Moussa Faki Mahamat, chairperson of the African Union Commission, issued a statement late last week, calling for resuming political dialogue under the Pretoria Accord. Alarmed by a renewed conflict in the north, he called for the “respect and full implementation” of the agreement.
Ethiopia’s economic reform negotiations with the International Monetary Fund (IMF) are in their fourth round, taking place in Washington, D.C., against the backdrop of joint meetings with the World Bank and the IMF. Despite having met three times in the past two years, the discussions have yet to resolve “differences” over economic reforms, which the IMF deems essential for advancing loans. The Ethiopian delegation, including Finance Minister Ahmed Shed, State Minister Eyob Tekalegn (PhD), Central Bank Governor Mamo Mehiretu, and Senior Monetary Policy Advisor Teklewold Atnafu, is facing IMF demands for more flexible and market-determined exchange rates. (In the picture: Ethiopian officials meeting representatives of the Paris Club creditors).
Alvaro Piris Chavarri, the IMF’s mission chief for Ethiopia, said last week that although negotiations continue, the gap between the parties persists. “There are still differences,” Chavarri said at a press briefing, voicing cautious optimism about reaching a consensus. He acknowledged that “discussions are time-consuming” but declined to confirm any specifics about potential financial packages, despite reports of a 3.5 billion dollar loan package. High inflation and severe foreign currency shortages compound Ethiopia’s economic challenges, pressuring the authorities to possibly devalue the Birr. The official exchange rate is notably misaligned with the parallel market, where the Birr trades approximately 50pc weaker against the U.S. dollar, inching to 58 Br late last week. The economic strain led Ethiopia to default on its international debt in December last year, marking it the third African country to do so within three years. The default has heightened the urgency of the ongoing negotiations. Ethiopia has been off the IMF’s funding radar since 2020, after the last lending arrangement of 2.9 billion dollars veered off course in 2021 after a civil war broke out in the north. The country also seeks to consolidate its post-civil war recovery efforts, following a peace agreement signed with the TPLF in Pretoria, South Africa, in November 2022.
Ethiopia is also negotiating with the World Bank for about 3.5 billion dollars in support. According to a Western diplomat familiar with the talks, who spoke to Reuters, Ethiopia’s leaders plan to secure three billion dollars through debt restructuring. The potential financial influx is critical as the country looks to stabilise its economy and address structural issues. A spokesperson told Reuters last week that the World Bank, optimistic about the eventual impact of these negotiations, is still working out the details of subsequent phases. A statement by the Ministry of Foreign Affairs said last week that the talks with the Bretton Wood institutions intended to underpin Ethiopia’s ambitious economic program, which includes liberalising the market and correcting foreign exchange distortions.
In a departure from its traditionally opaque practices, the National Bank of Ethiopia (NBE), under the stewardship of Governor Mamo Mehiretu, has unveiled a new report mapping the financial sector’s stability—a move signalling a broader commitment to transparency in financial governance. On the surface, the report, dubbed the stress test, details the financial sector’s robustness and vulnerabilities. But more importantly, its release marks a cultural shift towards openness that could set a precedent for other federal institutions to do the same.
Like many developing economies, Ethiopia is exposed to the choppy waters of global economic fluctuations, exacerbated by domestic turmoil such as recurrent droughts and regional conflicts. During such times of uncertainty, the clarity and comprehensiveness of the Central Bank’s report can serve as a crucial navigational aid. By laying bare the country’s financial health, the Governor appears to have decided to inform the market and fortify investor confidence as well as public trust when both are sorely needed.
The report concluded that the banking industry, commanding 96.3pc of the financial sector’s total assets, remains fundamentally sound. It boasts a Capital Adequacy Ratio (CAR) of 14.7pc, although down by 1.6 percentage points from the previous year, it was still well above the eight percent regulatory threshold. Such figures suggest that, while capital buffers are tightening, the banks continue to maintain a resilient position against potential financial shocks.
However, the report uncovered a decline in the liquidity ratio, from 27pc to 24.2pc, and a slight uptick in the ratio of loans to deposits to 60.6pc. These shifts may hint at growing reliance on deposit funding, which, under stress conditions, could exacerbate liquidity risks. Nevertheless, the report takes a tone of cautious optimism, backed by data and a clear outline of regulatory strategies targeting enduring financial stability.
Encouragingly, the Central Bank does not shy away from acknowledging the potential clouds on the horizon. Its stress test report is candid and discusses at length the economic repercussions of international conflicts and geopolitical confrontations, such as Russia’s war in Ukraine, alongside internal pressures from inflation and shortages in foreign currency. Such candour is crucial because it allows domestic economic actors and international investors to make well-informed decisions, potentially promoting a more permissive economic environment.
Governor Mamo’s decision to steer the central bank towards greater transparency can be seen as strategic and indicative of a broader shift in governance philosophy. Historically, the lack of direct and effective communications from the central bank has often led to market speculations and economic uncertainty, eroding public trust and deterring investment. By reversing this trend, the Governor is adhering to his regulatory responsibilities and reinforcing a transparent governance ethos, recognising that informed public engagement is fundamental to accountability.
Continuing with the ethos of transparent governance, the report’s in-depth analysis also opens up conversations about the need for broader economic reforms in Ethiopia. The report goes further, detailing the stress testing undertaken to assess the banking industry’s resilience against adverse economic shocks. The exercise shows that it is poised to withstand potential crises despite global and domestic turmoils, owing to solid capital and liquidity buffers.
However, it also calls for attention to areas of concern, particularly the high concentration of credit among the top 10 borrowers, who account for 23.5pc of total loans. This could mean that, on average, each of these borrowers tapped 42.3 billion Br last year, a lopsided share compared to the 4.4 million borrowers registered in the system, the vast majority of which were serviced by microfinance institutions. It is clear from the data that while the banking sector is stable, its stability hinges on a relatively narrow base. The concentration of loans and deposits among a select few is a financial risk and a barrier to broader economic participation. Its foundations could be brittle if primary borrowers default.
The banking industry is also characterised by a notable aversion to risk, primarily focusing on collateral-based lending. While prudent, this conservative approach has stymied the sector’s evolution, particularly in adopting digital banking technologies and expanding credit to underserved markets.
The state-owned Commercial Bank of Ethiopia (CBE) demonstrates this trend, with nearly half of the banking industry’s assets. Its substantial holdings in government bonds and involvement in a liability corporation created to absorb non-performing loans (NPL) ascertain its systemic importance but also expose vulnerabilities. The report’s characterisation of the CBE as a stable financial institution yet fundamentally entangled with the government’s fiscal health paints a nuanced picture of what stability means in the Ethiopian context.
However, the top 10 depositors hold a disproportionate share of the industry’s deposits. Although a remote possibility, this could lead to instability if these major depositors were to withdraw their funds simultaneously. The stress test report should serve as a timely warning that a more diversified and inclusive banking system that extends services beyond the elite few to a broader population segment is needed.
As the administration of Prime Minister Abiy Ahmed (PhD) continues with its signature zeal of liberalisation, particularly in the financial sector, and the country prepares to welcome foreign capital, the transparency demonstrated in the Central Bank’s report could serve as a valuable practical guide. It demonstrated the necessity of evolving past outdated practices to embrace a more robust regulatory role and diversified banking models consistent with global standards.
The banking industry could benefit from implementing higher capital adequacy ratio (CAR) requirements for systemically important banks and introducing measures like countercyclical capital buffers (CCyB), a regulatory tool critical to ensure a stable and resilient banking environment. Capital buffers can help dampen the amplitude of financial cycles, reduce systemic risks, and support sustainable economic growth by counterbalancing the inherent cyclicality of credit markets. It has been prudent for the Central Bank to push all commercial banks to meet a threshold capital of five billion Br before June 20026, a prudent policy that promotes a stable industry that can withstand economic shocks and support the broader economy in times of stress.
Another wise policy of the Central Bank is its determination to promote financial inclusion by encouraging the transition of microfinance institutions into formal banking. A number of these institutions—such as Shebelle, Sidama, Gadda, and Tsehay—have already graduated to become full-fledged commercial banks. However, their entry into the market has intensified the competition in the industry on several fronts, most noticeably the hardship in mobilising deposits during economic turbulence. Many of them are seen wresting against all odds to remain liquid.
Governor Mamo can adopt liquidity standards such as the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR), which could help banks manage cash flows even under stressful conditions. Transitioning to a more risk-based supervisory approach would also enable the Central Bank to tailor its oversight to banks’ specific risk profiles and business models, enhancing the financial sector’s health. Encouraging fintech solutions that expand access to financial services is also crucial.
Governor Mamo’s initiative to bring these issues to light can be seen more than his desire to adhere to modern financial practices. It could also be about his urging for a systemic overhaul of how banking and financial services should be approached. It may signal a move towards a system that not only supports large entities and public projects but also nurtures smaller enterprises and offers services to the underbanked and unbanked segments of the population.
The regular conduct of such comprehensive stress tests and their public disclosure should be encouraged. They can elevate investor confidence and enhance public trust in the financial system.
Two months ago, a well-dressed man in his thirties walked into Dawit Basazinew’s furniture store on Africa Avenue (Bole Road) and selected a long list of items worth over 70,000 Br. Dawit, the store’s owner, was accustomed to delivering sold items the day after payment, but the customer’s urgency raised some concerns. The situation became suspicious when Dawit received a screenshot of a payment transfer on his phone.
“I immediately noticed something was off,” Dawit told Fortune.
The fake bank deposit looked like it had been made in Weliso City, Oromia Regional State, a 100-kilometer journey from the capital.
“There is no way he could have travelled that far and in that little time,” the veteran retailer says.
Dawit ordered his employees to pause the delivery of the goods and went to check the authenticity of the bank account, which proved to be fake.
He says without meticulous attention to detail, sellers can easily be swindled by digital transactions in the rush to move inventory.
The rising use of digital financial technologies has simplified transactions, expanded financial inclusion and streamlined commerce while introducing new risks to customers and institutions alike.
A report by the National Bank of Ethiopia(NBE) released two weeks ago highlights increased operational risk for commercial banks with the expanded introduction of new technology-based products and services. It indicates that bank frauds and forgeries, including false texts and calls, withdrawals using stolen ATM cards, false financial instruments, and embezzlement, doubled to one billion birr in 2023.
The Bank for International Settlements(BIS) defines digital fraud as including operational risk, social engineering(phishing emails or SMS), and cyber risk. It has recently extended the scope to include elements of spoofing (impersonation of a bank), fake financial products, and account takeovers.
Nahom Mekbib, a thirty-year-old technician, was contacted by an individual purporting to be from a commercial bank’s digital banking staff three months ago working on ‘system integration’. He was told to open his mobile banking app and given step-by-step instructions, culminating in a request for a PIN.
“I refused to give him the code, which agitated him,” Nahom told Fortune.
Last year, the thirty-year-old was scammed out of 3,000 Br for a fake digital investment scheme on the popular online messaging application Telegram, which made him more cautious.
“I have stopped opening links altogether,” he says
A report on global financial fraud by the International Criminal Police Organization (INTERPOL) released last month reveals a rise in digital scams involving advance payments, investments, and business email fraud. It highlights a growing sophistication of criminals powered by Artificial Intelligence (AI) without the need for advanced technical skills and at relatively little cost.
Ethiopia’s Financial Intelligence Services (FIS) was re-established two years ago to monitor suspicious financial transactions and combat financial crimes across all platforms. It receives around 2,100 reports annually of potentially fraudulent transactions from financial institutions.
Endale Assefa, Communication director of the FIS, points out that aggressive technology adoption will invariably increase potential fraud attempts. He says each financial institution in the country is expected to report any suspicious transaction to the Service within 24 hours of its occurrence through an internal online system.
“We prioritize the reports based on their potential harm,” he told Fortune.
Endale emphasized the importance of coordination between FIS and financial institutions to identify potential fraud before it causes damage.
“If the perpetrators succeed, it becomes a criminal investigation,” he said.
The Federal Police Commission Crime Investigation Bureau brought hundreds of financial fraud cases, a significant portion of which related to digital banking, before courts in 2022, with the majority being in Addis Abeba.
The director indicated that FIS assists in the subsequent criminal investigation and prosecution of fraudsters who are caught.
“Creating awareness will prevent most of the fraud,” Endale says.
He suggested that most fraudsters channel money from victims to fund other criminal activities.
This sentiment is echoed in the Global Scam Alliance’s 2023 report, which indicates that around one trillion dollars was stolen from victims worldwide last year, exacerbated by inadequately supervised financial technologies. As Ethiopia targets a three-year increase in the value of digital payments and financial services fourfold to 17 trillion Br, some financial institutions have begun to strengthen their security protocols.
Sosina Mengesha, Chief Digital Banking officer at the Bank of Abyssinia(BoA), says most incidents of digital financial fraud in Ethiopia arise from unsophisticated perpetrators who exploit people’s lack of financial and digital literacy.
She also noted that poor Know Your Customer(KYC) practices and financial institutions’ eagerness for new customers to open bank accounts have further widened the security gaps.
“Identification problems and improper password managment cause most incidents,” Sosina told Fortune.
The bank employs an AI-embedded system that flags transactions and risk-based security protocols across most services. As digital financial transactions now make up 60pc of total transactions, the exposure to risks has increased.
She indicated that most problems reported by customers are handled at the branches, while an entire department dedicated to digital security exists at a corporate scale. “People need to be very cautious with their financial information,” Sosina says.
Two years ago, the Ministry of Justice(MoJ) report revealed that the banks had suffered around 1.8 billion Br in losses due to fraud over four years.
The Bank, which accounted for 17pc of the losses in the study, has recently begun collecting biometric data on some branches to improve customer identification procedures.
The central bank’s inaugural financial stability report indicates a marked rise, as one billion birr was defrauded within a quarter of the time from 20 banks.
Belte Fola, a portfolio manager at the National Bank of Ethiopia, says reports on attempted frauds and successes are collected from the banks every quarter to understand the scope and extent.
“Successful prevention largely depends on proper coordination,” he told Fortune.
Belete referred to a directive from two years back that requires each financial institution to establish a fraud detection, reporting, and mitigation strategy as the bedrock of the regulatory framework.
“Vigilance is expected from financial institutions,” he says.
Banks in Ethiopia are expected to maintain a fraud register that includes names, addresses, the type of fraud, and the position of suspected employees who are possibly involved.
Tatek Negassa, deputy chief of digital banking at Nib Bank, says financial institutions must attend to upgrading security protocols just as much as they prioritize onboarding new technology to attract customers.
“Every technology comes with risks,” he told Fortune.
Tatek has observed inadequate information delivery from the banks to customers as one factor that needs significant attention to reduce risks for both.
He says customers who have not been informed of the risk are easily swindled by scammers who impersonate bank staff or forge financial instruments. Untrained staff also inadvertently pass on sensitive data to external parties.
“Proper information management is expected of customers and institutions,” Tatek says.
He also pointed out that the technological capabilities across banks are not harmonized enough to track and process suspicious transactions beyond the usual dispute management procedures.
The deputy explains that poor Know Your Customer (KYC) procedures at one financial institution compound the verification difficulties for the other, with customers bearing the ultimate price.
In its 2023 report on Ethiopia, the Global Systems for Mobile Communication Association(GSMA) recommended the accelerated development of digital identification systems and electronic KYC mechanisms to reduce risks of digital financial fraud and increase mobile money adoption.
Fayda, the national ID project with real-time biometric authentication and eKYC for all use cases, with more than 4.6 million Ethiopians registered so far, has been cited as a promising development in the digital financial ecosystem.
Abenezer Feleke, strategic communications adviser at the Tony Blair Institute for Global Change and the National ID program, expects the digital ID to significantly alter the ease and security of financial services within the coming two years.
“The vision towards a cashless society is pinned on proper identification,” he told Fortune.
Abenezer noted the challenges of proper customer due diligence when potential customers have multiple identities that can be used to defraud both financial institutions and the wider population.
Banks will serve as major registration centres for the Fayda project nationwide starting next September and have financed the purchase of over 6,000 kits set to arrive in the coming weeks.
“Frauds will be less likely while possible types of services increase,” Abenzer says.
Digital finance consultants point out that financial institutions’ acquisition, use, and management of technology are underrated risk factors that could increase fraud in the long term.
Yegeremal Meshesha, a digital finance consultant who has advised several fintech startups, has observed that most financial institutions launch digital services without obtaining the necessary international certifications.
He indicated that certifications obtained locally from institutions like the Information Network Safety Agency(INSA) are primarily concerned with the front end, interactable part of a technology product, despite the security risks embedded at the backdrop.
“Some products are risk-prone at the outset,” Yegermal told Fortune.
He noted that the absence of comprehensive frameworks at the enterprise level incorporating regular audits, discrepancy checks, and account reconciliations like manual bookkeeping procedures has heightened risk factors.
“Products are forgotten after they are launched,” the consultant says.
Yegermal expects intense financial and digital literacy campaigns conducted in parallel with the rush to introduce new technologies to close off most windows of opportunity for fraud.
“Sensitivity to financial information needs to be standard practice,” he stressed.
Experts attribute the exposure to financial fraud to a lack of well-designed, user-friendly features, underdeveloped internal risk procedures, and the dearth of human capital.
Tewodros Tasew, one of the earliest entrants into Ethiopia’s financial technology landscape, recognizes negligence in including fraud risk-minimizing user-friendly features at the early stage of the design process as one of the drivers of fraud.
He reasons that the lack of transparent fee structures in some financial technology products creates fertile ground for potential fraudsters to exploit, as users cannot tell why their money was debited.
“A small side window can easily give a cost breakdown,” Tewodros told Fortune.
Tewodros also challenged the idea that digital illiteracy causes most fraud cases, arguing that financial technology companies’ failure to understand their customer segment is a more significant factor. He said companies must design products with security features tailored to their market base.
Management from EthSwitch, the national switch operator, declined to comment on the development of this story.
An undercurrent of controversy surrounds the appointment of founding members of Amhara Bank after regulators at the National Bank of Ethiopia (NBE) withheld approval for two of the Bank’s nominated board members, including its founding board chairman. They cited the need for an extended investigation before nodding for the appointments of Melaku Fenta, board chairman until recently, and Tewodros Yeshiwass to serve on the board.
Frezer Ayalew, head of NBE’s banking supervision directorate, approved the other 10 nominees three weeks ago; they will undergo training in corporate management, internal control, banking laws, and risk management before officially taking their positions.
Tewodros, a significant shareholder in Gomeju Oil, has come under scrutiny for allegedly using a loan of 125 million Br disbursed to Quara Manufacturing PLC — a company in which he also holds a substantial stake — to cover half of his subscribed capital in Amhara Bank. Despite denying owning shares in Quara Manufacturing Plc when these allegations first surfaced four months ago, the controversy, however, persisted.
“I’ll wait for the final decision,” Tewodros told Fortune, in response to questions to address the controversy.
Melaku Fenta, another nominee, is also embroiled in controversies.
The allegations against Melaku Fenta centred around a criminal conviction six years ago, which the petitioners argued should prevent him from serving as board chairman. He was charged in a Federal High Court and imprisoned in a high-profile corruption case based on allegations during his tenure as head of the former Ethiopian Customs & Revenue Authority (ERCA). Although many believed the criminal charges were politically motivated during political unravelling within the now-defunct EPRDF, the banking law prohibits individuals with such convictions from holding leadership positions in financial institutions. Attempts to reach Melaku for comment were unsuccessful.
According to Gobena Worena, deputy head of banking supervision at NBE, the regulatory bank’s reluctance to approve these nominations has not stalled Amhara Bank’s functions. He asserted that “enough members have been approved for the board to continue operations”. He argued that the ongoing probe should not delay the board’s activities, as nine approved members meet the requirements set forth by the country’s corporate governance laws.
Hizkias Tafesse, the secretariat of Amhara Bank, confirmed that the approved board members are gearing up to begin their mandated short-term training at the central bank.
“We’re adhering to the central bank’s rules,” he told Fortune.
Remaining optimistic about the Bank’s future, Hizkias believes calling a general assembly would likely be unnecessary, as stand-by appointees have been ready should the authorities decline Melaku and Tewodros’s nominations.
Amhara Bank’s shareholders have not been passive in the unfolding saga. In December, over 20 shareholders petitioned the NBE, objecting to the appointment of nine out of the 29 board nominees, such as Melaku, Mesenbet and Tewodros, placing a series of allegations, including violations of banking laws, inappropriate use of the Bank’s credit line, and nepotistic practices. The petition prompted regulators to engage with the signatories and launch probing over the credibility of these claims.
The newly composed board includes Gashaw Debebe, Berhanu Haile, Berhanu Taemalew, Ewentu Alene, Biyadeglegn Sheferaw, and Abebaw Geta. Three nominees – Mesenbet Shenkute, president of the Addis Abeba Chamber of Commerce & Sectoral Association (AACCSA); Hailmeariam Temesgen and Eden Ashenafi – have received NBE’s approval despite being the subject to complaints by the petitioners. These directors are expected to oversee the Bank’s committees on risk, audit, strategy, and human resources.
The contentious atmosphere was discernible during Amhara Bank’s general assembly held at the Golf Club near Mauritania Street. Shareholders learned of a 460 million Br loss days after the departure of the Bank’s founding president, Henok Kebede. The meeting, marked by the indignation of shareholders angry over the negative three percent Earnings Per Share, gave way to new board members under the watchful eye of the NBE. The revelation came as a blow to an institution that had debuted with a record subscribed capital of 6.5 billion Br, 75pc of which was paup by 150,000 shareholders, setting high expectations for its financial performance. Upon incorporation, Amhara Bank was shy of less than 200 million Br to meet the regulatory threshold of five billion Birr NBE set for all commercial banks before the end of 2026.
Legal experts have weighed in on the situation, emphasising the delicate application of the commercial code in the financial sector.
Yehualashet Tamiru, a corporate lawyer with extensive experience, argued that NBE should prioritise shareholders’ interests and maintain the integrity of the financial system. He believes that an established procedure for replacing board nominees who fail to secure approval from authorities could offset the need for a general assembly.
“The minute from the general assembly will colour what happens next,” Yehualashet said, forewarning the potential for disputes as the Bank moves away from its tumultuous early days.
Yehualashet also raised concerns about the board’s governance dynamics. He advocated for an odd number of directors, which he argued would ensure smoother decision-making during strategic disagreements.
“An odd number board is better suited for decision-making,” he said, stating that such a configuration could help prevent deadlocks and facilitate more efficient governance.
An ambitious cooperative housing initiative designed to provide thousands with affordable homes is mired in a complex web of legal, logistical, and bureaucratic hurdles, demonstrating the difficulties of urban development in fast-growing cities like Addis Abeba.
Launched two years ago by the Addis Abeba Housing Bureau, the project aspired to ease the city’s severe housing shortages, enabling residents to build their own homes through cooperative unions. Approximately 4,500 residents, organised into 54 unions, were granted access to six sites in the Kolfe Keranyo and Aqaqi Qality districts after many had spent years saving to afford subsidised condominium apartments. Despite their efforts, none of these unions have commenced construction.
The city allocated 27hct of land to the unions that had successfully saved up to 70pc of the construction budget, expecting the balance to be covered by loans from the state-owned Commercial Bank of Ethiopia (CBE). However, a litany of issues, including right-of-way disputes, lack of essential infrastructure, and a series of court injunctions, have stalled progress.
Surafel Girma, who leads a 73-member union that raised 81 million Br for its project, voiced concerns over the diminishing purchasing power of its savings due to ongoing delays.
“We’ll be unable to dig in the winter,” Surafel told Fortune.
He fears that continued delays, exacerbated by a recent court injunction halting work on their 3.9hct site in Berta Sefer, Qality District, might lead to members withdrawing their funds out of weariness and frustration. Legal challenges from existing landholders (farmers) aggravate the delays.
“Some unions have conducted soil tests under police protection,” Surafel said.
Legal experts point to systemic issues in the way land disputes are handled. Arba Beyene, an experienced lawyer in property cases, believes the implementation gaps in the legal framework lack functionality despite its strengths. He attributed poor enforcement to a three-year-old directive intended to facilitate the relocation of affected landowners.
“Compensation should be based on potential earnings,” said Arba, alluding to the fact that most right-of-way disputes stem from inadequate compensation and insufficient information provided to those displaced.
However, officials challenge the notion of inadequate compensation payments, as at least five rounds of discussions were held between district officials and residents in the areas before hundreds of millions of Birr were paid out. They claim further compensation payments would be made under the revised crop valuation rates.
The complexity of these disputes is evident in the story of Alemnesh Hunde and her brothers, who have been embroiled in a legal battle over their property for eight months, spanning more than 6,000Sqm and around 25 homes. Alemnesh, involved in a lawsuit against the Housing Bureau and local administrative bodies, stated her demands unapologetically. The Federal First Instance Court passed the latest injunction two weeks ago.
“I’m not against development,” she told Fortune. “I just want to be fairly compensated.”
Infrastructure challenges further complicate the situation.
Mezgebe Alemu, head of an association with 78 members, pointed out the unresolved issues related to a plot in Chaffee of Aqaqi-Qaliti District, which was assigned to them eight months ago.
“They should have cleared these issues before giving us the plot,” said Mezgebe.
A nearby gorge and disputes with a local mosque that allegedly lost about 5,000Sqm due to improper fencing added to the unresolved issue. The 17 associations looking to build 11 housing blocks have pressured the District officials to resolve the mosque’s case.
Prospective homeowners, who have collectively raised nearly four billion Birr, are not as optimistic as the officials. Representing another union, Yared Tefera bemoaned the stalled progress due to inadequate road infrastructure.
“Our soil test and design mean nothing without a road,” he said, encapsulating a sentiment echoed across the project’s sites.
Some cooperative unions that have started to float tenders around the Hana Mariam area have yet to finalise demarcations as right-of-way disputes brew with nearby developers.
Despite the array of obstacles, some officials remain hopeful.
Mekonnen Bejina, deputy head of the capital’s Housing Bureau, has engaged with the Addis Abeba Roads Authority to request essential services like road access and drainage systems.
“The courts are handling the legal matters,” said Mekonnen, noting a separation of jurisdiction in resolving these issues.
Mekonnen has petitioned the Addis Abeba Planning Commission to consider relocating some of the housing projects to more suitable sites. He assured that individual title deeds would be issued upon the completion of construction, a crucial step in securing homeowners’ investments.
According to Takele Luluna, deputy director general of regulatory at the Roads Authority, the infrastructural issues, such as the precise width of roads, are pending further expert review but should be resolved shortly.
Even as officials ponder the procedural and legal mazes, the residents’ patience appears to wear thin.
Abay Seifu, head of the directorate in charge of right-of-way and land transfer at Aqaqi Qaliti District, acknowledged the ongoing resistance from some farmers who were previously compensated between 286 Br and 491 Br for a square meter, depending on the type of crop they used to cultivate, when their land was incorporated into the city’s land bank. He noted that despite past discussion rounds and compensations, some landowners had reconstructed their homes on the disputed plots.
“Everything will not be solved overnight,” he told Fortune.
Ethiopia’s juice manufacturers confront formidable economic challenges following the reclassification of their products as flavoured beverages, which has led to them being burdened with hundreds of millions of birr in back taxes.
Last year, upon request from the Finance Ministry, the Ethiopian Food & Drug Administration (EFDA) conducted research that concluded all the juice manufacturers in the country were producing flavoured drinks, which entails a 25pc excise tax levy.
The declaration spurred the Ministry of Revenues to seek back taxes and penalties from 10 manufacturers dating back four years, a move that has unsettled the beverage industry subsector already grappling with input shortages.
Temesgen Takele, the Ministry’s excise tax liability and audit services coordinator, says they are responsible for collecting taxes on any item deemed taxable by the Finance Ministry.
“We could only go back four years,” he told Fortune.” Still, only a few have come to report.”
Excise taxes were introduced four years ago on items deemed harmful to public health, like sweets, alcohol, and cigarettes, as well as those categorized as a luxury, like bottled water and flavoured drinks.
Abraham Rega, legal advisor at the Ministry of Finance, contends that the manufacturers should have already been paying excise taxes as their products could not be classified as ‘juice’.
“There is no way around not paying,” he told Fortune.
According to the Institute of Ethiopian Standards(IES), juice production needs to include at least 30pc fruit pulp, a concentrate comprised of both the fibre and juice from fruit processing.
The Association of Ethiopian Beverages Manufacturing Industries has pleaded with the Ministries of Industry, Finance and Revenues to reconsider the reclassification and subsequent excise tax over the past two months.
Ashenafi Merhed, the association’s general manager, foresees the imminent closure of the 15 semi-operational factories. Ten have already terminated operations over the few years due to mounting input shortages and lack of access to foreign currency.
“The Authorities are completely misunderstanding it,” the general manager told Fortune.
Ashenafi claims that meeting the 30pc requirement is impossible without local pulp manufacturers or sufficient access to foreign currency for imports. He says some manufacturers already use 15pc imported pulp, which he believes should prevent them from being categorized as flavoured drinks.
“There is a serious misconception,” Ashenafi says.
Officals from EFDA challenge the notion.
Mulatu Tesfa, head of inspection and legal enforcement at the EFDA, says no ‘juice’ manufacturer in the country met the minimum requirements to be called such despite the advertisements. He suggested that the manufacturers had intentionally swindled consumers by falsely representing flavoured drinks as juices even though the products did not meet the standards.
“There was an industry-wide false promotion,” Mulatu told Fortune.
Nursedin Redwan, general manager of Sendelet Food Processing PLC, says the company might be forced to close its 3,000 Sqm factory in Burayu, Shagaar City if the taxes are not revised.
“Not enough research went into it,” he says.
The company, which can produce around 20,000 bottles of the ‘O Mango’ juice daily, has been importing decreasing volumes of pulp due to a lack of foreign currency.
“We have lost most of our markets,” Nursedin told Fortune.”The livelihood of 100 employees is at stake”.
The Food & Beverage Institute has stepped in to evaluate the amount of nutrition derived from the current pulp requirements to save the fledgling industry.
Medhin Alemu, a researcher from the Institute, says an ongoing study might lead to the revision of the existing pulp requirements. Over the past three years, he has observed over nine manufacturers close down operations due to raw material shortages.
” We are exploring ways to reconcile nutrition standards and pulp requirements,” Medhin told Fortune.
He recalls the closure of the country’s only pulp manufacturer, africaJUICE Tibla S.C., three years ago as one of the major reasons for the input crunch for manufacturers.
“We are also looking at ways to produce pulp locally,” Medhin says.
According to a report by the United Nations Development Program (UNDP), the manufacturing sector’s share of the country’s GDP dipped by 1.5pc last year, with the closure of 450 factories that went under due to the combination of macroeconomic instability, security issues, and exogenous factors.
African Global Business PLC, manufacturer of the popular flavoured drink ‘Bon Juice’, is one of these companies as it shut down operations nine months back after eight years in business.
Gashaw Hailemesqel, the company’s general manager, says sourcing pulp became increasingly difficult as access to foreign currency seemed to dwindle by the day. He suggests that most other companies produced drinks with even less pulp and sold them at lower prices.
“It was tough to compete,” Gashaw told Fortune.
Nutrition experts applaud the government’s orientation towards employing stricter regulations over the juice industry.
Hiwot Tadesse, former food inspection director at the EFDA, says the inadequate pulp concentration could harm consumers’ health. She explains that most manufacturers would use more artificial sweeteners to compensate for the lost pulp.
“Minimum requirements are the right approach,” Hiwot told Fortune.
The expert who currently works at the World Food Program(WFP) says all the benefits of a so-called juice would vanish with the greater infusion of artificial additives. She recommends rigorous research to create a bridge between the manufacturers’ complaints and the authorities’ requirements.
“Both sides should re-evaluate working practices,” Hiwot says
Long lines and frustration are mounting at gas stations across the country are faced with a fuel shortage triggered by a confluence of factors. The scarcity is disrupting transportation, impacting businesses, and raising worries about economic health.
Reduced supplies are a major culprit. Inefficiencies at Djibouti’s ports, the primary fuel import point, have slashed daily fuel deliveries by millions of litres, according to Derese Kotu, head of petroleum dissemination & regulation at the Petroleum & Energy Authority. Out of the demanded 2.5 million litres of benzene and 8.5 million litres of diesel, half a million litres and 1.5 million litres were reduced respectively.
With 300 trucks availed, Derese expects the next four months to be critical as demand will be higher for fertiliser distributions. Addis Abeba faces another predicament with 11pc of its supply dwindling, as it coincided with an ongoing corridor development construction that wiped out seven of its key fuel stations.
“This has exacerbated the shortage,” said Derese.
Ethiopian Petroleum Enterprise has struggled to keep the petroleum efficiency at bay with constant disruptions at the terminal of Djibouti. Esemelealem Mihretu, CEO of Ethiopian Petroleum Enterprise (EPSE), said a slight disruption in logistics would impose an extreme disruption to a vulnerable market. For him, the past Eid holiday had stalled progress that barely recovered from a recent flood in the ports.
“It was one after the other too quickly”, he said.
Adding fuel to the fire is a recent controversy surrounding a new quota system for fuel distribution. The system which was previously allocated based on market share now takes storage capacity and number of stations into account. It aimed at fairer allocation among 49 fuel companies, following a discussion with Authorities six months ago.
However, it was met with resistance from industry leader National Oil Ethiopia (NOC) which boasts the largest market share with 27pc. Its contenders OLA Energy and TotalEnergies follow with 15pc and 12pc shares respectively.
Derese alleges possible hoarding by dealers dismayed with the arrangement.
“Control mechanisms have to be in place,” he said.
An official from NOC who spoke to Fortune on the conditions of anonymity said while they have been strongly against the new system, allegations of hoarding were baseless.
“It’s a groundless accusation,” he told Fortune.
The executive said lower supplies have impacted its 250 stations across the country with insufficient supplies.
A Board Member at Ethiopian Petroleum Association Ephrem Tesfaye concurs. His station around the Asko area in the capital has been receiving 500,000ltr less than its 1.5 million litres demand.
“It’s going somewhere with less demand,” he said.
The problem persists 167Km away from the capital. Abdela Seid is a manager of a TotalEnergies outlet around the Assela area in the Oromia Regional State, with a monthly demand of 600,000ltr.
“It’s been a week since we received a drop,” he said.
The government is implementing measures to address the shortage. Alongside short-term measures to shield consumers from the impacts of the crisis benzene is being accessed from the depot found near the Sululta area, Sheger City, to appease the shortage transporting over 1.1 million litres of Addis Abeba daily.
However, experts suggest a long-term solution requires a more comprehensive approach, including diversifying import routes and strengthening the domestic fuel sector.
For Serkalem Gebrekiristos (PhD), a regional representative for Habitable Energy Solutions Africa Ltd, the reliance on Djibouti ports as the primary entry point for fuel imports has served to amplify the shortage. He argues a vicious cycle where depleted shares from those struggling with limited resources are redirected to others.
“Some companies should consider consolidation to strengthen their financial position to weather future crises,” he told Fortune.
Serkalem recommends a fundamental reevaluation of the regulatory framework governing the sector.
Consumers are bearing the brunt of the crisis. Taxi drivers like Daniel Zenebe spend hours searching for gas, sometimes waiting in line at multiple stations before finding fuel.
“Some of them don’t even have any,” he said.
Awash Insurance consolidated its lead in the private insurance sector last year, registering vigorous profit growth that eclipsed its competitors — United Insurance, Nyala, and Oromia. Despite a challenging economic backdrop, Awash Insurance outperformed with a profit of 509.12 million Br, a 52.5pc increase from the previous year, outstripping United Insurance’s 327.02 million Br, Nyala’s 273.3 million Br, and Oromia’s 333.9 million Br in net profits.
Although its earnings per share (EPS) grew modestly by 10 Br to 360, this growth was less pronounced than its contenders during the same period. Its EPS lagged behind Oromia’s 430 Br and United’s 479 Br, though slightly higher than Nyala’s 354 Br.
Awash’s acting CEO Jibat Faji, attributed the dampening EPS growth to its aggressive capitalisation strategy. The company raised its paid-up capital by 47.5pc to 1.41 billion Br, nearly threefold the half-billion regulatory minimum set by the National Bank of Ethiopia (NBE) and almost double Nyala’s 830 million Br, United’s 840.5 million, and Oromia’s 870 million Br.
Abdulmenan Mohammed (PhD), a London-based financial analyst, noted that the substantial capital increase has impacted the company’s EPS. He urged the directors to consider a capitalisation policy beneficial to shareholders.
The Acting CEO, Jibat Faji, echoed this sentiment, citing the company’s strategy of bolstering its capital to align with profit growth. At the shareholders’ meeting, he stated: “We still have one of the highest EPS in the industry.”
However, at 36pc return, Awash posted an EPS four percentage points lower than United Insurance in the 2022/23 operation year.
The company’s profit surge was driven primarily by a substantial 64.1pc increase in investment returns, totalling 484.1 million Br, and a 35.4pc jump in underwriting profit to 548.88 million Br. This was supported by a 36.4pc increase in gross written premiums, which reached 2.4 billion Br. A 6.4pc drop in the amount ceded to reinsurers enhanced the company’s retention rate.
Abdulmenan praised Awash’s management for its adept handling of investments during this period.
Awash Insurance not only retained its lead among private insurers but also commands a 22.3pc market share in the life insurance segment, with nearly 60pc of its revenues stemming from motor insurance. Despite the insurance industry contributing less than one percent to the national GDP, it saw a collective net profit increase of 29pc from the previous year, reaching 3.6 billion Br.
Continuing its aggressive growth course despite losing its respected executive, Gudissa Legesse, Awash Insurance has rewarded its shareholders with returns almost 50pc higher than the banking industry offers. According to Board chairman Tadesse Gemeda, who addressed a shareholders’ assembly held at the Addis Ababa Hilton Hotel on Menelik II Avenue in October last year, the firm has maintained its strategic dominance in the general insurance market.
Awash Insurance’s gross written premium was nearly twice that of its closest competitors, with United at 1.5 billion Br, Oromia recording around 1.2 billion Br and Nyala slightly more at 1.3 billion Br. The insurance industry reported a 38pc increase in gross written premium to 22.9 billion Br, with general insurance accounting for 94pc of the premium income and life insurance generating the balance. The industry recorded a loss ratio of 59pc as net earned premiums reached 12.8 billion Br against substantial net claims of 7.5 billion Br.
Tsegaye Kemsi, one of the 456 founding shareholders, praised the company’s performance. Awash Insurance was incorporated in 1994 with a 4.9 million Br paid-up capital and appointed Tsegaye as its founding CEO before he was replaced by the late Gudina five years ago. He believes the company should focus on underwriting services in fire and life insurance, for they yield higher returns with modest risks. He argued that several motor insurance claims are either fraudulent or exaggerated.
The acting CEO disclosed that motor insurance claims constituted most of the total claims; consistent with industry-wide figures, this segment contributed around 52pc of the premium income at a loss ratio of 69pc.
Tsegaye called for updated risk assessment procedures and management practices to strengthen Awash’s industry leadership.
After working at the branch for a decade, where he increased its performance by 33pc this year, Binyam Binyam Gebremehdin, manager of the Gofa Branch, recognised motor insurance as the most resilient and sought-after insurance segment. Over the past year, he has observed a dip in appetite for performance guarantee bonds from new construction projects and marine insurance.
“Both construction and international trade have dipped,” he told Fortune. “But, we’re on a strong growth trajectory.”
The financial performance was also reflected in the company’s earnings from the commission, which rose by 23.2pc to 164.99 million Br, although the commission paid out to agents grew by 67pc to 102.67 million Br. However, the surge in gross written premiums and retention rates led to a notable increase in claim expenses and other provisions by 36.6pc to 836.3 million Br.
“It should ring a bell for better risk management practices,” said Abdulmenan.
According to Jibat, the rise in claim expenses was due to increasing costs for automobile spare parts for motor insurance and higher payouts for political violence and terrorism insurance.
Despite rising operational costs, which saw a 40pc increase in wages, benefits, and administration expenses to 541.64 million Br, Jibat defended these expenses, citing the company’s extensive portfolio and nationwide presence with 60 branches and 717 employees.
“It’s small compared to our size,” he argued.
Awash Insurance’s total assets saw an upturn by 36.3pc to 5.7 billion Br, primarily held in short-term and fixed-time deposit accounts worth 1.99 billion Br, 860.41 million in shares, 60 million Br in government bonds, and 366.22 million in property investments. With its capital and non-distributable reserves representing 28.6pc of its asset base and a rise in its ratio of cash and bank balances to total assets by 1.13pc to six percent, Abdulmenan observed that the firm remains a well-capitalised enterprise, substantially ahead of its peers.
Awash Insurance’s asset base is considerably higher than its peers, edging United by 2.4 billion Br, Oromia by two billion Br, and Nyala’s asset base by 1.9 billion Br.
The acting CEO disclosed plans to expand Awash’s asset base further by constructing a 32-story building in the heart of the capital’s financial district around Mexico Square, consolidating the firm’s ambitious expansion strategies.
“Our investments are still below the regulatory cap,” Jibat told Fortune.
Despite the relentless stream of bad news from around the world, there are still reasons for optimism. One notable example is the renewed push to localise pharmaceutical production in Africa, demonstrating how even catastrophic events like a pandemic can lead to positive, unforeseen outcomes.
The COVID-19 shock underscored the critical need to fund public health systems and expand access to essential technologies and preventive and therapeutic drugs. It should have served as a wake-up call for policymakers and the public worldwide. But, once the virus was controlled, wealthy countries reverted to the policies and practices that had made the initial pandemic response so unequal. No part of the world has suffered more from these extreme global inequalities than Africa.
African countries were the last to receive COVID-19 vaccines, having been crowded out by vaccine-hoarding wealthier countries and denied access to the technologies necessary for domestic production. Although Africa accounts for 18pc of the world’s population, the continent received only 3.3pc of all administered vaccines by the end of 2021. By the end of 2022, its share had barely increased to 5.5pc.
Even before COVID-19, Africa was already grappling with the global neglect of major epidemics such as Ebola, Zika, and monkeypox, as well as endemic diseases like sleeping sickness. One of the biggest obstacles to tackling these health crises is the continent’s dependence on imported drugs. Despite bearing one-quarter of the global disease burden, only two percent of medical research is conducted in Africa, and more than 90pc of the continent’s vaccines and 70pc of its medicines are imported. Of the roughly 375 pharmaceutical manufacturers operating in Africa, 15pc are locally owned, and most of these companies focus on formulations rather than the active pharmaceutical ingredients (APIs) crucial for drug production.
Fortunately, the bitter experience of COVID-19 appears to have catalysed a much-needed policy shift. During the pandemic, the Africa Centre for Disease Control & Prevention laid the groundwork for inter-governmental cooperation by bolstering collective regional responses under extremely difficult conditions. Several African governments and international organisations have recently launched initiatives to boost local pharmaceutical production and promote innovation across the continent.
The African Pharmaceutical Technology Foundation, backed by the African Development Bank (AfDB), is a prime example. This initiative aims to bolster the continent’s technological capabilities by expanding access to knowledge, building skills, and expanding product pipelines. The Foundation has pledged to invest up to three billion dollars over the next decade to develop pharmaceutical products in Africa, thereby reducing import dependence.
Another example is the Medicine Patent Pool’s mRNA technology transfer program, supported by the World Health Organisation (WTO) and the United Nations (UN). This initiative, which operates from its South African hub at the Cape Town-based biotechnology company Afrigen, aims to develop the necessary technological capacity and know-how to enable 15 low- and middle-income countries to manufacture mRNA vaccines. Initially focused on COVID-19 vaccines, the program has since expanded to other diseases prevalent across Africa and more affordable cancer treatments.
These initiatives face profound challenges, especially their reliance on voluntary technology transfers, which have proven limited scope. To access essential knowledge and force multinational companies to share their technologies, African countries must expand their use of compulsory licensing, in line with their patent laws and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Notably, the mRNA hub in South Africa has already faced legal challenges from Moderna, itself a beneficiary of US government subsidies and patent sharing. This shows the importance of ensuring that the ongoing negotiations for a global pandemic treaty include specific provisions addressing compulsory licensing.
That said, access to knowledge alone is not enough. Given that production processes require specialised expertise, comprehensive education programs and skills training are crucial to establishing a sustainable foundation for innovation and production in Africa. This requires a broader regional effort, which African governments appear to be considering.
Another major obstacle is competition from large pharmaceutical companies. Novartis, which has previously initiated patent disputes in countries like India, has announced its intention to achieve a fivefold increase in patient outreach in sub-Saharan Africa by 2025. For localisation efforts to succeed, it is crucial to emphasise local ownership and ensure that Big Pharma does not monopolise the benefits. Multinational companies can be unreliable partners, as is evident from Moderna’s recent decision to put its planned investment in vaccine production in Kenya on hold because reduced demand makes commercial profitability less likely.
Given that Africa’s rich genetic diversity makes it a veritable treasure trove of genomic data, the risk of knowledge and data theft is a pressing concern. While the African CDC’s Pathogen Genomics Initiative was celebrated as a major achievement when it was launched in 2019, there are now valid concerns that the pandemic treaty could make these data globally accessible, potentially benefiting large pharmaceutical companies in rich countries without ensuring fair compensation for Africa.
Tellingly, foreign powers are squabbling over who should control access to this invaluable database. The challenges confronting African countries’ efforts to take control of their healthcare destiny are immense. Their determination to localise drug and vaccine production is a promising start.
The Big Art Sale in Hilton attracts notable dignitaries like Minister of Labor & Skills Muferiat Kamil. During its 18th rendition this year, thousands of visitors showed up to see the works of over 100 artists. Ethiopia’s rich art history has been subjected to theft and destruction through the ages due to successive wars over the centuries. Most recently, Ethiopians have been asking for the return of a 19th-century shield, taken by British soldiers more than 150 years ago. The engraved shield is part of a vast cache of royal, religious, and military artefacts looted during the 1868 Battle of Maqdala.
A 123-year-old newspaper adorns a cafe around Bole, inspiring the inquisitive gaze of its sole customer on a late afternoon. “Aimro” was the first government newspaper published in Ethiopia in 1901, and it had Emperor Menelik II on its front page. The Emperor introduced the first motor car, postal system, telephone, telegraph, and typewriter. Menelik also reorganized the tithe system to fund the army, issued the first national currency in 1894, and built the first mint nine years later
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