Financial institutions are awaiting a nod from federal authorities to make nearly half a billion Birr in war contributions to the Ethiopian National Defense (ENDF) and regional forces.

They have yet to determine whose account the war fund should be transferred to, with commercial banks requesting clarifications on the recipients of the financial contributions. The Ethiopian Bankers Association, on behalf of 18 commercial banks, has asked for an explanation on how to make the financial support, amounting to an estimated 400 million Br, according to sources close to the matter. Insurance firms and microfinance institutions are expected to contribute up to 100 million Br, these sources said.

Addressed to the Addis Abeba Mayor's Office, the Ministry of Defense, and the Amhara regional government, the Association wrote the letter seeking advice on sharing the donation between federal and regional governments. Signed by Abie Sano, president of the Commercial Bank of Ethiopia (CBE), who is also chairperson of the Association, the letter to the three entities urges them to decide where the donation be deposited.

According to Abie, the Association has yet to make the contributions.

The banks were asked to contribute by federal authorities, including the ministries of Peace and Defense, and the Addis Abeba City Administration, district offices, and the Amhara regional government.

The Association contributed close to 200 million Br to the national defence forces in the first round in December last year and to pay for the rehabilitation of people displaced due to the war. Half of this amount was made by the state-owned CBE, while Awash, Dashen, Abyssinia, United, the Cooperative Bank of Oromia and the Development Bank of Ethiopia (DBE) donated 10 million Br each.

The federal government has been facing a budget squeeze because of the war and the ensuing humanitarian crisis. Last month, Prime Minister Abiy Ahmed (PhD) told parliament that his administration had spent over 100 billion Br to pay for the war and humanitarian provisions in Tigray. Over five million people are now in need of emergency humanitarian assistance, 400,000 of whom face the risk of famine. Another 300,000 people have been displaced in the regional states of Amhara and Afar, with the expansion of the militarised conflict into areas of these regions since June this year.

The federal government was forced to shift economic priorities last year, with its budget for defence reaching 23 billion Br by the end of the third quarter, six billion Birr higher than what was appropriated at the beginning of the year. National defence takes a budget of 22 billion Br for the current year, the largest ever.