as a backlog of unresolved tax appeal decisions leaves businesses in prolonged uncertainty.

Taxpayers report mounting frustration over the Commission’s failure to deliver timely written rulings, even after hearings conclude and verbal assurances of case closure are given.

The Commission, tasked with arbitrating disputes between taxpayers and the city’s revenue authorities, is overwhelmed. In the third quarter of 2025 alone, it received 818 new appeals, pushing its caseload to 1,144. Though it ruled on 686 cases during that period, nearly 60pc, appellants claim that receiving written decisions remains an arduous process.

At the heart of this dysfunction is a procedural gap. Decisions rendered by judges do not automatically translate into enforceable rulings.

According to Behailu Nibret, vice president of the Commission, rulings should undergo drafting, judge approvals, and registrar processing before final issuance.

“After a ruling is made, the decision should be prepared and signed by the judges,” he said. “Only when the decision is prepared and signed is the case officially closed.”

However, while regulations set a six-month limit on appeal resolution, the timeframe for issuing a formal decision after the verdict remains ambiguous and unenforced.

Hingya Abdisemed’s year-long tax ordeal reveals the system’s shortcomings.

Running a legal translation business in Yeha Building, on Ras Mekonnen Avenue, near Addis Abeba Stadium, Hingya’s business was initially assessed for tax at 600 Br a day. A surprise revision by the Revenue Bureau inflated her estimated daily earnings to 7,500 Br, later reduced to 4,000 Br, figures she says grossly overstate her actual income, particularly given the seasonality and dependency of her work on court activity.

“It’s still much more than what I earn,” she said. “My daily income doesn’t come anywhere near that amount.”

The new estimate pushed her into the value-added tax (VAT) bracket and set her projected annual earnings above 2.5 million Br.

“That isn’t right,” Hingya said. “My business doesn’t make that amount of money.”

Convinced the assessment was wrong, Hingya filed a formal complaint with the revenue office on October 31, 2024, challenging the revised figure. It took the Bureau eight months to respond. Her appeal was heard by the Tax Appeal Commission in mid-2025, with verbal confirmation of a decision by December. Yet months later, she remains in limbo. After being told the letter was ready, she was asked to join a Telegram group for updates, an informal workaround that only deepens confusion.

“It has now been almost two months, and I still don’t know how long it will take,” Hingya told Fortune.

The absence of a formal ruling leaves her exposed to penalties and unable to comply with tax obligations or plan for her business.

Another case involves a woman, who asked to remain anonymous, seeking to dissolve her family-run travel agency, left stagnant by dwindling tourism and the death of her father.

“The business was already performing badly because we weren’t getting many tourists,” she said. “After my father passed away, I wanted to shut it down.”

But when she approached the revenue office to close the company, a mandatory five-year audit triggered a steep two-million-Birr tax bill for the first year alone. Though the Commission informed her that a ruling had been reached in late December 2025, she has yet to receive written confirmation, stalling the closure process and exacerbating financial pressures.

“They told me I would get the decision within 15 days,” she said. “But it has been almost a month now, and I still haven’t received the result. I don’t know how long it will take.”

According to the Vice President of the Commission, the length of time required to review each case varies. Once the decision is signed, both parties receive it within seven days, according to Behailu. Each hearing, he noted, is spaced more than 15 days apart, adding to the timeline.

“The appeal process is long and thorough so that the decision can be fair,” he told Fortune. “We can’t determine exactly how long each case will take. We’ve the prerogative to take the necessary time to examine cases thoroughly.”

Delays persist, however. For legal experts, a dual challenge of understaffing and poor communication is to blame. While the Commission may be committed to thorough reviews, it lacks the institutional responsiveness to keep appellants informed.

Aman Eumer is a lawyer and legal adviser with more than 13 years of experience. He holds an undergraduate degree in political science from Addis Abeba University, an undergraduate law degree from Haramaya University and a postgraduate degree in psychology from Lincoln University, London.

He saw that appellants often do not understand the Commission’s internal processes. This opaqueness results in a mismatch of expectations. Appellants interpret judges’ verbal decisions as final, unaware of the bureaucratic steps that follow.

“When a judge says a case is over, most appellants believe the process has fully ended and that they will receive the written decision shortly,” he said. “However, that is not how the internal procedure works. Even judges may not know how long these internal steps will take, making it impossible to provide reliable timelines to appellants.”

Beyond procedural inefficiencies, the economic costs are significant. Delayed rulings freeze tax disputes in place, allowing interest and penalties to accrue. For small business operators, especially in service sectors already strained by seasonal demand or external shocks, these costs are unsustainable.

“When time passes, penalties and interest can add up,” Aman said. “Together, they can significantly affect appellants.”

The Tax Appeal Commission, located on Chad St., within a short distance of both the city’s revenue offices and the courts, often affects but is not translated into institutional efficiency. Despite processing cases involving billions in disputed taxes, 1.79 billion Br in revenue cases, and 1.8 billion Br in customs disputes in the third quarter alone, the Commission’s internal workflow continues to hinder timely resolution.

Shiferaw Taps Daily Transactions to Fund Disaster Relief

Posted on January 25, 2026January 28, 2026 by Digital Editor

The federal government is to implement a far-reaching scheme to finance its disaster-response infrastructure by drawing on micro-contributions from millions of everyday transactions.

Spearheaded by Shiferaw Teklemariam (PhD), commissioner for Disaster Risk Management, the new campaign, under the Ethiopian Disaster Risk Response Fund Office (EDRRFO), marks a strategic shift from reliance on foreign aid toward domestic resource mobilisation. However, its structure has ignited debate over the implications for economic equity, service affordability, and institutional readiness.

Under a new regulation signed by Prime Minister Abiy Ahmed (PhD) and approved by the Council of Ministers, the Ethiopian Disaster Risk Response Fund Office (EDRRFO), an institution accountable to Shiferaw, the federal steward of solace, will mobilise funds from a broad range of daily transactions. Citizens will be required to pay into the fund through various service fees, including charges imposed on digital banking users, insurance premiums, corporate dividends, flight tickets, and voice and data airtime fees collected by telecom service providers.

Additional revenue streams include fees for passport and visa services, income generated by petroleum suppliers, lump-sum fees during trade license registrations and renewals, and charges for services at the Federal Documents Authentication & Registration Services (DARS). The Office also expects contributions from federal agencies and private companies, with the Customs Commission tasked to transfer proceeds from goods and money seized in alleged trafficking cases, whether sold directly or through auctions.

Chemical manufacturers, tobacco and alcohol producers, and shipping and logistics companies are included in the pool of contributors. Government budget allocations from the federal government, the Addis Abeba City Administration, and the Dire Dawa City Administration will supplement the fund. Donations from development partners, charitable organisations, and individuals are also anticipated.

The regulation details revenue rates and collection responsibilities for each sector, with banks and telecom providers required to collect and transfer the funds. Digital banking users will face a five percent charge on service fees, matched by a similar five percent contribution from those buying airtime or data. A one percent levy applies to insurance premiums, loan disbursements by banks and microfinance institutions, and dividends received by shareholders.

Citizens are expected to pay each time they use a listed service, a structure that has triggered criticism for effectively requiring repeated payments for the same fund.

Banks and service providers responsible for collecting funds are required to deposit the funds at the end of each month into an account opened under the Office, with oversight from the Ministry of Finance and the National Bank of Ethiopia (NBE). Any organisation or institution that fails to deposit the collected money within the specified period will be subject to repayment of the principal with interest, as determined by the NBE, and a 10pc penalty on the unpaid amount.

“No institution is exempt, and everyone must follow the law strictly,” Alehegn Kassa, head of the legal affairs department at the Commission.

According to Alehegn, who once served as the Supreme Court Justice in the Amhara Regional State, the Office will deploy these funds only in the event of a confirmed budget gap or an emergency disaster. The funds will be used to procure humanitarian relief supplies, build strategic food and non-food reserves, expand storage infrastructure, and strengthen reserve warehouses.

The Office is in the final stages of organisation, with appointments of a director general and deputies underway. Last week, insurance companies in Addis Abeba were summoned to an awareness session on the fund’s implementation.

According to Fasil Asfaw, risk and compliance director at Nyala Insurance, the meeting was more of “a directive than a forum for discussion.”

“It would’ve been better if insurers had been given the opportunity to share their views and discuss the contribution rates imposed on the sector,” he said. “The contribution could be particularly burdensome for large insurers.”

Abraham Mebrat (PhD), a lecturer and researcher at the Institute of Disaster Risk Management & Food Security at Bahir Dar University, argued that the scheme, though placing pressure on the financial sector and the public, is necessary for national self-reliance. He believes the fund reflects Ethiopia’s longstanding tradition of risk-sharing, pointing to the “Busa Gonofa” system in the Borena area of Oromia Regional State as a precedent for collective responsibility.

“After the suspension of foreign aid, the responsibility for disaster response has shifted to the government and the public,” he told Fortune.

Disaster relief funds are not a new concept for Ethiopia or globally.

Kenya, for example, operates a similar fund but with a crucial difference in funding mechanics. Its model follows a top-down approach, with the government allocating a portion of its tax revenue to a dedicated disaster fund. Citizens are not required to pay additional charges when buying goods or services. Ethiopia, by contrast, is taking a bottom-up approach, collecting small amounts from millions of daily transactions. While this system allows for rapid accumulation of funds, it also increases the cost of living for ordinary residents.

Yohannes Hailu, a founding shareholder of Berhan Bank and a businessman, is among those who have voiced frustration.

“When I borrow money, I contribute,” he told Fortune. “When I buy insurance for my car, when I buy airtime for my phone, when I fuel my car, I contribute.”

Yohannes found it unfair to require contributions on borrowed money, arguing that taking a loan already involves risk and high interest rates. He warned that adding another contribution on top of this discourages business activity. He also questioned the logic of imposing fees on businesses that incur losses, noting that there is no reciprocal support when businesses become unprofitable.

For Yohannes, such duplicated charges are not contributions in the spirit of solidarity but resemble extortion. However, he acknowledged that contributions can be justified in some cases, such as when profits are earned through dividends.

“When someone earns dividends, it means they’ve made a profit,” he said. “Asking for a contribution from that profit is reasonable.”

Yohannes was careful to emphasise his support for the humanitarian response fund. He described it as a “good initiative” that could strengthen Ethiopia’s ability to respond to sudden disasters, provided that implementation does not place an excessive burden on the public and is informed by public discussion.

Not all officials share these concerns. They pushed back against such public criticism, insisting that the office was established to enable citizens, communities, and institutions to fulfil their social responsibility by supporting each other in disaster risk prevention and response, as well as in recovery and rehabilitation. Federal relief officials argue that because disasters can affect anyone, it is reasonable for everyone to contribute to a fund that enables timely and effective responses. They believe the existence of a federal fund helps the country become more resilient and able to respond independently to human-made and natural disasters.

“The Fund is also intended to strengthen humanitarian relief efforts, strategic reserve stocks, emergency machinery, reserve supplies, and disaster-related technologies,” said Alehegn.

The federal government’s rationale has taken on new urgency following the drop of USAID support, which led the country lose billions of dollars in aid.

“How should disaster response efforts be sustained without external assistance?” Alehegn asked.

For Alehegn and his colleagues at the Commission, relying on domestic contributions has become indispensable. He argued that many routinely pay service charges without objection, but take issue when a portion is redirected to disaster relief.

“The contribution scheme is designed to collect small amounts from a wide range of services, spreading responsibility and promoting solidarity,” Alehegn told Fortune. “This approach reduces dependency on external aid and strengthens the country’s ability to respond to disasters using its own resources while distributing risk across society.”

When the amendment to the law governing disaster risk management was introduced last March, it initially proposed deducting contributions from the salaries of public and private sector employees. That provision sparked widespread public backlash and was removed before Parliament ratified the bill. However, the final regulation and the subsequent implementation directive have retained the broad array of levies on banking and insurance services, igniting debate among sector leaders and service users.

The Commission’s officials have informed executives of banks and insurance firms of the regulation through letters they dispatched last week. With the short implementation time they are given, banks now should complete costly core system integrations and adjustments within weeks, after being officially notified only recently.

Demissew Kassa, secretary general of the Ethiopian Bankers Association, welcomed the idea of a federal fund for emergency and relief works but voiced concern about the pressure it would place on the public. While banks primarily serve as collection agents under the new regulation and may not be directly affected, Demissew believes users, particularly the middle class and businesspeople who rely heavily on banking and insurance services, will bear the brunt of the additional costs.

Tadesse Hatiya, president of Sidama Bank, expressed even stronger concerns. He sees the fund as an issue to worry about, not only for individuals but also for banks, arguing that the scheme exerts direct pressure on the financial sector.

“Banking is a competitive industry, and banks may not be able to transfer the full cost to customers if they want to attract and retain clients through fair pricing,” he told Fortune. “They may absorb part of the cost, which could affect their bottom line.”

He found the five percent contribution on digital transactions particularly problematic, particularly at a time when the government is encouraging digital finance. With the existing 15pc VAT, he warned, users could end up paying as much as 20pc in different charges. Tadesse warned that repeated fees could make digital services prohibitively expensive and push customers back toward traditional banking methods.

While not opposed to contributing to disaster relief, Tadesse argued that the required rates, particularly for loans and digital payments, are too high.

“Revenue collection is necessary, but it should not harm banks, businesses, or citizens, nor be treated as just another revenue exercise,” he said.

Tadesse also questioned the logic of a one percent contribution on loans. He argued that businesses already repay principal and interest and that the new charge further increases their burden. He warned that they might pass these costs on to consumers, making it more difficult to tame inflation.

For Abraham, the lecturer, the fund could help cultivate a sense of ownership and belonging among citizens. However, he urged the Shiferaw and his team at the Commission to consider alternative sources of revenue, such as the sale of unused public assets, to ease the burden on denizens.

Ahadu Bank Profits Signal Resilience But Capital Falls Short

Posted on January 25, 2026January 28, 2026 by Digital Editor

Ahadu Bank closed its most recent financial year not by pursuing breakneck growth, but by focusing on the fundamentals of survival. While its strong earnings, healthy deposit inflows, and solid asset quality provided a foundation for future progress, the unresolved capital shortfall and the liquidity challenges confronting the banking industry defined the financial year 2024/25.

Like many young financial institutions, Ahadu Bank faced a year that tested its ability to adapt. Aggressive expansion was set aside in favour of steady management amid regulatory tightening, unpredictable shifts in foreign-exchange rules, persistent liquidity constraints, and political and economic uncertainty. The Bank’s Board Chairman, Anteneh Sebsebie, and its President, Mulugeta Beza, described the period as one of resilience, not acceleration, setting a tone that avoided both pessimism and unwarranted optimism.

“Over the past year, we’ve steered a dynamic social, political, and economic situation with resilience, turning challenges into opportunities and laying a stronger foundation for sustainable growth,” Anteneh wrote in the Bank’s annual report.

The year’s results mirrored this cautious optimism. Progress was real, but so were the Bank’s underlying vulnerabilities. Despite the headwinds, Ahadu Bank delivered a strong topline performance.

Anteneh attributed this to “deliberate” and “disciplined” decisions at the Board level, stating three priorities of strategic clarity, operational discipline, and improved governance. According to the Board Chairman, active oversight, structured processes, and alignment with regulatory expectations and good governance guided the Ahadu Bank’s operations.

“Governance reforms, including stronger committee oversight, data-driven decision-making, and accountability at the senior management level, were key to ensuring growth led to sustainable profitability,” said Anteneh.

The Board placed a premium on risk management, capital adequacy, asset quality, and regulatory compliance. According to Anteneh, good oversight is not about micromanagement, but about setting clear expectations, targets, performance tracking, and accountability.

“Effective oversight,” he said, “enabled the Bank to spot issues early, rather than responding after the fact.”

This approach paid off in the numbers. Interest income from loans, advances, and investments jumped by 129.3pc to 852.32 million Br. Net commission and service charges surged by 133.3pc to 905.58 million Br. Gains from foreign exchange dealings jumped by 286pc to 343.74 million Br. The growth across these income streams reflected the Bank’s broader business activity. By the end of June 2025, Ahadu Bank’s total assets had reached 10.1 billion Br, up 56.5pc from a year earlier. Loans and advances climbed by 146.6pc to 4.43 billion Br. Liabilities grew in parallel to 8.55 billion Br, making up 85.1pc of the balance sheet.

Analysts hailed the expansion as impressive, noting that Ahadu Bank appeared unaffected by regulatory lending caps. Deposit mobilisation was also strong, rising by 69pc to 7.88 billion Br, resulting in a 55pc loan-to-deposit ratio. However, Abdulmenan Mohammed (PhD), a financial analyst based in London, noted this was “alarmingly” low and urged the management to deploy deposits more efficiently to improve profitability.

Yet, lending has also expanded, with loans and advances, in addition to 950.2 million Br allocated to mandatory treasury bills. Despite these gains, Ahadu Bank’s market share remained small, limiting its systemic importance and its involvement in key market infrastructure, such as payment settlements or foreign exchange clearing.

Analysts agreed that liquidity and funding risk remained the main vulnerabilities for Ahadu Bank. Deposits accounted for 92.1pc of total liabilities, with savings and demand deposits making up 78pc of that base. Access to wholesale or long-term funding was limited. The Bank’s customer base is young and sensitive to shifts in confidence, a situation made more precarious by the prevailing volatile macroeconomic environment.

The leadership of the Bank conceded in the annual report that forex liberalisation-driven liquidity pressure and Birr depreciation are tightening balance-sheet liquidity.

“Rapid currency depreciation generated profound implications, not only by intensifying liquidity pressures but also by creating a range of operational challenges across the financial sector,” said Anteneh.

Ahadu Bank’s capital grew 5.6pc during the year, but the shortfall remained a pressing concern. Paid-up capital was 1.13 billion Br, well below the five billion Birr statutory minimum required by June this year. The Bank faces a daunting task in raising the balance within the set timeframe. The Board Chairman acknowledged this as a “core vulnerability,” and the President admitted, “low capital limits shock absorption, magnifies liquidity stress, and raises confidence sensitivity.”

“We remain below the minimum statutory requirement,” said Anteneh. “Raising capital to the authorised level is fundamental to the Bank’s viability and the preservation of its distinctive identity.”

The admission anchored the year’s results in the context of an expansion far from complete.

Ahadu, a Ge’ez word literally translated to “One”, tells its founders’ ambition to pioneer a new banking model. It was incorporated in 2021, with a paid-up capital of 564 million Br raised from more than 10,000 founding shareholders. Headquartered in the Sunshine Building on Africa Avenue (Bole Road), the Bank has quickly expanded its branch network and customer base.

Some shareholders, however, remained dissatisfied.

According to Afework Tibebu, a founding shareholder, he has yet to find a reason not to rue his investment in the Bank. He felt the money would have been better placed elsewhere, deepening his dismay not only toward Ahadu Bank but also his holdings in Abay Bank.

Abay Bank consolidated its position as a mid-tier incumbent with a broad branch footprint and a deposit-led balance sheet, translating scale into steady, if not standout, profitability amid rising operating and credit-cost pressures. Ahadu Bank, by contrast, continued to behave like a younger and faster-growing challenger, prioritising asset and loan expansion and capital build-up, which supported headline growth but constrained short-term efficiency and margins.

He claimed that promises such as mortgage financing and vehicle loans were not fulfilled.

“I should have invested elsewhere,” Afework told Fortune.

For him, the results presented at the general assembly, held in November last year at the Millennium Hall on Africa Avenue, were “just numbers,” rather than dividends reaching his pocket.

Profitability was, nonetheless, one of Ahadu Bank’s most encouraging features in its 2024/25 operations.

The Bank generated 2.16 billion Br in income against 1.66 billion Br in operating expenses, resulting in a profit before tax of 502.1 million Br and a net profit of 399.4 million Br. Net profit for the previous year was merely 90.9 million Br. Earnings per share (EPS) jumped to 183 Br, up from 48 Br.

Addressing shareholders at the general assembly, Mulugeta Beza, president of Ahadu Bank, hailed the performance as “remarkable” and credited employees’ dedication, resilience, and teamwork.

Mulugeta, 45, took over as president in July 2025, replacing Sefialem Liben, with Sisay Gebru stepping in as acting president. He brought nearly two decades of commercial banking experience, mostly at the Bank of Abyssinia, where he directed credit underwriting, international banking, and finance and accounting. He had served as chief business officer at Bunna Bank since 2020. He did his postgraduate studies at the International Leadership Institute and his undergraduate studies in accounting and finance, as well as in information systems, at Addis Abeba University.

“Ahadu Bank was committed to adapting, meeting new requirements, and leveraging emerging prospects for sustainable growth,” he said in a statement published in the annual report.

However, his management declined to provide further comment beyond official statements.

In the report, Mulugeta cited several regulatory measures that affected operations, including credit caps, changes to the foreign exchange regime, revised banking proclamations, and the mandatory Fayda ID requirement for account opening. While these reforms are designed to strengthen the industry in the long term, they created short-term constraints on liquidity, income, and customer acquisition.

Nonetheless, the Bank posted a return on assets (ROA) of around 3.97pc, above the industry average of 2.1pc. Return on equity (ROE) reached 26.7pc, compared to the industry’s 25.7pc benchmark. The loan-to-deposit ratio (LDR) was 55.1pc, lower than the industry average of 60.6pc. Liquidity seemed ample by some measures, with the ratio of cash and bank balances to deposits at 37.1pc, better than the industry’s average of 24.2pc.

Yet, the structure of the deposit base and loan book reinforced the image of a cautious financial institution. Savings deposits accounted for 51.5pc of the total, demand deposits for 26.7pc, and fixed deposits for 21.8pc. Lending was concentrated in trade, with export and import services making up 57.7pc and domestic trade and services for a further 23.5pc. Construction and manufacturing accounted for under 12pc, while agriculture and consumer lending played only a minor role.

“We’ve taken a cautious credit posture, focused on short-tenor, cash-flow-driven activities rather than long-term project finance,” Mulugeta said.

Anteneh acknowledged that the Board faced external and internal challenges, such as macroeconomic pressures, inflation, foreign exchange constraints, evolving regulations, competition, the need to scale operations while maintaining controls, talent retention, and the pressure to balance growth with caution. According to him, the Board addressed these issues through scenario planning, timely policy changes, stronger risk buffers, and close coordination with management and regulators.

Analysts noted that early action in portfolio rebalancing, capital planning, and governance helped the Bank remain agile. Asset quality remained solid, with 95.7pc of loans classified as “pass” and only 1.8pc as special mention.

Mulugeta credited “closely monitoring borrower situations and proactively implementing corrective measures to prevent loan delinquency.”

In an environment where rising rates, exchange rate volatility, and slowing economic activity are expected to test borrowers, this was a notable outcome for a young bank.

Ahadu Bank’s performance reflected a late entrant that had found a profitable niche, albeit with structural weaknesses common to young lenders. Confidence-sensitive funding, limited long-term resources, and a capital base trailing regulatory requirements. Its year is best viewed as a distinct story in an industry where larger banks set the overall tone for confidence and liquidity. High performers like Zemen Bank benefited from large non-interest income and foreign exchange income, strong operating leverage, and positions that capitalised on shifts in the forex regime.

At the other end, Nib Bank’s heavy losses revealed the risks of poor alignment with forex revaluation. Ahadu Bank’s profitability was strong but not windfall-driven, with gains built on core spreads and fees rather than exceptional forex movements, but also limiting upside when market shifts occurred.

Non-interest income accounted for 60.6pc of revenue, while interest income accounted for 39.4pc. Personnel expenses grew by 27.8pc to 626.37 million Br, while other operating expenses grew by 21.7pc to 426 million Br. This appears to have led Ahadu Bank to slow branch expansion, merge four underperforming branches, and open two new locations, ending the year with 102 branches.

“This is a disciplined approach to branch expansion, prioritising efficiency and strategic positioning over scale,” Anteneh said.

At the Sarbet branch, one of its earliest, its Branch Manager, Zenash Belay, a 20-year industry veteran, saw that the focus was moving to digitalisation, especially QR Codes and mobile banking. The Branch’s foreign exchange gains came mainly from import and export clients. Located near the African Union, the Branch serves a large corporate customer base. It records about 20 walk-in customers daily, with most activity at the service desk.

The President cited this as a progress in digital banking, including upgrades to mobile platforms and the launch of digital lending for individuals and small businesses. The Bank’s in-house “School Pay” system now serves nearly 20 schools and is set to expand. Digital transactions accounted for over 42pc of volume.

More than 390,000 new customer accounts were opened during the year, taking the total above one million. The Bank raised 3.22 billion Br in new deposits and generated 88.2 million dollars in foreign exchange. The loan portfolio reached 4.43 billion Br, supported by prudent lending and risk management.

However, liquidity management remained a concern. Cash and bank balances increased by 42.4pc to 2.92 billion Br, though the ratio of cash and balances to total assets slipped to 29.2pc from 31.9pc. Abdulmenan observed that the Bank needed to use excess liquidity more efficiently to drive income. The high reliance on customer deposits, over 92pc of liabilities, made maintaining depositor confidence essential.

Anteneh disclosed that the focus is on sustainable profitability and on ensuring long-term competitiveness through improved asset quality, diversified income streams, digital transformation, a compliance culture, and human capital development.

“Our objective is not just growth, but enduring institutional strength, positioning Ahadu Bank as a resilient, trusted, and forward-looking financial institution in the banking sector,” he said.

Birr Holds Steady as Banks Close Ranks

Posted on January 25, 2026January 28, 2026 by Digital Editor

The foreign exchange last week displayed tranquillity, although the numbers revealed a market steered more than stirred. The Birr hardly “traded”, as commercial banks marched in lockstep, preserved a two-percent spread and altered prices by mere hundredths of a Birr. Calm still masked a disciplined corridor where rivalry showed up in access and service, not in the rate.

From January 19 through 24, 2026, the centre of gravity barely moved. Ignoring the National Bank of Ethiopia (NBE), the average buying rate among banks was at 152.55 Br for a dollar, while the average selling rate sat near 155.58 Br. Daily shifts were microscopic. Buying crept from about 152.52 Br on January 19 to 152.57 Br by January 24; selling hugged 155.6 Br, save for January 23, when an abnormal quotation dragged the average lower.

For most banks, it was calibration, not repricing, that proved a market obeyed an informal code.

The crucial divide was not between state and private banks but between a hierarchy of reference posters and followers. At the pinnacle sat the Central Bank. It offered the week’s highest buying rate, 155.55 Br early in the week, and did so with a zero spread, buying and selling at the same figure. That is an anchor, not a commercial price. More telling is the glide path. The Bank’s buying quote slipped to 155.54 Br on January 21 and then fell to 155.26 Br from January 22 onward. The decline, though small, signalled deliberate recalibration.

Beneath the Central Bank, Oromia Bank long set the private bank’s ceiling and remained the most expensive seller. Throughout the six days last week, it bid 155.25 Br and asked 158.35 Br. Once the Central Bank revised its own quote, the NBE’s buying rate stood roughly 0.016 Br above Oromia Bank’s, a small inversion that reasserted the regulator’s primacy even when a commercial bank reached for the top.

Zemen Bank formed a distinct second tier. Its buying rate was between 153.55 Br and 153.58 Br, well above the big privates clustered in the mid-152 Br. In a market starved of hard currency, such persistence often signals a bank prepared to pay up to signal availability even if actual volumes are modest. Zemen Bank’s consistency showed how pricing can broadcast confidence more than it conveys size.

Most large private banks acted as shock absorbers. They shadowed the cluster, rarely led and never widened spreads. On January 21, the Bank of Abyssinia was at roughly 152.58 Br, Awash at 152.04 Br and Wegagen at 152.09 Br. The gaps were commercial rounding in a market where a few cents do not tilt incentives when quantity is rationed. More striking is what failed to occur. No one undercut peers meaningfully, while the two percent convention endured.

The state-owned Commercial Bank of Ethiopia (CBE) was a study in administered steadiness. Each day it bought dollars at 151.60 Br, the week’s lowest rate and one unchanged for four weeks in a row. Its selling quote, 154.64 Br, also sat near the floor and, absent the January 23 anomaly elsewhere, was the lowest outright offer. CBE was not chasing headline buzz; it was providing a stable reference for a vast branch network and captive flows. Top-up bonuses, such as 10 Br on every dollar, let banks maintain the posted two percent spread without jolting the corridor.

Dashen Bank supplied the sharpest outlier among its peers. For much of the week, it sat at the lower edge of the private cluster, buying around 151.70 Br and 151.73 Br, sometimes below younger banks. Then on January 23, it posted 151.72 Br for buying and selling, a zero percent spread. Zero margin invites one-way flow, so context suggests a reporting quirk rather than a deliberate gamble.

A subtler deviation appeared on January 24, when Bunna Bank narrowed its spread to 1.74pc. Unlike Dashen Bank’s abrupt zero, its tweak looked tactical, perhaps attracting notes or clearing a small balance. Its rarity proved how tight the corridor is and how swiftly discipline reasserts itself.

Draw the ladder, and the structure emerges. The Central Bank and Oromia Bank occupied the high end, Zemen Bank sat on an upper-middle rung, CBE anchors the bottom, and Dashen and Ahadu banks often quote softly among privates. The bulk clustered between 152. Br and 152.9 Br on the bid and 155 Br and 156 Br on the offer. The pattern appeared to be a coordination equilibrium. No one wanted to widen spreads first, nor appear to pay far above the convention unless compelled.

Across last week, the commercial-bank average ticked fractionally higher while the official anchor drifted lower. The counter-movement fit a managed system, where the cash window stayed orderly, dispersion remained tight, and pressure, if any, showed up not in posted prices but in availability, allocation practices, and the premium brewing outside the formal channel.

The cash-dollar market operated as a tightly governed corridor. Pricing converged, spreads were standard, and deviations were fleeting. The Birr’s posted value changed slowly, not because demand and supply are balanced, but because the mechanism deterred abrupt moves. The real action lies beyond the board, in who gains access to dollars, how much they get and on what unseen terms. For customers and policymakers alike, the decimals on the rate board are the tip of a regulated system built to absorb shocks.

Handmade Dreams Meet Imported Realities in Jewellery Trade

Posted on January 25, 2026January 28, 2026 by Digital Editor

Armed with 12,000 Br and a flair for the unconventional, Addishiywet Ermiyas, 28, embodies a new breed of jewellery makers. Her medium, epoxy resin, glitter, and paint, requires little beyond craft and creativity.

An undergraduate in management with a postgraduate degree in business administration, Addishiywet Habesha Queen Jewellery offers handmade earrings priced from 200 Br to 300 Br, appealing to younger buyers seeking individuality on a budget. Though the entry barrier is low in capital, it is high in persistence.

Inputs start at 200 Br, sourced from both local and foreign suppliers, but can reach 7,000 Br depending on the quantity and type. In four years, Addishiywet has become one of the more recognised makers of epoxy earrings. For her, success depended more on discipline than credentials.

“Entry is difficult,” she said, “especially in a crowded space where persistence often outweighs formal education.”

For many artisans, the real impediment is breaking through the noise on social media, where visibility determines viability.

Another businesswoman, Tufa Abdurahman, co-owns Nara’s Jewellery with her sister despite her studies of law. The business, marking its first anniversary in December, draws inspiration from blacksmithing traditions but uses precious stones, stainless steel, brass, and silver. Tufa began with an initial capital of 30,000 Br. The business sources locally polished stones and imports other components from neighbouring countries and the Far East, selling pieces priced between 200 Br and 2,000 Br.

Holiday sales have softened compared to last year.

“Christmas usually fuels demand for symbolic and distinctive gifts, yet this season has been quieter,” she said.

Rising input costs have pushed prices higher even as orders have slowed. Most sales now occur on TikTok, a leading social media platform owned by the Chinese technology company ByteDance, with monthly active users worldwide reaching two billion.

This shift to digital commerce has altered the market.

For millennia, people have adorned themselves with materials at hand. Modern Ethiopia’s jewellery market reflects both the legacy of traditions and the push of new trends. The democratisation of materials and production methods has opened the field, allowing nearly anything, from emeralds and gold to iron, bronze, diamonds, rubies, and even rope, to appear in jewellery cases. Advances in epoxy resin have allowed makers to produce custom pieces in any shape or colour, bypassing old methods of melting and carving.

Small-scale producers, often operating from home, create self-designed and hand-painted items ready for sale in days, serving customers entirely online. Where the market once depended on in-person transactions, craftspeople now rely heavily on social media and content creators to attract buyers and meet sales goals. The shift to online platforms is accelerating, driven by the growing importance of digital platforms.

Offering presents, now an expected part of the season, drives demand for jewellery that serves as a symbolic link to the recipient’s personality.

For buyers, shopping online introduces its own issues. According to Blen Hailu, who bought jewellery for the holidays, delivery fees often inflate final prices. She observed some sellers fold delivery into the cost, others charge separately, and a few waive it altogether.

“In the jewellery market, the uniqueness of the product always dictates the final price,” Blen said.

Eshe Jewellery & Antique Shop, run by Fekade Haile, who has worked in the trade for 25 years, illustrated the challenges faced by artisans. As the only vendor offering handcrafted accessories at the Millennium Hall, on Africa Avenue (Bole Road), Fekade depends on scarce input supplies, often dismantling finished pieces to create new designs. Many items cannot be reproduced because supplies are limited.

“The unavailability of inputs has made the market waver through the years,” he said.

To offset losses, prices rise, steering customers toward imported goods. Fekade mostly sells to close friends and from his own shop.

“I plan to put my products online, but I haven’t yet since I work alone and the schedule is tight,” he said.

In person, vendors may lower prices to avoid losing a sale. Rings and earrings start at 500 Br, while antique bracelets can cost up to 3,000 Br. Women are the primary buyers, looking to stand out at family gatherings, with earrings remaining the most popular item year-round, bought by men as gifts and by women for themselves.

Betelhem Kassu, 24, another customer who studied managment at the Addis Abeba University, recalled how prices for imported and handmade jewellery go up within the few consecutive days approaching the holiday. After receiving several gifts, she returned to the same vendor at the bazaar held during the January of last year to buy one for herself, only to find prices had nearly doubled.

“Whole piece items have always been very expensive,” she said. “But, during holidays, their price nearly doubles.”

Despite the convenience of online shopping, many buyers still prefer the atmosphere of bazaars during the holidays. Prices at these events vary, as some vendors increase prices to cover rent while others lower margins to attract customers. Bright lights, loudspeakers, clown acts, and circus troupes add to the spectacle, drawing crowds to bazaars and exhibitions across the city, where white traditional clothing is accented with affordable, shiny accessories.

Still, some shoppers are discouraged by high prices. One corner at the Millennium Hall, crowded with gemstones, buttons, necklaces, crucifixes, and rings for all genders, sees plenty of interest but few buyers.

Beyond sales, Eshe Jewellery also restores damaged pieces and collects antiques, though demand is weak.

Importers, meanwhile, are thriving. At another corner, Maymuna Mulu, a salesperson at Abarte Jewellery, displayed necklaces, rings, keychains, and earrings imported from China. These items benefit from lower production costs abroad, even as importers add markups to account for taxes.

“Rings sell for the price of a chicken, yet customers still gather,” said Maymuna.

The cheapest items started at 1,000 Br, rising with size and detail. Shops like Fert’ Jewellery and Diva Jewellery confirm that customers continue to favour imports despite higher prices. Diva Jewellery imports from Dubai and China, where materials are more available.

Buyers of imported jewellery cite the price gap as a factor. Online platforms such as Shein and Fashion Nova pull customers away from local artisans. Stainless-steel earrings imported from abroad are selling in large volumes locally, and prices per item are at least 300 Br higher than last year.

According to Mustafa Abdelah, an economist and business consultant at Zafer Plus Business & Investment Consultancy Services, the sector’s dependence on imports.

“The market shows a heavy reliance on imports of jewellery, beads, threads, and other accessories from China and other Asian markets,” he said.

Non-essential goods, such as jewellery, are imported in volumes far exceeding exports, uncovering a shift away from local craftsmanship. Imitation jewellery values have fluctuated, accounting for an even smaller share of 0.011pc total merchandise imports estimated at 17 billion dollars in 2023. But most spending is concentrated on imports from China and Thailand, especially for necklaces, rings, bracelets, and earrings.

China has emerged as the fastest-growing source of imitation jewellery, with exports to Ethiopia rising by about 1.52 million dollars between 2022 and 2023. The United Kingdom (UK) and a handful of other countries also feature, with UK imitation jewellery exports increasing by over 200,000 dollars during the same period.

Ethiopia imported an estimated 82.9 million dollars’ worth of jewellery in the same year, according to trade data compiled from international reporting sources. Imports of precious-metal jewellery and parts were modest, at about 2.43 million dollars. The United Arab Emirates (UAE) shipped about 122,508Kg of silver jewellery to Ethiopia, valued at six million dollars.

Mustafa observed that despite the abundance and low prices, quality is inconsistent. Many of the inputs they use are imported from foreign platforms that supply their competitors.

“Artisans report difficulty finding locally produced beads in traditional colours and sizes, as well as decorative elements like shells, seeds, and stones that feature in regional designs,” Mustafa said. “The system connecting input producers with jewellery makers remains underdeveloped.”

Efforts to strengthen local supply chains have stumbled under financial pressures. Even when domestic supplies exist, prices often exceed those of imports, pushing makers back to foreign sources.

Policy support is limited. The strategic plan for the gemstone and jewellery sector, which extends through 2029, exists but does not directly target jewellers or set specific protections and timelines for local craftspeople.

“Traditional jewellery making represents a living cultural heritage that could disappear within a generation if current market conditions persist,” Mustafa warned. “Urgent action with clear milestones is essential to ensure these skills and traditions survive for future Ethiopians.”

Education’s Future in AI Era

Posted on January 25, 2026January 24, 2026 by Digital Editor

The rapid progress of large language models (LLMs) over the past two years has led some to argue that Artificial Intelligence (AI) will soon make college education, especially in the liberal arts, obsolete. According to this view, young people would be better off skipping college and learning directly on the job. I strongly disagree.

Learning through hands-on experience is valuable and always has been. But it works best when people have a good sense of which jobs and skills will be in demand. If there is one thing we can be confident about, it is that the future of work is highly uncertain. Advising young people to forgo college in favour of early entry into the labour market is misguided, at best.

Geoffrey Hinton, widely regarded as one of the pioneers of modern AI, once compared progress in his field to navigating through “fog”. What lies immediately ahead is visible, but what comes next is not. Accordingly, the central challenge for educators is to prepare students to operate effectively in fog-like conditions. The answer is not to train them for specific tasks that may soon become obsolete, but to make them as adaptable as possible.

Trying to prepare people for a fixed set of challenges, when those challenges are constantly changing, is a losing strategy. We want skilled drivers who can navigate unfamiliar roads and unexpected obstacles.

From this perspective, education, and especially higher education, plays a more important role than ever. Because we do not know which specific skills will be in demand in the future, a return to fundamentals is imperative. A liberal education emphasises how to think, rather than what to do. It trains students to reason, to read carefully, to write clearly, and to evaluate evidence. These skills will age far better than narrow technical competencies.

This does not mean ignoring technology. On the contrary, students should learn to work with AI. But the goal should be to make them critical users and informed judges of AI tools, not passive consumers. It remains essential to teach basic mathematics, logic, and reasoning; to engage with foundational texts; and to learn how arguments are constructed and tested. These are the skills that allow individuals to stay ahead of rapidly evolving technology.

This principle raises two practical questions.

What should we teach, and how should we teach it?

The first question is difficult and will inevitably generate debate. While there may be broad agreement on the importance of core concepts, the details will change over time. Our experience with earlier technologies offers useful guidance. The introduction of calculators and computers did not eliminate the need to teach arithmetic. Students still learn how calculations work, but time-consuming manual computation is now delegated to machines. Similarly, spelling and grammar remain important, but software has largely replaced the need for endless drills.

AI calls for a similar adjustment across many domains. LLMs now perform tasks such as summarising text or identifying main ideas, longtime staples of education, extremely well. The same is increasingly true for programming, solving quantitative problems, and even drafting text. Though these activities should not disappear from the curriculum, the goal should shift. Students need to understand the underlying concepts and logic, rather than mastering every step of the execution.

The students who will succeed are those who can use AI tools effectively to achieve well-defined goals. It is the same with good management. Success depends on setting priorities, structuring problems, and deploying available resources wisely. These are conceptual skills, not narrow technical ones.

The second pedagogical question concerns how learning is reinforced and assessed. Understanding requires some practice, but AI makes it easier than ever for students to avoid doing the work themselves. Even highly motivated students will sometimes be tempted to take a shortcut, especially under time pressure. We, therefore, need a major change in assessment. Take-home essays, problem sets, and unmonitored exams are increasingly ineffective.

They will need to be replaced by in-person quizzes and exams, oral evaluations, and problems solved in real time, whether on paper or at the whiteboard.

Such changes have far-reaching implications. They require in-person attendance, smaller classes, and more direct interaction between students and instructors. In many ways, this would mark a return to older teaching models, reversing some of the scale and standardisation introduced by earlier technologies. It could even usher in a new golden age for liberal-arts education.

But this model also raises serious concerns. It places greater responsibility on instructors, who should be willing to enforce standards and make difficult judgments. Institutions should support them in doing so. At the same time, evaluation based on personal interaction raises legitimate worries about bias. Standardised exams have their flaws, but their biases are at least visible. Subjective assessment based on oral exams and personal interaction can be less transparent.

Perhaps the most serious challenge concerns inequality. Small-class, highly personalised education is expensive. Elite institutions may be able to provide it, but large public universities will struggle. Just as remote schooling during the pandemic widened educational gaps, an AI-driven shift toward intensive in-person teaching could disadvantage those who rely most on public education.

Some argue that AI itself will reduce the need for formal education by providing information and personalised guidance on demand. But this assumes that users know what to ask and how to interpret the answers. The most motivated or gifted individuals may thrive in such an environment, but they would do so regardless. Formal education matters most for the broad middle.

If AI is to benefit society, we will need more, not less, investment in education. AI will displace jobs, but it will also create new ones. Education should be among the sectors that expand. As AI becomes widely available, educational quality will depend less on access and more on expectations and enforcement. Smaller classes, more instructors, and greater personal interaction are costly, but the productivity gains promised by AI make such investments both feasible and worthwhile.

Month: January 2026