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Author: Tizita S.

AquaSafe Gasps for Air as Company Fights to Stay Afloat in Tax Whirlpool

Posted on by Tizita S.

Debre Birhan Natural Spring Water (DBNSW) S.C., the Company behind the AquaSafe bottled water brand, has suspended its operations amid a dispute with federal tax authorities, involving hundreds of millions of Birr.

The tax dispute, which unfolded over the past two years, followed an audit of the Company’s finances, with federal tax authorities claiming over 600 million Br in tax liabilities. The audit questioned the Company’s financial practices, leading to severe measures, including asset seizures and bank account freezes, significantly impacting its operations and workforce. Over 300 employees faced uncertainty as the Company battled the claims by federal authorities.

The Company has been a major player in the water bottling industry for over eight years. Its plant covers 10,000Sqm and has an hourly production capacity of 13,000 bottles. Located in the scenic town of Debre Birhan, 130Km north of Addis Abeba in the Amhara Regional State, DBNSW was incorporated in 1999 by Gebeyaw Takele and his family. It underwent several ownership changes before 54Capital acquired 98pc of the shares.

Trade registration documents revealed that 54Capital, a private equity firm registered in the United Kingdom (UK) in 2013, was dissolved in 2022. It has been acquired by SAMANU, a conglomerate overseeing various consumer brands, including Tena edible oil, 555 Household Care and Aura soap and detergents. Despite these changes, company representatives claim the legal relationship between DBNSW and SAMANU remains defined by specific agreements without direct shareholding ties.

According to Lemlem Fekadu, SAMANU’s legal department head, the presence of the Aquasafe brand on the Company’s website results from an agreement between the two companies that “cannot be publicly disclosed but with no shareholders relationship” between the two entities.

However, the ambiguous ownership structure has not spared the bottling company from ceasing production.

DBNSW’s course took an unexpected turn when it acquired another plant after three years of operation as part of a strategic expansion. It triggered a three-year investigative audit by federal tax authorities on the first plant, as the audit findings led to a cascade of events that would alter the Company’s fate. Claims by federal tax authorities put the Company and its employees in a precarious situation.

The executives of DBNSW sought to contest the audit’s findings, appealing to the federal tax-appellate tribunal for relief.

The tribunal’s requirement of a 50pc deposit of the tax assessed to proceed with the appeal, however, presented another obstacle. Company executives have voiced their frustrations with the audit process and the substantial financial burden it imposed, arguing that the process was flawed. Aziz Iraqi, members of the senior management team at the forefront of the tax battle, expressed deep disappointment in the process despite years of efforts to appeal and request a reevaluation of the audit findings.

“The findings were completely wrong,” he told Fortune.

Most audits have led to prolonged disputes, particularly within the manufacturing sector. Experts call for reform in the auditing and taxation processes to ensure a fairer approach that supports growth and sustainability. With audit statements being inflated, a tax expert who requested anonymity has raised concerns about the legality of the auditing practices. He claimed an acute flaw in audit processes and tax assessments, failing to consider the potential losses in production.

“Tax authorities’ mindset tends to focus on a company’s revenue target rather than its actual performance,” he said. “It should be centred on performance metrics.”

Raising questions about the fairness and accuracy of the tax assessment process, the expert urged a reevaluation of current practices, emphasising the need to examine tax dues and prevent potential adverse effects on the manufacturing sector.

Reta Asefa is a director of the IT Development Administration at the Ministry of Revenues. He believes businesses are entrusted with declaring taxes, stressing the potential for discrepancies, and pointing out the possibility of companies underrepresenting revenues and overstating costs discovered during audits.

“Underreporting persists in some cases,” he said.

The Ministry of Finance is mandated to consider waiving interests on taxes. According to Abraham Rega, the Ministry’s legal advisor, the likelihood of this happening is rare. However, he acknowledged the exceptional measures, including interest exemptions and settlement reschedules, such as during the COVID-19 pandemic three years ago, conflict situations, and natural disaster relief measures.

The directives issued to provide fiscal relief to taxpayers were repealed last year, and according to Abraham, the reliefs were limited even during their existence.

The executives have made multiple appeals to the tax authorities and the Ministry of Finance, requesting a waiver of interest and penalties, reaching 372 million Br. They had offered to settle 221 million Br in the principal tax over time, contingent on the resumption of their operations. Firehwot Teka, the chief financial officer (CFO), bemoaned the lack of response from the authorities, leaving the Company in limbo. Three months ago, another round of appeals sought the waiver of penalties and the bank accounts unfrozen. It bore no fruit.

According to Aziz, settling excessive payments without the means of production is difficult. He disclosed that company executives were compelled to persuade shareholders for funds to address tax claims, to ensure the continuation of operations. He argued that settlements should consider the possibility of operational recovery, emphasising the need to operate to generate revenues.

“We’ve no choice,” said Aziz. “Our hands are tied.”

However, officials of the Ministry of Revenues maintained an uncompromising position, reflecting the government’s ambitious tax mobilisation target at a time of economic hardship. They offered to waive penalties provided that 15pc of the total tax liability was deposited upfront, with the balance to be settled in 24 months.

“Despite the unusual considerations, they still didn’t want to comply,” said Yeruf Gemechu, an official at the Ministry’s Medium Taxpayers Office.

He warned that failure to address the issue could lead to the auctioning of the Company’s assets.

Ethiopia’s manufacturing sector faces numerous hurdles, including foreign currency shortages and high input costs. Caught in the Ministry’s ambitious target to collect 440 billion Br in tax revenues this fiscal year – a 35 billion Br increase from last year – businesses are under heightened pressures from the authorities.

DBNSW, operating at only 20pc capacity, illustrates the sector’s struggles, as it is confronted with a competitive market and limited resources. According to industry sources, the Company needed no less than 300,000 dollars a month to operate at full capacity but struggled to secure even a fraction in the forex-strapped economy with a market share declining to less than 10pc.

The tax dispute has broader implications, affecting the livelihoods of its employees. The job security of 300 workers hangs in the balance. The Confederation of Ethiopian Trade Union (CETU) has appealed to the Ministry of Revenues on behalf of the Company. Leaders of CETU have intervened, advocating for the workers’ rights amid the uncertainty. However, the Confederation’s leaders acknowledge their limited influence over resolving the tax dispute.

Diribsa Legesse serves as CETU’s head of industrial relations, trying to shield workers from the burdens of job losses. Despite the Confederation’s efforts to secure adequate severance packages in the event of layoffs and preserve job security if operations were to resume, Diribsa acknowledged limits to its mandate.

“We can’t do much to resolve tax issues,” he told Fortune.

As the threat of termination looms, Tilaye Workneh, the deputy chairman of the trade union at the bottling company, remains anxious about the growing fear permeating the workforce. He described the situation as “unfortunate” where most employees have been unable to secure alternative employment, leaving them uncertain at home and apprehensive at work about what the future might hold.

Wendimu Abebayehu (PhD), who has worked for the Company for over eight years, is one of DBNSW’s employees under stress. He tried to find another job for over a year but realised that opportunities are rare in the region due to ongoing conflicts.

“It’s been hard,” he told Fortune.

Firehiwot, the CFO, was also worried about the reality DBNSW faces, where difficult decisions could be made to steer through turbulent times. She warned of the likelihood of job terminations if the Company’s problems remain unaddressed.

“It appears like there might be no other way,” she told Fortune.

Bunna Bank Jogs Past Some, Stumbling Over Shareholder Returns

Posted on by Tizita S.

In its latest fiscal year performance, Bunna Bank joined a hoard of competitors in posting a rise in net profits, positioning it as a noteworthy contender within the banking industry. However, its financial performance placed it in a peculiar middle-tier position — above Berhan Bank but trailing behind competitors such as Abay and Oromia banks.

Despite the uptick in profits, shareholders experienced a decline in Earnings Per Share (EPS), with a drop to 236.44 Br from the previous year but above Berhan Bank (156 Br) while it fell short of Oromia Bank (324 Br) and Abay Bank (360 Br). A critical indicator of profitability on a per-share basis, Bunna’s 23.6pc in EPS was the second largest rate over the past decade, although lower than the average of 38.4pc across 15 private banks posted in 2021/22, revealing room for growth in maximising shareholders’ value.

The Bank’s executives attributed the decrease to strategic capital infusions to reinforce its resource base amid rising operational costs. While the move is believed to help Bunna consolidate its capital structure, analysts caution operational efficiency and cost management strategies in a period marked by industry repositioning.

The Bank ended its operations with a 6.6pc climb in net profits to 949.21 million Br, almost double the profit Berhan Bank reported but lagging behind Abay’s 1.55 billion Br and Oromia’s 1.58 billion Br. Although it appears to be dwarfed by Awash Bank’s 6.9 billion Br profit (the industry’s largest for private banks), Bunna Bank’s performance is noteworthy, defying its smaller scale and contributing to the industry’s aggregated profit of 22.2 billion Br in the latest operational year.

Under the stewardship of Mulugeta Alemayehu, its president, Bunna Bank’s strategic shift towards acquiring technology and expanding its footprint was notable.

With an accounting and business administration background from Addis Abeba University, Mulugeta began his career at the state-owned Commercial Bank of Ethiopia (CBE) and helmed the presidency at Bunna Bank in 2018. Under his watch, Bunna Bank has seen notable increases in its interest income, which surged by 53.4pc to 5.63 billion Br.

A diverse portfolio of loans, advances, treasury bonds, and other financial instruments drove this growth. The total loans, advances, and interest-free financing went up 35.6pc to 34.17 billion Br. Despite the upticks, Bunna’s loan portfolio only exceeded Berhan’s 27.35 billion Br, markedly less than Oromia’s 41.56 billion Br and a tad bit lower than Abay’s 36.47 billion Br.

While Bunna Bank’s provision for impairment of loans and other assets increased by 29.4pc to 160.2 million Br, the total deposit reached 34.35 billion Br, rising by 34pc.

The loan-to-deposit ratio of Bunna Bank increased to 99.5pc from 93.4pc. While generating interest income, analysts warned that a high loan-to-deposit ratio could pressure the Bank’s liquidity position, recalling the borrowing of 511.11 million Br from the central bank.

Mulugeta concured.

“We’re also planning to collect disbursed loans aggressively,” he said.

Following the same trend, the Bank’s income from fees and commissions rose by 14.3pc to 811.98 million Br, complemented by a 35.5pc increase in gains from foreign exchange dealings from last year’s 82 million Br, a rare accomplishment in an industry besieged by forex crunches.

“The management should be appreciated,” said Abdulmenan Mohammed (PhD), a London-based financial analyst.

These achievements, however, are set against a backdrop of broader industry-wide impediments, including the disparity between official and parallel market rates, which have impacted foreign exchange earnings.

Bunna’s Board Chairman, Alemayehu Sewagen, raised these problems during the shareholders’ annual general assembly in December at the Millennium Hall on Africa Avenue (Bole Road). He pointed to the adverse effects on the Bank’s performance, emphasising the need for strategic adjustments to overcome limitations.

A seasoned banker with two decades of experience, Mulugeta’s management is characterised by an ambitious vision, steering away from conventional banking practices of deposit-centred towards a more diversified approach. This includes a significant expansion of the bank’s branch network, with 122 new branches added, totalling 465. He disclosed his desire to balance expansion with cost control as a crucial move forward, integrating technology and staff efficiency.

While these expansions contributed to the Bank’s increased footprint, they also increased operational costs. A significant portion of these expenses was allocated to personnel, with costs surging to over two billion Birr, surpassing that of several competitors but falling slightly below Oromia Bank’s 2.32 billion Br.

Abdulmenan voiced concerns over this trend, urging the Bank’s management to closely check its expenditure framework to ensure sustainability and profitability in the long run.

Mulugeta acknowledged the significant growth in costs but remained upbeat about the Bank’s future, alluding to a “holistic transformation” in his operational strategy. The transformation is evident in the Bank’s financial indicators, with a notable increase in cash and bank balances, albeit accompanied by a slight decline in the ratio to total assets. According to Abdulmenan, the shift suggests a strategic reallocation of resources, with savings being channelled into investments to boost returns, requiring careful management to avoid liquidity issues.

“Management needs to be vigilant to avoid liquidity issues,” Abdulmenan said.

According to Mulgeta, the savings were used for investments to boost returns, decreasing cash and bank balances.

Bunna’s cash and bank balances increased by 35.6pc to 4.46 billion Br in the year while its ratio to total assets dropped by 0.4pc to 9.6pc, indicating a rise in absolute terms and a relative decline. These balances-to-assets ratios are less than Oromia’s 16pc, Abay’s 15pc, and a percentage point higher than Berhan’s 8.6pc. In aggregate, they were less than half of Oromia’s 10.99 billion Br and nearly half of Abay’s 8.25 billion Br, while slightly higher than Berhan’s 3.73 billion Br.

Bunna Bank’s strategic efforts also extend to its capital structure, with its paid-up capital growing by 29.3pc to 4.28 billion Br. However, this growth was accompanied by a reduced capital adequacy ratio from 18.9pc to 15.7pc.

Incorporated with 175 million Br paid-up capital 14 years ago, Bunna Bank was short of 1.72 billion Br to meet the central bank’s minimum paid-up capital requirement. The Bank’s capital amount accounts for approximately 3.67pc of the aggregate capital for 29 private banks, while its total equity and assets contributions stood at 3.28pc and 2.69pc, respectively, of the industry.

Although reflective of a smaller scale, these figures show Bunna Bank’s substantial place in the banking ecosystem. Its executives’ measures, including aggressive loan collection strategies and investment in digital financial products, aim to fortify the Bank’s competitive position in total assets, equity, and profitability.

While modest compared to giants like Awash, Dashen and Abyssinia banks, shareholders recognise the Bank’s achievements and potential.

Tesfaye Fente, one of the 8,000 founding shareholders, praised Bunna Bank for its accessibility, range of services, financial stability, and customer service. With shares worth nine million Birr with Bunna Bank and stakes in 12 other banks, Tesfaye observed several new entrants into the industry, followed by staff migration lured by the promise of better benefits.

“It’s an industry-wide problem,” he told Fortune.

However, Bunna Bank’s workforce grew by 1,168 during the year, bringing the total number to 4,100.

Yohannes Limeneh has been a deputy manager at the Qera Branch of Bunna Bank for several years. He saw how business activities in the capital’s cattle market nearby slowed down due to conflict-related issues, which impacted his branch’s performance.

“Our branch is directly affected by the livestock market’s declined activities,” he told Fortune.

Yohannes believes that a shift towards innovative digital financial products would best leverage the skill sets of the Bank’s energetic employees.

Bunna Bank’s balance sheet size is at the core of its financial position, encapsulating a total asset value of 46.4 billion Br, representing a growth of 36pc from the previous year. Compared with industry giants such as Awash Bank, which boasts a staggering total asset figure of 224 billion Br, Bunna Bank’s market footprint appears smaller. The disparity extends to total equity, where Bunna Bank’s 6.5 billion Br contrasted with Awash Bank’s 27.9 billion Br, illustrating the challenges inherent in scaling operations within an industry dominated by more sizeable competitors.

Bunna Bank demonstrated a competent performance among its peers when measured in efficiently utilising its assets to generate profits, as shown by its returns on assets and equity. These are crucial barometers for assessing how effectively a bank leverages its equity and assets to generate profits.

Bunna Bank’s return on equity (RoE) was at 17.8pc, moderate compared to banks such as Awash Bank’s 25.8pc (the highest in the industry) and Wegagen Bank’s 9.6pc. Its return on asset (ROA) was 2.61pc, half the size of Zemen Bank’s leading rate and Wegagen Bank’s 1.3pc.

Bunna Bank used its assets to generate earnings relatively effectively, outperforming many of its peers.

Ethiopia’s Power Play: A Lucrative Deal or Risky Gamble on Crypto Mining?

Posted on by Tizita S.

Ethiopia is venturing into plans to sale power  to over two dozen data mining companies. This move has ignited a discussion between key industry players and keen observers on the potential benefits and drawbacks associated with this nascent industry.

Fueling crypto with a million-dollar start is the Ethiopian Electric Power (EEP). It has signed deals with 18 companies, four of which are already operational. These companies are heavy consumers of electricity, demanding significant amounts ranging from 10MW to 100MW to power their crypto-mining operations. The initial revenue collected in foreign currency has already surpassed two million dollars within a mere two months.

Ethiopia’s emerging legislative framework recognises crypto-mining as a form of data mining which involves solving complex mathematical problems using powerful computers. This computation known as hashing, is integral to generating new cryptocurrencies.

The past two years have witnessed a surge in crypto-mining companies setting up shop in the country. This coincides with a relaxation of regulatory restrictions and a modest increase in the country’s electricity generation capacity. While trading cryptocurrency remains banned, reflecting a cautious approach towards the volatile market, authorities are actively developing regulations for mining it.

The Information Network Security Administration (INSA) spearheads this regulatory shift. In 2022, INSA offered a brief 10-day window to register entities involved in crypto services, such as mining or transfer. This move signalled a tentative openness to the industry, attracting around 21 companies to Ethiopia. Solidifying this shift, a directive was finalised this year aimed at regulatory and technological standards for crypto-mining operations.

Moges Mekonen, EEP’s communications director, acknowledges the evolving landscape. He emphasises that additional infrastructure development is not necessary with most companies located on the outskirts of Addis Abeba, simply connecting to the existing nationwide grid. However, he clarifies that EEP’s role is merely to connect potential partners with high-energy substations, as long as payment commitments are fulfilled.

“We don’t regulate the specific type of data mined,” he said.

EEP and Ethiopian Electric Utility (EEU) were established as separate entities 13 years ago with distinct roles. The Utility is responsible for managing electricity distribution and purchasing bulk power for resale. A senior official from the EEU claims to learn about the power sale agreements with crypto miners through media outlets, with no prior engagement between the two state-owned enterprises.

For companies, setting up business in Ethiopia presents a golden opportunity. The country boasts significantly lower electricity prices (0.6 cents per kWh) compared to Europe and North America hovering around (34 cents per kWh). However, it is not all smooth sailing. Three companies have already received warnings for failing to meet essential prerequisites despite signed agreements.

Many countries initially welcome crypto miners, lured by the promise of investment. However, the high energy demands of these operations can quickly turn into a nightmare. Kazakhstan serves as a cautionary tale. Once a haven for miners, it embraced them in early 2017, only to face a harsh reality of miners’ insatiable appetite for power, consuming up to seven percent of the national output, resulting in rolling blackouts for ordinary citizens. This ultimately led Kazakhstan to take swift action by effectively cutting off power to miners.

Similarly, China cracked down on Bitcoin, the most valuable cryptocurrency, mining in 2021 due to concerns about grid stability and its environmental impact. Some landed in Ethiopia.

Following their footsteps, Ethiopia seems to be taking a cautious approach. Aschalew Tadesse, head of the investment promotion directorate at the Ethiopian Investment Commission (EIC), indicated that new licenses for cryptocurrency mining have been temporarily suspended due to the lack of clearly defined legislative footing.

“It’s not an encouraged activity,” he told Fortune.

The recent commissioning of a 120MW data mining facility by Russian company Bitcluster underscores the significant investments pouring into Ethiopia. This 30,000sqm facility near the Kilinto high-voltage substation in Addis Abeba, exemplifies the growing interest in the sector.

The country’s sovereign wealth fund, Ethiopian Investment Holding (EIH), announced last month (in a later edited social media post) a data mining and artificial intelligence training agreement with a Hong Kong-based West Data Group. It was later indicated that the Holding would leverage the infrastructure of SOEs under it to boost the energy sector’s potential.

This has not stopped prospective companies looking to invest hundreds of millions of dollars in Bitcoin mining in the country. Proponents like Kal Kassa, CEO of Hashlabs Mining in Ethiopia, highlight the potential benefits of embracing crypto-mining. He believes the abundant hydropower resources and progressive stance on crypto-mining offer a chance to jumpstart the economy.

“It can bring in more foreign currency than coffee,” he said.

A surge in crypto-mining companies would not only inject foreign capital for development projects but also create new jobs in maintenance, security, and facility management, according to Kal. With plans to expand his Bitcoin mining facility, Kal finds the electricity prices extremely alluring for a sector that has energy as 90pc of its operational costs. He believes that cost-effective electricity positions the country to become a major player in the global cryptocurrency market.

Generating around 5,200MW of energy from hydroelectric sources, Ethiopia finds itself at a crossroads. Embracing crypto-mining presents the potential for significant economic benefits and technological advancement. However, not everyone is convinced of the merits of embracing crypto-mining.

Experts like Mikael Alemu, a close observer of the energy sector and Co-founder of 10 Green Gigawatt, raise critical concerns such as the risks of exacerbating energy deficits, jeopardizing grid stability, and neglecting crucial development sectors.

According to Mikael, companies solely lured by the headline-grabbing electricity price might have overlooked crucial details of acute energy deficits, with less than 60pc of the population having access to electricity due to a lack of proper infrastructure. He argues that the energy-intensive process diverts electricity from crucial sectors, impacting the functioning of the grid as 10MW is consumed by nearly 10 hospitals while 100MW could potentially power all the industrial parks.

He highlights the misconception around Ethiopia’s electricity prices, suggesting that potential crypto-miners may not fully grasp the challenges posed by grid maintenance costs and ongoing energy deficits.

“Such loads impact the operation of a grid most seriously,” he told Fortune.

Mikael stresses the importance of clear terminology to prevent companies from exploiting loopholes by disguising themselves as data mining entities.

“A lack of clear definitions can hinder effective regulation,” he said.

Legal Eagles Meet Financial Architects: Building Ethiopia’s Capital Market Stronghold

Posted on by Tizita S.

The transparency, legal frameworks and technical expertise in Ethiopia’s budding capital markets are sparking discussions between investors and industry players. They focus on navigating this uncharted territory and unlocking new avenues for investment, empowering businesses, and boosting economic growth.

A cornerstone of any thriving capital market is transparency as investors rely on accurate and readily available information to make informed decisions. A lack of clarity, observed in some companies that sell shares, breeds distrust and ultimately hinders market vibrancy.

Mehrteab Leul, managing partner of pioneering law firm Mehrteab & Getu Advocates LLP, emphasises the need to revise Ethiopia’s tax clearance procedures, capital accounts regulations, and foreign company registration processes. These revisions will bolster confidence and entice investors to participate in the market.

“Lack of transparency will be penalised by the market,” he said.

While embarking on this new adventure, a crucial consideration lies in establishing a healthy balance between debt and equity markets. Recognising Ethiopia’s existing treasury bill auctions conducted by the central bank, Lutz Hartzman, a lawyer and co-founder of Axis Capital, recommends prioritising debt markets as a launchpad. He cautions the government to tread carefully and avoid crowding out equity markets with overly attractive debt offerings.

He said: “No company can beat 18pc returns offered by debt instruments.”

While a 10pc stake in the state-owned Ethotelecom is the first to be offered, at least four more companies within the country’s sovereign wealth fund Ethiopian Investment Holding are poised for listing. With experience in European capital markets writing multiple prospectus documents for companies, Lutz recommends prudent interest rate management, especially given plans to list several state-owned enterprises on the exchange.

“They would be shooting themselves in the foot with too high interest rates on the debt side,” he told Fortune.

Ethiopia has a distinct advantage in its foray into capital markets: the opportunity to learn from the experiences of others. However, maintaining a sustainable equilibrium is essential.

Mark Duffy, a seasoned banker with over 17 years at the helm of the Bank of Scotland and co-founder of Axis Capital, emphasises the importance of lessening reliance on solely foreign expertise. He advocates for a nuanced understanding of local challenges.

“Measured adoption of international practices is crucial,” he said.

The burgeoning ecosystem is attracting attention from international players. Kenyan Capital Bank (KCB), represented by its President Paul Russo, expresses a keen interest in entering the market through acquisitions, subject to legal frameworks. Paul emphasises that commercial banks will need to adapt to the new reality of capital markets. Embracing robust investor relations, strategic thinking, and a focus on delivering returns will be paramount for their success.

“We have been on a treadmill since the proclamation,” he said.

Balancing regulatory oversight with attractive investment incentives will be key to attracting and retaining foreign capital. This highlights the crucial role of legal professionals like Getu Shiferaw, co-founder of Mehrteab & Getu Advocates. He raised the absence of secondary markets as a concern of potential foreign investors, who require clear exit strategies.

Law firms are poised to play a pivotal role. A pioneering corporate law firm, Mehrteab & Getu Advocates LLP, dedicated resources specifically to capital market-related services, offered in partnership with Axis Capital Ltd. The partnership was launched last week at Hilton Addis where the co-founders were in attendance.

Director General of the Ethiopian Capital Market Authority, Brook Taye (PhD), was the keynote speaker during the ceremony alongside investment commissioner Hana Arayaselassie. Brook recognised the vital role law firms play as transaction advisors, ensuring transparent and efficient market operations.

The conversation did not just involve external investors and legal frameworks. A skilled workforce was mentioned as the backbone of a thriving capital market where existing financial institutions, particularly commercial banks, are facing a period of adaptation.

Melaku Kebede, president of Hibret Bank, highlighted the current gap in technical expertise. While some senior management within his organisation have undergone basic capital market certifications, he underscored the need for more extensive training programs. He expressed excitement over knowing the prices of shares, as raising capital within banks in Ethiopia entails an informal and opaque process with shareholders dealing amongst themselves.

“We don’t know what we’re worth,” Melaku said.

Crucial questions were raised during the discussion with a refreshing perspective from the neighbouring country’s experience.

Worqu Lemma, vice president of Oromia Bank, asked on how banks can participate in the capital markets.

“Banks, can in fact, pursue both strategies,” said the president of KCB. He dismantled the notion of a binary choice – listing on the exchange or simply investing while he acknowledged the challenges banks will face as they adapt to the capital markets.

“It’ll not be a walk in the park,” he cautions, “however, the potential rewards are significant.”

The Intriguing Tale of U.S. Investments in Africa

Posted on by Tizita S.

The U.S. Embassy recently disclosed an “investment” nearing 125 million dollars through the President’s Emergency Plan for AIDS Relief (PEPFAR), which has been made to strengthen Ethiopia’s healthcare infrastructure markedly.

Comprising the construction of six national and regional reference laboratories, renovation of numerous hospital laboratories, and establishment of outpatient care centres, health centres, and pharmaceutical warehouses, the initiative represents a substantial commitment to enhancing the country’s health system. The Embassy wishes to see the project’s success in expanding service coverage and maintaining a commendable 95pc treatment retention rate among patients. It also hopes the investment will reduce laboratory turnaround times from two months to one week.

Washington has funnelled 13 billion dollars into Ethiopia over the past two decades through the United States Agency for International Development (USAID). The talking point among American officials could be that the “investments” were made mainly on “broadening access to quality healthcare, elevating educational standards, and promoting an economic environment driven by the private sector’s dynamism and innovation.”

However, the term “investment” employed in this context does not fit with the conventional understanding tied to foreign direct investment (FDI) but rather encapsulates a strategic deployment of American resources to exert soft power and secure political leverage in Ethiopia. It is a subtle relationship between aid and investment, where the former, despite its benevolent facade, often serves broader geopolitical objectives.

The diplomatic ties between Ethiopia and the United States, spanning over a century, present a long history of cooperation and tension. Yet, a closer look at foreign direct investments from the United States to Ethiopia reveals a cautious, if not reticent, reality towards engaging in more substantial business ventures akin to those observed in Egypt and Kenya. The disparity should raise eyebrows about the standards and considerations guiding American investment strategies across Africa.

As the largest beneficiary of U.S. direct investment in Africa, Egypt hosts significant American business interests, including Apache Corp Texas and notable corporations such as General Motors, Johnson & Johnson, Marriott, and Coca-Cola. These investments point to Egypt’s strategic importance to American interests and position it as a vital regional economic hub. Similarly, Kenya’s FDI landscape is notably enriched by U.S. companies, with a total FDI stock of 10.4 billion dollars, of which American firms contribute 10.3pc.

Contrastingly, U.S. direct investment in Ethiopia, despite the presence of American giants like Boeing, Corteva, General Electric, and Coca-Cola, remains relatively modest at 29 million dollars. Compared to the substantial aid provided, this figure paints a picture of a partnership heavily skewed towards compassion rather than equitable economic engagement. The involvement of companies such as Corteva, funded by USAID, further blurs the line between commercial ventures and aid-driven projects, casting doubt on the nature of the business that brings the companies to Ethiopia.

The dichotomy between aid and investment should invite a deeper reflection on Ethiopia’s limitations as a potential destination for foreign investments. Despite the significant aid flows from the U.S., the conspicuous absence of more FDI raises questions about trust, risk assessment, and the broader standards American entities employ in selecting their investment battlegrounds. The success of Chinese companies in Ethiopia’s investment landscape, often through a model that blends loans with infrastructure projects executed by Chinese firms, suggests an alternative paradigm of engagement that, while not without its critics, has delivered tangible benefits and infrastructural development in the least developed economies such as Ethiopia.

The comparison with China’s engagement strategy, often criticized for creating dependencies on debt-driven investments, nonetheless demonstrated a willingness to embed within the Ethiopian economic fabric in a manner the Americans have yet to grasp.

Ethiopians’ perception of the United States’ role in their country is convoluted, shaped by historical legacies, contemporary political realities, and the impacts of external powers’ involvement in their daily lives. Their awareness of political dynamics and the implications for sovereignty, economic development, and national identity transcends traditional aid paradigms. The concerns lie in addressing immediate health and humanitarian needs and promoting a genuinely reciprocal partnership, grounded in economic cooperation, and respectful of Ethiopia’s aspirations for development and autonomous policy space.

Finding Serenity in Nature’s Wonders

Posted on by Tizita S.

On a splendid afternoon, I found myself reclining on the veranda of the exquisite Tukul Restaurant nestled within the Ghion Hotel. Towering, timeless giant trees that stood sentinel, imparting a fortress-like ambience that shielded the gaze from anything beyond the verdant gardens, framed the vantage point.

My tranquil contemplation was abruptly interrupted by an explosive sound, swiftly followed by an object hurtling through the air at lightning speed, momentarily unnerving me. The birds scattered in the wake of this unexpected event still shrouded in mystery. It was then that fellow patrons of the veranda came to my aid. They revealed that the explosive sound emanated from the cracking of a jacaranda tree seed pod, propelling its seed into the air.

I marvelled at the rarity of witnessing such a natural phenomenon firsthand, an experience both unexpected and pleasantly enchanting. With its wonders and inexplicable riddles, nature is an inexhaustible source and a lifetime seems inadequate to explore them all.

The Hotel’s trees are ancient and diverse, hosting numerous indigenous species. The lush vegetation, with towering trees and meticulously maintained lawns, transforms the place into a haven for nature lovers, a botanical open lab. Strolling in the evening’s cool air, the old cobblestone slabs and dry leaves crunching beneath my feet create an ambience that feels like a scene from a dream. While not formally designated as a city park, Ghion Hotel rivals any other frequented by joggers, trekkers, and leisurely strollers. It puzzles me why more city residents do not embrace this paradise in the heart of the city.

The legacy of tree conservation in Addis Abeba extends back decades, with historical figures like poet laureate Tsegaye Gebremedhin fighting tirelessly to save iconic trees from being felled.

One such example is the majestic acacia tree standing tall in front of the National Theatre, a testament to the unwavering fight for cultural heritage and environmental protection. Another magnificent tree at the Italian Cultural Institute, estimated to be almost a century old, has intertwined its roots with the earth, creating a natural platform for other plants to flourish. This display of self-sufficiency serves as a powerful reminder of nature’s inherent ability to thrive when left undisturbed.

Addis Abeba is blessed with pockets of green scattered throughout the city, each one a visual feast for the eyes. As I write this, I find myself nestled in a small garden tucked between the main building of the Zobras Olympiakos Greek Club and its tennis court. This intimate space, shaded by towering juniper trees, exudes an air of serenity.

I remember from my time at the 4 Kilo Science faculty campus that a freshman asked the meaning of unpronounceable scientific names pegged to the trees. His friend who had no idea what the inscriptions meant gave a witty reply “No one is allowed to pee on the trees” which made us all burst into laughter. Like that of countless other green pockets within the city – the sprawling campuses of Addis Abeba University campuses adorned with decades-old trees, the iconic palm tree-lined promenades around the Wabi Shebelle and Ethiopia hotels – serve as a constant reminder of the importance of preserving these urban sanctuaries.

On the contrary, a 2013 study by the UK Royal Society of Biology examining the Chernobyl Exclusion Zone paints a poignant picture. This area, ravaged by a nuclear disaster in 1986, was stripped of its human population, allowing nature to reclaim its dominion. In the following decades, despite the lingering presence of radiation, the region witnessed a remarkable resurgence of plant and animal life.

This contrast between the destructive potential of human intervention and the restorative power of nature compels us to reflect on our relationship with the environment.

Commending current efforts in afforestation and the Green Legacy initiative, it is heartening to witness the transformation of the cityscape with the creation of expansive parks like Entoto and Friendship. As the city evolves, it is crucial to plant and preserve indigenous species that have thrived through millennia of evolution and adaptation to the local environment.

However, it is crucial to prioritise the cultivation of indigenous species over aesthetically pleasing, yet ecologically disruptive, alien plants. The recent felling of juniper trees along Bole Road serves as a reminder of the need for responsible environmental practices. These trees, with their long-established symbiotic relationship with the local ecosystem and decades of growth, cannot be easily replaced. They were more than just aesthetic additions – they were seasoned veterans, embodying the city’s history and holding the stories of countless encounters within their weathered bark.

Diplomatic compounds with their verdant landscapes serve as hidden oases within the city. The well-preserved ecosystem in embassies such as Vatican and French, with towering trees and thoughtfully designed lighting that respects both nature and human comfort, is a testament to the possibility of creating harmonious spaces for all.

In the era of environmental concerns and diminishing soil fertility, the imperative of planting and preserving trees cannot be overstated. While sustainability is a cornerstone of policy documents, the sociocultural value of maintaining forests as havens of tranquillity is equally vital. Allowing nature to flourish without undue interference is a proven path to harmony. The consequences of tampering with nature are depicted in Michael Jackson’s “Earth Song,” serving as a poignant reminder of our responsibility to nurture and protect the planet.

Championing Women’s Inclusion for a Greener, Fairer Future

Posted on by Tizita S.

It is hard to find a word more relevant to the world’s greatest challenges and policy priorities than “inclusion,” the theme of this year’s International Women’s Day. Inclusive, green economic growth that benefits all of society is essential to sustainable prosperity, social cohesion, competitiveness, and geopolitical stability. Supporting a “just transition” that includes all members of our societies is crucial to ensuring that climate action and digital transformation lead to a more sustainable and secure world.

Gender equality and equal rights are not just a matter of equity but also of paramount economic importance.

Research from the International Monetary Fund (IMF) suggests that narrowing the gender gap in labour markets could increase GDP in emerging markets and developing economies by almost eight percent. The gains from fully closing the gender gap would be even higher, lifting GDP in those countries by 23pc on average.

Simply put, diversity and an equal role for women in the economy, decision-making, and policy debates bring better results. Mobilising all available talent maximises productivity and competitiveness, which will be crucial for addressing climate change and promoting global prosperity. It is especially important at a time when the combined effects of the climate crisis, the COVID-19 pandemic, and Russia’s invasion of Ukraine threaten to reverse many of the achievements we thought we had secured.

With four billion people around the world voting in elections this year, there is no better time to highlight the large, positive impact that gender equality has on all societies. For example, European Central Bank (ECB) research suggests that a one-percentage-point increase in female managers at a firm leads to a 0.5pc drop in carbon dioxide emissions. Similarly, the European Investment Bank (EIB) has found that firms led by women have higher environmental, social, and governance (ESG) scores. Likewise, IMF research shows that such firms are also more profitable, and that greater gender balance on bank boards is associated with greater financial stability and better performance.

These findings suggest that the greatest challenges of our time cannot be addressed without inclusion – throughout organisations and at the top.

There has been clear evidence of progress. More and more women today are starting businesses, despite having less access to financing. World Bank data for 71 countries show that, in 45 of them, women represent an increasing share of “sole owners” of companies.

How might we build on this progress?

A European Bank for Reconstruction & Development (EBRD) study demonstrates that blended-finance programs can help women entrepreneurs access more credit and expand their businesses.

Given that women make or influence 80pc of consumer-product purchase decisions, firms must take women’s views and experiences into account if they want to sell more of their goods. Women also tend to be more environmentally conscious, which helps to explain the growing customer demand for green financial services. Globally, one in three consumers reports that she would pay a premium of as much as 25pc for sustainable financial services.

This points to another reason that inclusion is good for business: research shows that more women on corporate boards correlate positively with the disclosure of CO2 emissions. Women now control 40pc of global wealth and want to invest in a sustainable future. Some 74pc of women report being interested in increasing the share of ESG investments in their current investment portfolios, compared to 53pc of men.

Firms that fail to make room for women overlook an opportunity to outperform their competitors.

Over many centuries, women have developed strategies for dealing with unequal situations, which has made us especially valuable to organisations that want to change the world. Owing to our historical experience of exclusion and inequality, we are more likely to recognise the need for change and consider the impact of a company’s operations or policy decisions on others. Countries with higher female representation in parliament are more likely to ratify environmental treaties and adopt policies that address climate change.

Women’s talent is a driving force behind economic progress and an essential part of the solution to climate change. Women already lead some of the world’s most influential financial bodies and play a growing role in the political arena. Now women must lead the shift to a more inclusive and sustainable growth model. We have a unique opportunity to advance inclusion, inspire similar commitments from others, and shape the future for the better.

In the Absence of Cultural Revolution, the Promise of Change Remains Another Broken Record

Posted on by Tizita S.

It could be misleading to think that Ethiopia’s battles to resolve its deep-seated issues are limited to its lack of political and economic reforms. They are fundamentally about cultural evolution, or their absence. Embracing change and encouraging unconventional ideas could help it chart a new course that acknowledges its complexities while harnessing its diverse potential. The journey ahead is undoubtedly intricate, but with a commitment to introspection, openness and inclusivity, Ethiopia can lay the foundation for a future marked by compromise, accommodation and civility.

As Ethiopia enters a new era, it faces continuing conflicts that mar its progress, contrasted with drought exacerbating an already dire economic and humanitarian crisis. The ongoing turmoil deepens the societal fissures and undermines the country’s reputation on the global stage. Despite a history marked by revolutions and reforms spanning half a century, Ethiopia finds itself wrestling with pressing problems.

The enduring nature of these issues should raise critical questions about the country’s ability to address fundamental problems related to security affairs and economic policies.

Among the myriad concerns are two prominent issues. Persisting conflicts seemingly rooted in insurmountable differences and economic struggles potentially attributed to resource scarcity are believed to have besieged the country. However, a closer exploration of these dimensions is essential for meaningful responses. Grievances are as diverse as the social and political factions, with a tendency towards mutual disregard fueling stormy rhetoric and further escalating into violence.

The cycle of conflicts often stems from a conviction in the legitimacy of one’s worldview over others, ignoring the potential for accommodating divergent views. History, however, demonstrates that societies harbouring more pronounced differences have successfully helmed their way to reconciliation.

Economically, the country has been gripped by a plethora of crises, seemingly anchored in the scarcity of resources ranging from food to foreign exchange. Yet, a deeper examination reveals that the crux of economic issues lies within the realm of production factors. With appropriate policies, the abundance of resources, as the potential of regions like Gambella and Benishangul can demonstrate, and a population exceeding 100 million, can be harnessed effectively.

Initiatives for economic policy reform may be plentiful. However, the gap lies in the policies’ legitimacy in the public’s eyes and the state’s capacity to implement them.

At the heart of the political and economic quandaries are perspectives deeply rooted in cultural legacies. Shaped by recent and historical experiences, the legacy dictates societal norms and expectations, often blinding individuals to alternative realities. The cultural lens through which Ethiopians view their world represents the broader difficulty of recognising and addressing innate biases. The recent conflict in Tigray Regional State demonstrated the destructive impact of entrenched viewpoints, with significant human and economic costs that divert resources from vital development projects.

Ethiopia’s obstacles are not insurmountable, nor are they primarily due to irreconcilable differences or a fundamental scarcity of resources. Rather, they are manifestations of deeply entrenched cultural perspectives. Addressing these requires a shift towards more accommodating viewpoints, beginning with critically reassessing existing paradigms. However, such introspection should merely be the starting point.

A transformation that extends beyond policy reforms is required. This should involve a cultural shift that embraces and encourages an environment conducive to divergent perspectives and unconventional ideas. Such approaches can potentially address immediate problems and lay the groundwork for paradigm shifts that can have far-reaching impacts. Ethiopians can deal with underlying issues simmering beneath the surface by encouraging dialogue and exploration across the dividing lines.

Ethiopia’s path forward is fraught with uncertainties, yet this presents opportunities for profound transformation. By recognising the value of diverse perspectives and the potential for new ideas that transcend traditional boundaries, its people can begin to address the root causes of its security and economic problems. This requires a collective effort to move beyond rooted convictions, promoting a culture of openness and adaptability that can pave the way for enduring peace and sustainable development.

 

When Women Win, the World Wins

Posted on by Tizita S.

In May 1988, Alejandra Arevalo became the first female geologist to enter an underground mine in Chile. She defied a popular myth that a woman brings bad luck by venturing into a mine. She also broke the law.

Chilean women were forbidden to work in underground mining or in any other job that “exceeded their strength or put at risk their physical or moral condition.” Arevalo’s defiance helped spark a revolution. By 1993, the restrictions on women in mining had been abolished; and by 2022, women represented 15pc of the Chilean mining workforce, a threefold increase since 2007.

Equally substantial progress has occurred worldwide over the past half-century. Globally, women’s legal rights have improved by about two-thirds, on average, since 1970. Major reforms have dismantled a wide array of barriers that women face at all stages of their working lives, but especially in the workplace and in parenthood. Yet, as the world marks this year’s International Women’s Day, it is clear that there is still a huge global gender gap.

The latest data show that the gap is much wider than previously thought. When legal differences about protections against violence and access to childcare are considered, women enjoy only two-thirds of the legal rights that men do – not 77pc, as was previously believed. The World Bank’s latest ‘Women, Business and the Law’ report finds that no country – not even the wealthiest – grants women the same legal rights as men.

The greatest deficiency concerns safety. Women enjoy barely one-third of the necessary legal protections against domestic violence, sexual harassment, and femicide. Inadequate access to childcare services is another hindrance. Only 62 economies – fewer than one-third of the world’s countries – have established quality standards governing childcare services. As a result, women across 128 economies may have to think twice about going to work while they have children in their care.

The gender gap is wider than laws on the books might suggest. For the first time, ‘Women, Business and the Law’ compared progress in legal reforms with actual outcomes for women in 190 economies, finding a surprising delay in implementation. Although laws on the books imply that women enjoy roughly two-thirds of men’s rights, countries, on average, have established less than 40pc of the systems needed for full implementation.

For example, 98 economies have enacted legislation mandating equal pay for women for work of equal value; but only 35 economies – fewer than one out of every five – have adopted pay transparency measures or enforcement mechanisms to address the pay gap. That represents a colossal waste of human capital, and precisely when the world needs to marshal all its resources to escape the rising risk of economic stagnation. Today, fewer than one out of every two women participate in the labour force. By contrast, roughly three out of every four men do.

Closing that gap could help double global economic growth in the coming decade. The evidence is clear: economies with higher “Women, Business and the Law” scores tend to have larger female labour-force participation rates, stronger female entrepreneurship, and more active female participation in political institutions. Gender equality, in short, is both a fundamental human right and a powerful engine of economic development.

Again, it is not enough to pursue equality merely by following the laws of the books. We need comprehensive sets of policies and institutions – as well as a transformation of cultural and social norms in many countries – to empower women to become successful workers, entrepreneurs, and leaders. That means stronger enforcement mechanisms to tackle workplace violence, practical provisions for childcare services, and easier access to healthcare services for women who survive violence.

Such policies enable women to remain employed without suffering career setbacks, help close the gender wage gap, and reconfigure gender roles and attitudes related to workplace and household duties. And as more women rise to leadership positions, they inspire new generations of girls to achieve their full potential. Positive outcomes take time to realize, but they do happen.

As Claudia Goldin, the winner of the 2023 Nobel Prize in Economics, has observed, the 1960s surge in US women rising to high-level jobs did not happen by accident. It was the product of a slow but steady accretion of legal rights.

“Even if the laws didn’t change women’s earnings, it made their lives better and expanded their options,” Goldin noted. “Workplaces became safer for them. They were no longer barred or excused from juries because of their presumed household responsibilities. They could not be fired when pregnant and could not be refused a job because they had children. They received better education and more resources, even as girls.”

Levelling the playing field presents crucial economic opportunities, and not just for women. When half of humanity wins, the whole world wins.

Climate Risks Spur Private Investments in Ethiopia’s Green March

Posted on by Tizita S.

Climate-related risks present a formidable challenge to Ethiopia’s sustainable growth and development. However, the private sector has significant opportunities to build and fund low-carbon and climate-resilient projects.

A recent World Bank Group report finds that climate change could shrink Ethiopia’s gross domestic product (GDP) by between one percent and 1.5pc of GDP annually and rise to five percent by the 2040s, potentially pushing millions of Ethiopians into poverty. Millions in the greater Horn of Africa, including Ethiopia, face acute hunger as the region suffers one of the worst droughts in decades. The Ethiopia Country Climate & Development Report (CCDR) outlines how Ethiopia can attract private funds into its green economy to support projects in the agriculture, infrastructure, and water management sectors. These are the sectors with the highest potential to help Ethiopia develop greater climate resilience.

Ethiopia’s government recognises climate change’s challenges and has an ambitious Climate Resilient Green Economy (CRGE), a strategy designed to support resilient and sustainable growth. The strategy calls for investing in climate-smart agriculture practices to boost production and food security, expanding electricity generation from renewable sources, and modernising transport and industrial activities to be more energy efficient.

The price tag is sizable. The report finds that Ethiopia needs more than 27 billion dollars by 2050 and that the government cannot fund these goals alone. The CCDR offers a blueprint for how the private sector, supported by a robust regulatory framework, can help Ethiopia meet its climate ambitions.

For example, private sector financing could be used to modernise Ethiopia’s infrastructure — including roads and bridges — to better withstand climate shocks.

Potential investors also have opportunities to contribute to the country’s green energy sources. This could mean investing in renewable energy-independent power producers in the agriculture sector to expand access to irrigation and affordable post-harvest storage facilities, to develop climate-resilient livestock and seed, and for targeted insurance products.

The International Finance Corporation (IFC) is already working with partners to strengthen farmer resilience and boost food security. Through its work with Soufflet Malt Ethiopia and Heineken Ethiopia, a local supply chain was established. These companies are now sourcing from more than 70,000 barley farmers, which has helped drive an increase in their production and productivity.

To mobilise this financing, the CCDR recommends that the government leverage public-private partnerships to bring private-sector know-how and investment.

Ramping up green investment in Ethiopia is urgent: the country is particularly vulnerable to climate change, with extreme climate shocks, including drought and floods, adversely impacting agriculture and endangering critical infrastructure in the transport and energy sectors. IFC and the broader World Bank Group are ready to continue supporting Ethiopia in its efforts to attract investment and support its green development.

Ethiopia may not be the only country facing climate change. But given its location and population size, it has the potential to be a regional leader in leveraging creative private-sector engagements for a more sustainable future.

Dual Realities Behind Gilded Gates

Posted on by Tizita S.

Living in a secure, affluent neighbourhood, I am surrounded by the outward signs of comfort where most of our neighbours are proprietors of thriving businesses. Yet, just beyond the confines of our gated community lies a glaringly different reality. Confined to meagre one-room dwellings, families struggle to meet their basic needs, their daily activities unfolding within plain sight from my bedroom window.

Early each morning, the faint glow of wood fires illuminates their dwellings as women begin baking injera, the staple flatbread, in traditional clay ovens. Smoke blows into the air, painting a picture of arduous labour, often undertaken while pregnant. Their husbands and children join them later, sharing a meagre breakfast of injera seasoned with salt or paprika.

While some fortunate children head off to school, others remain at home, their laughter echoing amidst the plastic bottles they collect for recycling. The day progresses with a relentless cycle of work – fetching water from neighbours’ wells, grinding grain, washing clothes by hand – tasks that expose them to harsh conditions and leave them visibly exhausted.

Despite their hardships, these individuals exude an unwavering spirit. Even as they face the threat of eviction and navigate a life devoid of basic amenities like running water and electricity, their faces reveal a remarkable resilience. Their smiles speak volumes about their strength in the face of adversity.

I particularly focused on the pregnant women who were doing activities that doctors advised me to stay away from, while I was carrying my child. They haul substantial bundles of firewood, splitting them into smaller pieces with an axe. In the haze of wood smoke, they prepare injera and meals, carry kilograms of ground grain on their backs, and laboriously handwash clothes, their thin frames indicative of their meagre sustenance.

Despite living in the capital city, basic services such as running water, electricity, or sanitation are lacking. They usually rely on our gated community’s “generosity” for water and sustenance.

Through personal interactions, I have gained a deeper understanding of their struggles – the traumas they have endured, and the constant fight for survival. Yet, they have not succumbed to despair. Instead, they instil in their children a strong work ethic, teaching them the value of self-reliance. The children who come to our doors, offering to work for food and water, are a testament to this ingrained discipline.

According to estimations done by UNDP in 2021, 68.7pc of Ethiopia’s population is multidimensionally poor, with an additional 18.4pc vulnerable to multidimensional poverty. While poverty is pervasive in Ethiopia, it is not solely a narrative of despair. For many, like the families I have come to know, it becomes a crucible that forges resilience. It fosters a profound appreciation for even the most necessities, strengthens familial bonds, and ignites hope for a brighter future.

Their ability to thrive in the face of adversity is not simply a product of physical strength, but rather a testament to the power of the mind. By cultivating a positive outlook and crafting a narrative of hope, they transcend their circumstances, demonstrating the profound impact our thoughts have on our lives. These individuals are not just surviving; they are setting an example of resilience and unwavering optimism in the face of unimaginable challenges.

Portions & Preferences: Adventures of Fine Dining

Posted on by Tizita S.

A dear friend of mine recently experienced a unique dining adventure at a luxurious restaurant. Invited for lunch by a friend from abroad, she arrived eager to explore new flavours. However, the unfamiliar menu left her feeling bewildered. Wanting to avoid appearing clueless, she opted for a random dish, leading to a surprise.

The dish arrived, featuring unfamiliar elements: a central vegetable, a delicate flower petal garnish, and a creamy hummus dip. Half the plate remained empty, leaving her curious about her friend’s plate overflowing with intriguing options. Curiosity piqued, she yearned to try those vibrant items, worlds apart from her own food experiences.

After their meal, her friend inquired about her dining experience. Knowing the restaurant owner, he sought honest feedback for improvement, determined to understand her genuine thoughts. Chuckling, she recounted her adventure with the unknown cuisine.

She admitted her lack of knowledge about the dishes, leading to a less-than-satisfying choice. While the food itself was surprisingly pleasant, the minuscule portion left her hungry. He gently questioned why she had not inquired about the menu or sought his guidance, assuring her that asking questions is encouraged, especially for international guests encountering unfamiliar dishes.

Their conversation highlighted the cultural differences in food preferences. Acknowledging her preference for Ethiopian delicacies like Tibs, which came in bulk, she clarified that the issue was not solely the lack of meat, but the portion size leaving her unsatisfied. He, however, countered with the argument of prioritising quality over quantity, a valid point in fine dining.

While quality is undeniably important, it is not always the sole factor. Sometimes, a comforting and filling portion of familiar food is more desired than an exquisite, yet meagre, offering. Charging a premium for a small, unsatisfying portion can be seen as exploitative, undermining the true essence of a satisfying meal.

This trend of smaller portions in fine dining has various justifications. Highlighting premium ingredients and intricate culinary techniques, chefs aim to create a “burst of flavours and textures” in each bite. This approach prioritises a unique dining experience focused on quality over satiety.

Furthermore, smaller portions allow restaurants to maintain profit margins while providing an elegant ambience and impeccable service. Restaurant professionals argue that this shift is a complex interplay of culinary philosophy, customer perception, and the very definition of luxury.

Smaller portions also tap into the psychological aspect of fine dining. They create a sense of exclusivity and encourage savouring each bite, appreciating the craftsmanship behind the dish. It can also promote a more diverse and exciting dining experience by encouraging diners to try multiple dishes.

The tasting menu format exemplifies this approach, offering an array of smaller bites showcasing diverse culinary techniques. This allows diners to fully appreciate the entire culinary journey without feeling excessively full. While supporters argue this promotes a healthier dining experience, concerns remain regarding the value proposition.

For diners paying a premium, the expectation is to receive a satisfying meal in terms of both quality and quantity. Leaving hungry can lead to disappointment and undermine the very essence of luxury dining, often associated with indulgence and abundance.

The focus on minuscule servings could potentially overshadow the skills and artistry of chefs. They face the challenge of creating visually stunning and flavorful experiences within these constraints.

A shift towards smaller portions in fine dining represents a complex evolution. While Ethiopia has not fully embraced this trend, it is likely to become a reality soon. This change invites consideration of cultural preferences, value perceptions, and the true essence of a satisfying dining experience.