The number of taxpayers the Addis Abeba City Administration Revenue Bureau barred from traveling abroad, alleging they collectively owe it 3.2 billion Br in unpaid taxes. Officials invoked a 2016 law, under tax administration proclamation 983, which authorizes the Bureau to request immigration authorities to prevent citizens with outstanding tax obligations from leaving the country.
Author: Yeabkal
What Ethiopia Can Do in the Face of Healthcare Crunch as USAID Pulls Plug
Ethiopia has relied on American foreign assistance for decades, receiving between 1.1 billion and two billion dollars annually through the U.S. Agency for International Development (USAID). In 2023 alone, it received about 1.3 billion dollars, making it the largest aid recipient country from Washington, after Ukraine. Although USAID works outside Ethiopia’s public finance system, its contributions have sustained essential services, notably in health and agriculture.
Now, with the Agency’s funding on hold, a crisis looms that threatens to undermine progress across critical sectors. The repercussions are already visible.
The Ministry of Health recently terminated 5,000 USAID-funded health workers, shifting their duties to an overstretched public system. According to reports by Reuters, these contract terminations are underway, further undermining Ethiopia’s capacity to provide crucial services. The cutbacks extend beyond personnel. The U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) covers 100pc of Ethiopia’s procurement of viral load and Early Infant Diagnosis reagents. Without this support, HIV treatment and prevention programs face severe disruptions, endangering countless lives.
This abrupt funding halt could stall years of gains in maternal health, child nutrition, and agricultural productivity, all heavily supported by American aid. The freeze may also undermine ongoing immunisation programs and the distribution of mosquito nets, further straining the already burdened healthcare system.
The sudden withdrawal of USAID leaves a substantial funding gap, forcing the government and other donors to scramble for solutions. Historically, non-governmental organisations (NGOs) and donors have plugged the gap, with USAID among the most important. Its departure has laid bare the fragilities in public service financing and heightened calls for reform.
While immediate pressures are sharp, some see an opportunity to recalibrate Ethiopia’s public finance management and shift toward a homegrown funding structure that reduces reliance on external sources.
Under the federal arrangement, sustaining local services is vital. The system requires the federal government to use capital allocations, block grants, and specialised funds, such as funds, to finance programs under the sustainable development goals (SDG). However, much of the federal budget is funnelled into large-scale infrastructure projects, leaving local authorities strapped for cash to meet community-level needs. At the woreda level, education and healthcare often rely on thinly stretched grants and meagre local revenues, which barely cover salaries and running costs.
The shock triggered by USAID’s abrupt exit demands a reexamination of how the government funds essential services. Preserving lifesaving programs, including healthcare, depends on restructuring the funding model to ensure critical resources reach those most in need. Federal authorities still appear best equipped to buy and distribute essential commodities in health, agriculture, and education. Yet, local-level funding mechanisms are equally important to guarantee targeted and efficient service delivery.
One potential blueprint is the newly formed Green Legacy and Degraded Landscape Restoration Special Fund. This entity, approved by Parliament, directs between 0.5pc and one percent of federal revenue to grassroots projects, contingent on performance benchmarks. Adapting a similar formula for core services could boost accountability and help ensure that funds serve communities effectively. Another avenue is performance-based financing, which would reward local officials, including health workers, agricultural experts, and teachers, for meeting service delivery standards. This system could enhance efficiency, ease the burden on federal coffers, and draw from Rwanda’s successful extension worker program, where frontline providers receive strategic incentives to improve outcomes.
Some observers hope that USAID might resume operations, but the prevailing sentiment is that Ethiopia should brace for a future where foreign aid is no longer guaranteed, and learn to thrive on its own terms.
The Uncertainties about USAID’s eventual return, possibly tied to stricter conditions, has the importance and urgency of establishing a self-sufficient framework. Ethiopia should capitalise on this moment as a turning point for reform, forging a more robust model for financing public services. A shift toward localised oversight and funding, backed by federal officials’ guidance, could yield accountability and sustainability, which have proved elusive in the country’s decades-long dependence on foreign support.
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The value in dollars of Ethiopia’s exports under AGOA in 2021, up from 930,000 dollars in 2000. It was a remarkable jump of 29,600pc, before the Biden Administration delisted Ethiopia from beneficiary countries in 2022.
“Am I not someone wanted to be charged with terrorism?”
Lidetu Ayalew said this with a mix of irony and sarcasm during an interview with the BBC. The veteran opposition figure, who has lived in the United States since 2022, said he was barred from boarding an Ethiopian Airlines flight departing Atlanta last week. The outspoken politician announced his determination to return to Ethiopia.
Farmers Struggle with Fertiliser Price Hikes as Soil Acidity Affects Productivity
In the Southern Gonder Zone of Amhara Regional State, skyrocketing fertiliser prices have thrown farmers into crisis, threatening both their livelihoods and the region’s agricultural output.
Mulatu Banke, a 45-year-old farmer and father of five, cultivates two hectares of land with onion, wheat, and teff. He usually harvests 15 quintals of teff and 40 quintals of wheat annually, selling most of his produce to sustain his family. But this year, he has not bought any fertiliser, he cannot afford it.
“I haven’t bought anything,” he said. “It’s too expensive.”
Fertiliser prices have doubled, sending shockwaves through farming communities. Mulatu has asked district agriculture officers to lower prices, but he has not yet received a response.
“I will wait until the prices come down,” he said.
Farmers across the country are facing similar struggles. The price of diammonium phosphate (DAP) fertiliser has surged to 7,000–8,000 Br per quintal, while Urea now costs between 5,000 and 6,700 Br per quintal. The price hikes stem from the depreciation of the Birr, rising global fertiliser costs, and surging demand.
The Amhara Regional State, where over two million farmers depend on agriculture, has been hit particularly hard. The government supplied 1.4 million quintals of fertiliser from the annual demand 8.8 million quintals needed. In South Gonder’s Fogera district, only 9,200 quintals have been distributed, while demand stands at 115,690 quintals.
Weletaw Abate, head of the district agriculture office, acknowledged the financial strain on farmers.
“DAP is being sold at 8,000 Br, and urea prices have also increased,” he said. “Farmers are struggling to afford it.”
Officials insist credit options are available for farmers who cannot afford fertiliser, but many farmers say otherwise.
Faced with rising prices, farmers are cutting their fertiliser use by up to 50pc, risking lower yields. Abera Bante, a 50-year-old farmer from Fogera, could only afford one quintal of urea and DAP.
“I just can’t afford it,” he said.
Abera, who supports a family of six, is also struggling with soaring seed prices. Onion seeds now cost 9,000 Br per quintal. His income from farming has dropped, making it even harder to cover costs.
Many farmers have stopped production entirely. Others have scaled back because they lack the money and access to credit.
According to Sophia Kassa (PhD), state minister for Agriculture, the government distributed 4.5 million quintals of fertiliser last month, about 20pc of the 24 million quintals planned for the year. This is four million quintals more than last year’s import.
A recent shipment of 4.5 million quintals has reached the country and is being distributed to regional states. Three more ships carrying 6.4 million quintals have arrived at Djibouti’s ports.
The government has allocated 1.3 billion dollars and 156 billion Br for DAP and urea fertilisers this fiscal year. However, higher-than-expected DAP prices may require additional funding.
Last year, the federal government spent a billion dollars on fertiliser, with subsidies reaching 15 billion Br. This year, subsidies have jumped to 84 billion Br, a staggering 253pc increase.
“We are providing the highest subsidy in our history,” Sophia said.
She stated that the government now subsidises 3,700 Br per quintal and the Ministry of Agriculture (MoA) has instructed regional governments to offer credit to farmers. However, farmers say they have yet to see any real assistance.
A three-year study by the Agricultural Transformation Institute (ATI) found that NPS fertiliser, containing nitrogen, phosphorus, and sulfur, is too acidic for Ethiopian soil, particularly the variants with boron and zinc. Researchers recommended shifting procurement toward DAP, which contains only phosphorus and nitrogen.
Soil acidity has become a growing problem, reducing productivity, causing fertiliser wastage, and leading to revenue losses.
Mengistu Tesfa, head of agricultural inputs at the MoA and chair of the national fertiliser procurement committee, acknowledged the problem.
“DAP is more expensive, which has pushed up the average fertiliser price,” he said. “But it is better suited for acidic soils.”
The government procures fertiliser year-round. In the sixth round of procurement, authorities sought to acquire 611,000 tonnes of DAP and 821,000 tonnes of urea.
The price of DAP has surged to 627 dollars per tonne, an increase of 122 dollars from the previously purchased NPS fertiliser. Urea prices have remained relatively stable at 353 dollars per tonne, compared to the previous purchase price of 366 dollars per tonne.
“Farmers have no choice but to buy it,” said Sophia.
Mengistu insists that government subsidies had eased the burden.
“Farmers should be grateful for the government’s efforts,” he told Fortune.
Last year, the Ministry changed its fertiliser procurement strategy, forming a new Board that including Mamo Mihretu, governor of the National Bank of Ethiopia (NBE); Alemu Sime (PhD), minister for Transport & Logistics; Alemtsehay Paolos, cabinet affairs minister; Semereta Sewasew, state minister for Finance; and Abie Sano, president of the Commercial Bank of Ethiopia (CBE).
Despite rising import volumes, global fertiliser prices have dropped slightly. This allowed the government to spend 20 billion Br less on fertiliser while securing higher quantities.
This year, Ethiopia primarily imported fertiliser from Russia, China, Saudi Arabia, and the United Arab Emirates (UAE).
Regional governments worry over crippling fertiliser costs, which heavily burden smallholder farmers.
In Oromia Regional State, home to 6.8 million farmers and 11.6 million hectares of farmland, cooperatives expect further price surges for fertiliser imports and distribution.
The Bora Denbel Multi-Purpose Cooperative Union, which represents 25,000 farmers, has only distributed 32,000 quintals of fertiliser, far below the 316,000 quintals needed for the year.
Sophia insists the government is exploring a deferred payment scheme, where farmers could pay back later through regional governments.
However, Aleyi Seko, head of the Union, says no such credit or loans have been provided.
Ministry officials argue that the crisis stems from seasonal demand spikes, logistical and infrastructure bottlenecks, and growing instability disrupting distributions.
Some farmers are shifting to low-fertiliser crops like chickpeas, while regional agricultural authorities are promoting composting to reduce dependence on chemical fertilisers.
Badiho Birmeji, a 50-year-old farmer in Meki, supports six children and cultivates 20 hectares of maize and wheat. This year, he faced a 100pc surge in fertiliser prices. Unable to afford his planned purchase of 40 quintals, he bought only 20 quintals, halving his input and risking his yield.
Badiho also worries about soil degradation caused by fertiliser acidity.
“It’s not just about producing enough for the market,” he said. “It’s about our own survival.”
The global fertiliser market, valued at 381.7 billion dollars in 2024, is projected to reach 541.2 billion dollars by 2030, growing at 5.99pc annually.
Asia-Pacific leads global production at 44.8pc, followed by Europe and South America. China, the world’s largest producer and exporter, accounts for 25pc of global fertiliser supply.
A recent study by the Ministry on wheat production found 248 billion Br in losses last year. Expected yields of 42 quintals per hectare fell to 26 quintals, a 40pc decline.
Lire Abio, soil resource development director at the Ministry, identified soil acidity as the primary cause.
Of Ethiopia’s 17 million hectares of cultivated land, 3.1 million hectares are severely affected by acidity. The most impacted regional states are Oromia with 1.7 million hectares, Amhara with 607,000 hectares, and Southwest Ethiopia with 417,000 hectares.
Severe soil acidity is increasing at an average rate of 4.48pc per year, worsening the crisis.
Takele Kurunde, head of agricultural input supply at Oromia Agriculture Bureau, warns about the fertiliser shortage.
While farmers in Oromia Regional State require 19.9 million quintals, the government has only allocated 10 million quintals. So far, just 1.4 million quintals have reached cooperative unions.
Takele urges farmers to adopt composting as an alternative.
The Ministry’s research revealed severe inefficiencies in fertiliser use, especially on acidic soils. Of the 6.28 million quintals of fertiliser applied last year, 4.32 million quintals, 70pc, was wasted.
This inefficiency resulted in a 19 billion Br loss, further straining an already struggling agricultural sector.
Acidic soil blocks plants from absorbing nutrients, even when fertilisers are applied. One solution is lime treatment, which balances soil acidity (pH) and allows plants to use nutrients effectively. However, the country faces a severe lime shortage, limiting farmers’ ability to improve soil conditions.
The country needs 1.1 million quintals of lime annually, yet only 390,000 quintals were produced last year. Lire attributes the shortfall to a lack of cooperation from cement manufacturers.
“Only three of the eight cement producers we contacted agreed to supply lime,” he said. “There was little willingness from manufacturers.”
Regional agricultural bureaus manage small-scale lime plants in Oromia, Amhara, and South Ethiopia. These plants have a combined production capacity of 290,000 quintals, yet only Oromia Regional State’s plant contributed last year, producing 180,000 quintals.
“A lot of work is needed to meet demand,” Lire said.
The Ministry allocated 1.4 billion Br for lime imports to treat acidic soil. However, only 300 million Br was spent because international suppliers showed little interest.
Industry experts say cement manufacturers avoid lime production due to low profitability. Mesfin Abi, board member at Habesha Cement, said cement plants prioritise cement over lime because lime production requires big investment in processing and packaging.
“There is no real incentive for manufacturers,” he said. “The demand and profit are not high enough.”
Mesfin argues that small-scale and dedicated lime producers are better suited to meet demand.
The government has distributed 4.5 million quintals of fertiliser across regions. Oromia and Amhara regional states received the largest shares, Oromia 1.8 million quintals, Amhara 1.4 million quintals, Central Ethiopia 301,000 quintals, and Tigray 122,000 quintals.
Officials in Oromia Regional State target to harvest 105.8 million quintals of wheat across 2.6 million hectares this season. This follows the arrival of 1.6 million quintals of urea fertiliser.
In Meki town, East Shoa Zone, the Cooperative Union has distributed 32,000 quintals of fertiliser across three woredas.
The price of Diammonium Phosphate (DAP) has surged by 120pc, reaching 7,400 Br per quintal, while urea prices have doubled.
“Farmers are having a difficult time making the purchases,” said Aliyi.
Members of the Union, who mainly cultivate onions and tomatoes, face a critical dilemma. Many have been forced to cut back on fertiliser purchases, risking lower yields and financial instability.
This year Sidama Regional State authorities seized nearly 200qtl of expired fertiliser traded to farmers.
The Regional State is among the hardest hit. The region requested 300,000 quintals of fertiliser but received only 43,000 quintals. The shortfall is made worse by soaring costs, with prices for DAP and urea doubling. This threatens the 50,000 farmers planning to cultivate 70,000 hectares of maize and potatoes.
The region has also struggled with fertiliser theft and diversion. Authorities report that 15,000 quintals meant for farmers were diverted, often ending up in particle board factories that use fertiliser as raw material.
“Shortage of fertiliser had driven illegal trading,” said Legesse Hankarse, deputy head of the Sidama Agriculture Bureau.
While illicit activity has declined since last year, Legesse revealed that 200 quintals of expired and illegally traded fertiliser were confiscated recently.
“Even though it has noticeably declined, it is still a problem,” he said.
Tigray Regional State received 122,000 quintals of DAP and urea, which it distributed across eight districts. However, this is far below the region’s annual demand of one million quintals.
Farmers in the Tigray Regional State cannot afford to buy the fertiliser they need. Many have been forced to halve their purchases, said Tadesse Gebre, crop & soil head at the Tigray Agriculture Bureau.
The Regional State is still recovering from the two-year war, followed by a devastating drought. Tadesse says that farmers remain economically vulnerable, unable to cope with price hikes, and lacking access to credit to cover their costs.
“Farmers are economically unable to handle the price hikes,” he told Fortune.
Tigray Regional State primarily cultivates wheat, teff, sesame, and sorghum. However, war and climate shocks have left the region’s agricultural sector crippled.
Before the war, farmers cultivated 1.34 million hectares of land. Now, only 53pc of that land is available for farming. The number of farmers has also dropped by 300,000, leaving only 600,000 active farmers in the region.
According to Tadesse, the Western Zone, which includes Tselemti, Welkayit, and Humera, remains unstable due to security concerns and the lingering effects of war.
Last year’s drought devastated the Regional State’s harvest, preventing nearly two-thirds of the expected 19 million quintals of crops from being produced. The region managed to harvest only 12 million quintals, falling seven million quintals short of its target.
The situation is further exacerbated by acidic soil. For the past four years, farmers have had no access to lime to treat soil acidity because the region’s only lime plant was looted and destroyed during the war.
Tadesse says the unpredictable rainfall patterns and worsening climate conditions prevent agricultural recovery.
The country is facing a deepening hunger crisis. A joint report by the United Nations Food & Agriculture Organisation (FAO) and the World Food Programme (WFP) estimates that 15.8 million Ethiopians are experiencing acute hunger. Ethiopia is now the fourth most food-insecure country in the world, behind Nigeria, Sudan, and Yemen.
The report attributes the crisis to a combination of erratic weather, ongoing conflicts, and economic instability.
Shimeles Araya (PhD), an agricultural economist, warns that farmers are in a difficult position, unsure whether they should continue planting crops. He says low productivity and declining profits could lead to underproduction, market distortions, and deepening poverty.
“The impact this will have on food security has been underestimated,” he said.
With climate change demanding new seed varieties, Shimeles warns that availability alone does not guarantee adoption.
“Just because it is available does not mean it will be bought,” he said.
Despite government claims of meeting fertiliser demand, Shimeles argues that the country’s fertiliser consumption remains low compared to other countries with higher agricultural output.
He believes monopolised fertiliser imports prevent competitive pricing and limit farmers’ access.
“The real issue is the lack of a competitive market that could drive down prices,” he said.
Shimeles also criticises the government’s low agricultural subsidies, arguing that farmers do not receive enough support compared to other sectors.
“Access to credit and incentive mechanisms are crucial for farmers,” he said.
U.S. AID FREEZES, LEAVING RECIPIENTS COUNTING
The abrupt funding pause of American aid has left the humanitarian world reeling, sparking immediate and profound uncertainty among those dependent on USAID-financed works. One consultant described the decision as “unexpected and shocking,” disrupting a range of vital programs, from youth empowerment initiatives to supporting refugees in camps and essential health services.
Consultants hired by non-governmental organisations working to equip young people with skills and opportunities, found themselves blindsided by the sudden withdrawal. One of these, earning 34,000 Br monthly, which had comfortably covered rent, school fees, and other essential expenses, now faces an uncertain future. His predicament captures the personal toll of a decision that has effectively upended many lives.
The funding halt comes as development partners recently boosted their commitments in Ethiopia. In the 2022/23 fiscal year, international donors collectively pledged 1.7 billion dollars and disbursed 4.9 billion dollars in humanitarian and development aid, a 50pc increase from the previous year. The scale of this investment proved how vital America’s largess has been. Its sudden suspension now leaves a vacuum that many fear will erode gains achieved over years of sustained international assistance.
Ethiopia received 2.3 billion dollars in aid from USAID in 2023, second to Ukraine, followed by Jordan and Afghanistan.
The implications are most acutely felt in the refugee camps, where lives and livelihoods have already been stretched thin. In Gambella, home to over 385,000 refugees, mainly from South Sudan, support has dwindled sharply; reports indicate a 35pc decline from 2023 to 2024, with an even steeper drop anticipated in the following year. In Melkadida, a sprawling camp near the borders of Kenya and Somalia that shelters more than 220,000 refugees, the loss is equally dire. Funding and supplies have fallen dramatically, leaving residents with reduced food rations and critical services, and forcing a retreat from long-term sustainable support initiatives.
For refugees, the funding freeze translates into a daily struggle for survival. After 15 years in the Melkadida camp, their words resonate with despair. “We don’t know where to go” is a widespread sentiment, as the interruption of aid not only diminishes basic sustenance but also undermines the fragile social fabric that holds these communities together.
The shockwaves extend into urban centres as well. Aid recipients with HIV/AIDS now face the grim reality of potentially losing subsidised medication, a lifeline that, if withdrawn, could have dire health consequences. Experts warn that the current ambiguity over humanitarian support demands the urgent need for Ethiopia to shift towards sustainable, domestic funding for essential services, lest future shocks erode the country’s hard-won progress.
USAID Funding Suspension Triggers Crises, Hits Health Sector, Leaves Thousands Jobless
Demelash Tekesete, a consultant for an NGO, was stunned by the sudden halt of US Agency for International Development (USAID) funding.
“It was unexpected and shocking,” he said.
His work, focused on equipping youth with job skills, internships, and university awareness programs, depended entirely on USAID funding. The abrupt cut has upended his life. He has lost his job.
“You make plans, rent, school fees, daily expenses, and suddenly, they’re all gone,” he said. “This decision destroys lives overnight.”
Demelash, a father of one, earned 34,000 Br monthly, enough to provide for his family and secure his daughter’s education. Now, he faces uncertainty, struggling to cover rent and tuition.
“How can I pay school fees in the middle of the year? How will we afford rent?” he asked.
Since taking office, US President Donald Trump has temporarily suspended USAID aid, severely impacting Ethiopia and other countries reliant on aid. The funding halt has disrupted local NGOs, stripped jobs, and stalled crucial projects.
On January 31, 2024, State Minister for Health Dereje Duguma issued a directive to all regional health bureaus, ordering the immediate termination of all employment contracts funded by USAID and CDC. According to UNAIDS, this affects around 5,000 public health workers who have been integral to Ethiopia’s HIV response.
The funding cuts not only affect employment but also threaten to undermine the country’s health system. UNAIDS warns that the abrupt loss of skilled personnel will create a transition crisis.
In Oromia Regional State, the health bureau has already informed 2,000 contract workers across districts that their contracts, funded by USAID and CDC, are terminated. These workers provided vital services, including technical advice, medicine and pharmaceutical supply, and HIV/AIDS counselling.
Kiya Fule, program head at the Civil Society Resource Center (CSRC), a local NGO, stated that the cuts are preventing many initiatives from achieving their goals. One such program, fully funded by USAID, was designed to support civil society through training, mentorship, and consulting. However, with the funding cut, the program has been suspended.
This initiative was in its second round. In its first phase, it supported seven initiatives, including human rights programs. The second round, which launched in September with 10 initiatives, was scheduled to conclude in July but came to an abrupt halt in January due to the funding suspension.
The crisis is rippling across the country, with devastating effects on families, local organizations, refugee camps, and critical health services.
The USAID is a major funder in Ethiopia, financing development projects, health initiatives, and providing humanitarian aid. In the 2022/23 fiscal year, the country obtained 2.3 billion dollars from the USAID. From 2014 to 2023, USAID provided Ethiopia over nine billion dollars in the form of on- and off-budget funding.
In the 2022/23 fiscal year, development partners signed new commitments worth 1.7 billion dollars, 39pc decrease from the previous year, and disbursed 4.9 billion dollars for development programs, projects, and humanitarian aid, an increase of 1.6 billion dollars, 50pc, from the previous year, largely due to emergency relief efforts.
The impact of USAID’s funding freeze is expected to hit refugee camps particularly hard. Ethiopia hosts 1.1 million refugees across 26 sites, including 20 camps and six settlements.
These refugee camps depend on a collaborative effort, while the government provides land, water, and security, international and local organizations supply food, shelter, healthcare, education, and sanitation.
Sileshi Demesew, head of public relations & communication at the Refugees & Returnees Service (RRS), warns that refugees are being left in limbo as dwindling aid exacerbates an already dire situation.
Funding from partner organizations has been declining for years.
According to the RRS, about 48 organizations support Ethiopia’s refugee camps, including the United Nations High Commissioner for Refugees (UNHCR), the World Food Programme (WFP), the International Finance Corporation (IFC), the World Bank (WB), the International Medical Corps (IMC), the International Rescue Committee (IRC), Save the Children International (SCI), and the local NGO Action for Need Ethiopia (ANE).
The USAID funding freeze has placed immense strain on the refugee camps and the refugees themselves. This could increase the risk of conflict between refugees and host communities over scarce resources.
The Gambella Refugee Camp, home to over 385,000 South Sudanese refugees, has been in decline for years. Mezgebewerk Gebremariam, head of the RRS Gambella branch, reports that funding has already dropped by 35pc from 2023 to 2024 and is set to decline by 40pc from 2024 to 2025. This has led to reduced food aid and left only 57pc of refugees with adequate shelter.
Water and sanitation services have fallen below minimum standards. While the global standard is 20 litres per person per day, refugees in Gambella currently receive only 13 litres, down from 17 litres in previous years. Similarly, food rations have declined sharply. In 2022, refugees received 15kg to 13kg of food per person daily, but this has now dropped to just 10kg.
Overcrowding, limited access to clean water, poor sanitation, and a lack of healthcare and education services have worsened conditions. Schools in the camp have shut down due to funding shortages, while critical aid programs have been discontinued.
The closure of Action Against Hunger, which supported children and breastfeeding mothers, and the shutdown of the International Medical Corps (IMC), which provided mental health and medical care for young mothers, have been particularly devastating.
“This is like pouring oil on fire,” Mezgebewerk said, describing the impact of USAID’s funding pause on an already struggling camp.
Melkadida refugee camp, near the Kenya and Somalia borders, is Ethiopia’s second-largest refugee settlement. Located about 1,000km from both Addis Abeba and Jijiga, it hosts over 220,000 refugees, primarily from southern Somalia.
Hassen Bulo, head of the local Refugees & Returnees Service (RRS) branch, says the camp faces severe infrastructure problems, including poor telecom services, unreliable drinking water, a lack of electricity, and deteriorating roads. Together, Melkadida and Gambella camps house half of the refugees in Ethiopia.
The lack of electricity has forced refugees to rely on wood for cooking, leading to widespread deforestation and rising tensions with local communities.
Like Gambella, Melkadida has suffered drastic funding cuts, with aid decreasing by 37pc from 2022 to 2023, 40pc from 2023 to 2024, and another 40pc from 2024 to 2025.
Food provisions have also declined sharply, with refugees receiving only 65pc of standard rations, sometimes dropping below 50pc. The supply of cooking oil has been reduced by half compared to two years ago. Essential services, including water, sanitation, healthcare, education, and housing, remain well below required standards.
“Funding organizations prioritise emergency response over long-term refugee support,” Hassen told Fortune.
Plans for sustainable refugee integration, including work and residency permits, have stalled due to a lack of job opportunities.
USAID’s abrupt funding halt has further crippled the camp. Several crucial aid programs have already shut down, including the International Medical Corps (IMC) project, which provided nutrition support, mental health services, and care for breastfeeding mothers. UNICEF’s upcoming withdrawal is another blow, leaving over 3,000 children aged three to six without access to education.
“The impact will be devastating,” Hassen warned.
Abdulahi Aden, a 29-year-old refugee from Somalia, has spent 15 years in Melkadida refugee camp, a place he describes as one of “constant desperation and lack of resources.”
His family, his elderly parents, three sisters, and three brothers, face an uncertain future. One of his sisters is seriously ill but cannot receive proper medical care due to the camp’s dwindling resources. While services have declined over the years, the recent USAID funding pause has intensified fears.
“After we heard about the USAID funding stop, the camp is full of worries. We don’t know where to go,” Abdulahi said.
Returning to Somalia is not an option due to ongoing conflict. With no employment opportunities and aid now vanishing, he feels hopeless.
“If the funding interruption continues, we have no choice but to wait for death,” he said.
The impact extends beyond refugee camps, affecting those living with HIV.
For over 21 years, the US President’s Emergency Plan for AIDS Relief (PEPFAR), one of USAID’s programmes, has been a pillar of Ethiopia’s fight against HIV/AIDS, investing more than three billion dollars in testing, prevention, treatment, and support services. It funds treatment for 98pc of Ethiopians on antiretroviral therapy (ART), with 503,000 people receiving care at 1,400 health facilities nationwide.
A 58-year-old Addis Abeba resident, who has lived with HIV for 27 years, fears losing access to her medication.
“If I have to pay for my HIV medicine, I’ll stop taking it,” she said.
Supporting three children on a 12,000 Br monthly income, she cannot afford the treatment without subsidies. The uncertainty surrounding USAID’s withdrawal has left her anxious.
“Why isn’t the government telling us anything? We need to know so we can prepare.”
Despite progress in reducing HIV transmission and mortality, its response remains heavily dependent on external donors. According to UNAIDS, Ethiopia is nearing the 95-95-95 targets, with 90pc of people with HIV aware of their status, 94pc receiving antiretroviral therapy (ART), and 96pc achieving viral suppression. However, without sustained funding, these gains are now at risk.
Getachew Alemu, an economist, warns that a lack of clarity on humanitarian programs could severely impact emergency and life-saving support.
“Uncertainty in aid disrupts vital services,” he said.
Getachew says that there is a need for long-term planning and self-reliance. He urged the federal government to develop a sustainable funding strategy for essential services like education, healthcare, and agriculture, reducing dependence on foreign aid.
“We cannot afford to sit and wait for three months,” he said. “Immediate action and strategic planning are critical.”
Getachew also called for direct communication between Ethiopia and the US government to clarify the situation. However, he believes shifting to local funding would not only ensure sustainability but also improve efficiency.
“It’s the time to rethink.”
Oversight Failures Ignite Parliamentary Wrath as Investment Audit Reveals Deep Flaws
The Ethiopian Investment Commission is under intense scrutiny after the Federal Auditor General’s findings revealed years of alleged oversight failures.
The report shows that, over the past 26 years, the Commission issued 18,559 licenses, yet only 4,490 of those projects, about 24pc, actually began operations. Another 9,061 licenses were revoked, often without clear explanations. The findings triggered a strong response in the federal Parliament last week, where the Public Expenditure Administration & Control Affairs Standing Committee gave Commission officials three months to submit a detailed action plan addressing investor facilitation and regulatory shortcomings.
The audit also uncovered a serious lapse in enforcing initial capital requirements. Of the 153 sampled projects, foreign investors were meant to deposit 200,000 dollars in a closed account for licensing, while joint ventures were required to deposit half that amount. Yet, the Commission did not follow up on bank deposit slips. The consequences of such failures become even more apparent in places like the Eastern Industrial Park, where 20 companies have shut down entirely, nine suspended operations over tax disputes, seven began operations well behind schedule, and two have disappeared.
These revelations sparked fierce debate among federal legislators, with members of the Public Expenditure Administration & Control Affairs Standing Committee questioning the Commission’s senior officials. Commissioner Zeleke Temesgen (PhD) appeared alongside other executives but faced pointed probes from committee members, including Chairwoman Yeshiemebet Demisse. Recently appointed following the arrest of her predecessor, Christian Tadele, the Chairwoman insisted on direct answers to legislators’ questions. She pressed Zeleke and his aides to offer specifics, repeatedly interrupting when they seemed avoiding direct responses.
Auditors reported to Parliament a finding of mismanagement in cases such as Emirates Steel Plc, which leased 4.8hct of plot in Oromia Regional State yet failed to begin construction four years later. The Commission was criticised for lacking a comprehensive system to track and monitor licensed investments. Auditors said they saw virtually no sign of record-keeping or regulatory controls that would allow officials to gauge whether companies are meeting their commitments.
Foreign investors were also blamed for inadequate job creation and technology transfer. According to the audit, many bring equipment that local workers lack the skills to operate, leaving the domestic workforce with limited benefits.
“There needs to be a skill development plan,” said Habtamu Simachew (PhD), a senior advisor at the Commission.
He argued that the absence of a national workforce training program has limited the country’s ability to capitalise on advanced machinery and processes introduced by foreign companies.
Additional concerns were voiced by legislators over the Commission’s use of duty-free privileges, which allow investment license holders to import capital goods, construction materials, and vehicles without paying customs duties. Auditors reported widespread gaps in documentation and oversight. Of the 153 sampled companies, no proper records verified that duty-free imports were used for the intended purposes. In 2023, the Commission found that 61 out of 1,316 companies had been subject to administrative action for alleged abuse of these privileges.
Despite these figures, Commission officials insisted they have operated within the law and granted no unlawful privileges. However, disputes with the Ministry of Finance remain, after the Ministry rejected 45 approvals the Investment Board had previously granted.
The Commissioner acknowledged the difficulties of coordinating policy across federal agencies, particularly when granting duty-free privileges.
“The process of granting duty-free privileges has been difficult,” he said.
In the two years beginning in 2021, the Commission facilitated only half of the 40 targeted investors. The following year, investment revenues were 3.3 billion dollars, falling short by 1.8 billion dollars.
The audit further revealed that the Commission failed to secure bilateral agreements with international partners that might expand and protect investment inflows. According to the Auditor General, no audited reports have been produced to demonstrate results from existing agreements. Investors also wrestled with obstacles such as weak infrastructure and land lease delays. The findings disclosed that some companies, including Sudan-Saudi Agricultural, Beti Ornamental Plants Plc, and the Pharo Foundation, have sought land expansions for over a decade without resolution.
According to Abera Tadesse, deputy federal auditor general, seven investors have not yet received land, even though they have fulfilled payment obligations. In another blow, three investors were operating under severe power shortages, a recurring problem in many parts of the country. Habtamu, the Commission’s senior advisor, argued that regional states are responsible for facilitating land and infrastructure such as electricity.
Zeleke observed the need for coordinated regulation among different federal agencies to oversee the granting of duty-free privileges.
The experience of Herburg Roses Ethiopia, a Dutch-owned horticultural firm, illustrated how land issues can stifle growth. The company has been waiting for 100hct of land for over three years, suspending plans to expand flower production and introduce a vegetable export line.
“No satisfactory response has been given,” said General Manager Jolis Klijis.
Exporting around 100 million rose stems annually to the United Kingdom (UK) and the Netherlands, Herburg Roses has also struggled with a lack of power infrastructure. Klijis said these limitations undermine a business that could potentially create more jobs and boost the country’s foreign exchange earnings.
The European Chamber in Ethiopia (ECE) uncovered widespread corruption and red tape as major impediments to land acquisition. Board Chairman Ben Depraetere blamed opaque land allocation processes that leave investors uncertain about costs and timelines. The Chamber, representing 180 companies, has repeatedly approached the Commission, but members complain about the slow pace of resolutions.
“Our concerns have received some attention,” said the Chamber’s General Manager, Bahiru Temesgen. “But solutions remain slow.”
Officials in the Oromia Regional State say they have improved over the last two years. Yilma Sisay, director of land planning at the regional land bureau claimed that new regulations and better coordination between land and investment bureaus have helped streamline the process. According to him, previous challenges, such as investors being evicted after construction had started because the land was reclassified, are being addressed. Recent data from the Bureau disclosed that land has been allocated to 4,000 projects.
Despite these efforts, the federal government focuses mainly on attracting new investments. The Prime Minister, who chairs the Investment Board, recently approved a directive opening previously closed sectors to foreign capital. Zeleke is optimistic about the future of reforms, crediting revisions in the Commercial Code and changes to the investment laws. He believes that as officials strengthen regulatory capacity and improve agency coordination, more investors will be willing to undertake long-term projects.
Parliament’s Standing Committee remains frustrated with the Commission’s performance. Yeshiemebet, who led the probing session, said the Commission’s responses lacked coherence. She faulted its officials for failing to produce a compelling plan to address the many issues uncovered by the audit and demanded a more thorough assessment of its operations.
“We expect a detailed action plan,” she said. “Promptly.”
Despite repeated warnings, she believes the Commission appears unwilling to deal with its core problems.
“What’s the point of issuing licenses if projects are managed haphazardly?” she rebuked.
Investment consultant Million Kibret observed that the business environment discourages foreign investments due to a lack of transparency, unpredictability, bureaucratic delays, and security concerns. He saw too many foreign interests enter the country without conducting due diligence on their financial capacity or ability to create jobs.
“There needs to be proper oversight of the commitment made by investors,” Million told Fortune.
He also contended that the Commission should be granted stronger legal authority. He argued that other federal and regional agencies have undermined the Commission’s power to enforce regulations and hold investors accountable.
“Without such authority, the Commission is forced to shoulder responsibility without real influence,” he said. “Responsibility without authority means nothing.”
Editors’ Note: This article has been amended from its original form on February 25, 2025.
Oromia Bank Installs New Chair in Governance Overhaul, Profit Slump
Oromia Bank has elected a new board chairperson following the resignation of Assefa Sime (MD), after serving the role for over a year, replaced by Tilahun Gemechu, a senior advisor in the business and research department of Silverland International Group. He took the mantra beginning last month.
The Bank’s Board has adopted a governance strategy that rotates the chairmanship every six months. According to people familiar with the Bank, this procedure allows different directors to apply their expertise and keeps leadership attuned to the fast-moving banking industry. Last year, board members unanimously approved this decision, which marks a sharp departure from traditional board practices, often keeping a single chairperson in place for much longer.
“Waiting until the chairperson’s term ends is not a good strategy anymore,” said Board Secretary Solomon Geda. “All board members will be allowed to lead before their term ends.”
According to a current board director, the leadership rotation might revitalize the Bank, stating how each member’s expertise will be used.
“Everyone can have their turn now,” he said. “The Bank will now be everyone’s responsibility, and this will improve performance.”
However, he conceded that Assefa stayed on longer than planned, missing the initial six-month window the Board had envisioned.
Assefa’s only regret as he stepped aside from the chairmanship was the recent slump in the Bank’s profitability.
“We’d hoped to restore shareholders’ faith,” he said.
He attributed the decline in profit margins mainly to escalating operating costs. He urged the new focus to be on cost optimization and revenue generation, a direction he believes can help build momentum behind Oromia Bank’s financial performance in the year ahead.
While the plan might appear unusual, Solomon believes it will introduce greater accountability, as each member will soon have direct experience in the driver’s seat. The Board decided to implement the change immediately, electing Tilahun with a majority vote on January 20, 2025, and reporting to the National Bank of Ethiopia (NBE) shortly after.
Assefa served as chairperson from September 2023 to March 2024 and again from May 2024 to January 20, 2025. A medical doctor by training, he stayed with the Board, leading the credit risk committee, where he succeeded Million Bekele. In his earlier assignments, Assefa also served as a board member of the Ethiopian Public Health Association and a local NGO. He once led a department within the Oromia Regional Health Bureau.
Tilahun brings three decades of experience in the business sector. He studied political science and international relations at Addis Abeba University (AAU) and later earned a postgraduate degree in business administration from St. Mary University. He worked for several federal agencies, including National Tour Operations (NTO), the Ministry of Industry, and the Industrial Parks Development Corporation (IPDC).
“I plan to change things around for the Bank,” he told Fortune.
His priorities are to boost Oromia Bank’s performance, restore shareholders’ confidence, and improve customer satisfaction.
Along with Tilahun, the Bank’s Board appointed Eshetu Zeleke (PhD) as deputy chairman, replacing Netsanet Workneh (PhD). Two board members, including former chairman Gemechu Waktola (PhD), resigned a few months ago, reducing the Board to 10. Two individuals are waiting for final approval from the NBE to join the Board.
These leadership reshuffles come during broader changes across the banking industry.
In June 2024, the NBE introduced five directives to shore up corporate governance and risk management within financial institutions. The revised rules require stricter checks on who is allowed to serve on the Board of Directors, including a mandate that a third of the directors be nominated and elected by “non-influential” shareholders. Regulators define that category as individuals who hold less than two percent of the subscribed capital.
As of June 2024, Oromia Bank had 15,658 shareholders, and its Board of directors now should convince them that it can manage these governance requirements and financial pressures.
Incorporated as a third-generation financial institution, Oromia Bank has yet to implement the requirement that one-third of its Board be composed of individuals without direct share ownership or operational ties to the Bank. It has experienced fluctuating performance, with moderate asset growth and deposit increases offset by a steep slide in profitability.
Last year, deposits climbed to 56.42 billion Br, a 3.97pc increase, but falling short of the industry’s 30pc average growth. Loans and advances grew by only 3.5pc, reaching 43.71 billion Br. While the Bank’s total assets increased by four percent to 68 billion Br, and its income grew by 15pc to 9.5 billion Br, its net profit declined by 46.7pc to 840 million Br. The resulting impact on shareholders was also felt in the earnings per share (EPS) drop, which dropped by 56pc to 142 Br.
The Bank’s branch expansion strategy proved expensive, with costs surpassing revenue gains. Although it opened 72 new branches to reach 575 by June 30, 2024, deposits per branch fell from 107.91 million Br to 98.12 million Br. Operational expenses and personnel costs jumped by 35pc, reaching 8.5 billion Br. Executives had hoped the new branches would attract a wave of depositors, but the influx fell short of expectations, putting added pressure on profitability.
The net profit margin on total assets halved to 1.24pc, displaying higher costs that cut into margins. Even so, the Bank increased its paid-up capital to 6.5 billion Br, a 21pc year-on-year (YoY) rise that strengthened its capital-to-asset ratio to 14.07pc. According to analysts, this could give the Bank a cushion as it may boost profits in the coming year.
Eshetu Fantaye, a veteran of the banking industry who now works as an independent consultant, finds the rotation “confusing and unprecedented” and likely to affect the Bank.
“Board directors are simply going after rotational benefits,” he said, stressing that a board chairperson remains in place unless discipline or incompetence issues arise.
He argued that the board chairperson’s role is critical for guiding strategy and ensuring the Bank’s performance meets industry demands. He warned that constantly shuffling leadership could erode accountability and make it harder to follow through on long-term plans.
“It’s important to know what happened during the leadership period,” he told Fortune. “It’s a wrong strategy. They should put a stop to it.”
Despite the reservations voiced by some, supporters within Oromia Bank see the rotation as an imaginative attempt to distribute responsibilities more evenly among directors. By putting each member in the hot seat of chairmanship, they believe the Bank can draw on a broader spectrum of insights and experiences. They also feel it guards against tunnel vision, where one leader’s perspective might dominate for too long.
However, they acknowledge the challenges in coordinating strategies when the top job changes hands twice a year, a rapid turnover that could make it difficult to sustain consistent policies.
Road Projects in Crisis as Compensation Disputes, Budget Shortfalls, Incompetence Stall Construction
The Ethiopian Roads Administration (ERA) has suspended 27 road projects due to security concerns, contractor disputes, supply chain disruptions, budget shortfalls, and surging compensation claims. These problems have hampered the construction and maintenance of 18,000km of roads nationwide. In the past six months, ERA has completed only four of the planned projects.
Mohammed Abdurahman, ERA’s director general, presented a six-month performance report to the Standing Committee of Urban Infrastructure & Transport Affairs, outlining severe delays in initiating new projects, completing ongoing ones, and reviving stalled constructions.
The right-of-way clearance process has been a major hurdle, with only 108 km cleared out of a planned 665 km. Additionally, 127 km of a targeted 437 km has been identified and evaluated, falling short of expectations.
“Resolving these issues requires regional authorities’ cooperation,” said Mohammed.
ERA’s budget reached a record 97.5 billion Br this fiscal year, a 20 billion Br increase from last year. However, its real value has nearly halved due to the rapid depreciation of the Birr since last July.
Compensation disputes have also doubled, with 790 unresolved claims now burdening the agency. The Administration has 8.6 billion Br in unpaid compensation debt, yet has only managed to pay 1.49 billion Br out of a planned 4.5 billion Br in six months.
Mohammed says that there are concerns over inflated compensation claims. He called for a financial audit before payments are made.
“We can only pay intermittently,” he told Fortune, indicating the financial constraints ERA faces.
Hundreds of people displaced for road construction projects remain uncompensated, forcing many into financial hardship. In Amhara Regional State, families have been evicted from their homes for right-of-way clearance, with no payments to support their relocation.
Bayeh Mule, a 42-year-old father of four, was forced to vacate his home three years ago after officials informed him his land was needed for a road project. He was promised compensation following a valuation by district authorities, but the funds never arrived. With no alternative, he now rents a house for 400 Br per month to shelter his family.
“Many have been forced to leave the country illegally due to a lack of options,” Bayeh said.
He has submitted multiple requests for compensation to federal authorities, but each time, he was told to wait.
“We have been left sidelined,” he added.
For the Administration, right-of-way compensation remains the main problem, delaying projects, increasing costs, and disrupting supply chains, including fuel deliveries.
A policy shift in July 2024 transferred responsibility for right-of-way compensation to regional states, relieving federal authorities of the duty. This reform, introduced by the Justice and Urban & Infrastructure ministries, includes provisions for compensating psychological and social damages. The amendment seeks to end the current system where district officials conduct property valuations and then request payments from federal authorities.
However, regional governments have been slow to assume responsibility, according to Mohammed.
Awareness campaigns are still needed to push regional states to take charge of compensations, he says. Discussions have been held with officials from Oromia, Amhara, Benishangul-Gumuz, and Dire Dawa city administration to address the issue.
While ERA struggles with suspended projects, 42 road constructions are progressing well. Three projects halted last fiscal year have resumed. Most affected projects are in Amhara, Oromia, and Benishangul-Gumuz regional states.
The Administration plans to complete 17 projects within the next five months. Currently, ERA oversees 204 road construction and renovation projects covering 18,299 km. However, 12 projects have been suspended due to a lack of qualified bidders, inflated bidding prices, and insufficient competition.
Despite these setbacks, the World Bank-funded Meisso–Dire Dawa road project (142 km) is moving forward. Bidding is underway, and construction is expected to begin this fiscal year.
The Administration has constructed 463 km of new roads, achieving 72pc of its target. It has also strengthened and renovated 315 km, covering more than half of its 517 km goal. However, 38 km of planned work has been suspended due to security concerns in various areas.
Reconstruction efforts in Kombolcha, Amhara Regional State, which suffered severe damage during the armed conflict in northern Ethiopia, have not yet begun. Projects in Debre Markos remain delayed due to ongoing instability, while roadworks in Shashemene, Oromia Regional State, have been pushed back due to heavy rainfall over the past six months.
One of the biggest issues facing the ERA is vehicle overloading, with 37 percent of trucks nationwide exceeding weight limits. The problem is particularly severe at weigh stations in Holeta (47 percent), Modjo (45 percent), and Sululta (45 percent).
Despite new regulations aimed at curbing overloading, enforcement remains weak. The regulation reduced load capacity on three rear axles by two tonnes, capping total weight at 56 tonnes and imposing fines of up to 65,000 Br for violations. However, trucks continue to exceed legal limits, accelerating road deterioration.
While some projects are progressing and abandoned works are being restarted, contractor incompetence remains a major setback. Over 50pc of projects, 139 out of 278, handled by domestic contractors are performing below 50pc of scheduled plans.
Mohammed points to a widespread lack of professionalism among contractors.
Eshetu Temesgen (PhD), deputy chairperson of the Urban Infrastructure & Transport Affairs Committee, called for an overhaul to improve contractor performance and ensure road projects are executed efficiently.
Members of Parliament voiced concerns about delayed roadworks in their constituencies.
Niusemagn Mohammed (PhD) criticised ERA for neglecting a road project from Agaro to Dekisa River, which has put lives at risk. He also pointed out that renovation on the Addis Abeba-Sebeta road has stalled, making it especially difficult for heavy trucks.
“Nothing has changed despite claims otherwise,” he said.
Fanos Hailu, another MP, condemned the seven-year delay in the Debre Berhan–Jika road project, blaming contractors citing financial constraints. She demanded immediate responses from ERA executives.
“What are we going to tell our people?” she asked.
“They are demanding answers.”
Negase Belay, MP, voiced frustration over years-long delays in road projects, reminding that only three kilometers of the 19 km Ambo-Woliso road has been constructed in the past decade. She also criticised the narrow, steep Addis Abeba-Jimma road, which has become a major cause of traffic accidents. Despite repeated promises for expansion, no progress has been made.
Mohammed attributed the delays to incompetent contractors, missed schedules, and unforeseen events such as earthquakes and security threats. He confirmed that the Ambo-Woliso project has been delayed for long, leading to the removal of its contractor.
Regarding the Addis Abeba-Jimma road, he said that designs for an expressway have been completed. However, attempts to finance the project through a public-private partnership (PPP) have failed. ERA is now exploring options to fund the project independently.
Abebe Dinku (PhD), a professor of civil engineering at Addis Abeba University (AAU), stated that 70pc of road projects face right-of-way disputes, causing delays and cost overruns. He recommends better planning to avoid disruptions to households and businesses.
Abebe warns that a lack of professionalism among consultants and contractors remains a serious problem. He called for a rigorous selection process that evaluates both technical and financial qualifications, criticising the current system for focusing solely on cost, which compromises quality.
“Selection shouldn’t only be cost-based,” he said.
Authority Introduces Education Quality Audit System as Sector Faces Crisis
The Education & Training Authority (ETA) is set to implement a standardised quality audit system for all higher education institutions (HEIs), including universities and Technical & Vocational Education & Training (TVET) centres. The new directive aims to address quality gaps and ensure graduates are better prepared for employment.
The ETA has drafted a bill, higher education and TVET quality audit directive, outlining the framework, which includes seven focus areas, 14 standards, and 107 guidelines.
Currently, there is no uniform framework for quality assurance in Ethiopia’s higher education sector. The new system will allow the ETA to enforce compliance with audit recommendations and hold institutions accountable when they fail to meet standards.
A key change is that a quality audit will now be a mandatory prerequisite for accreditation. Institutions must undergo a formal quality audit before applying for accreditation, ensuring a more rigorous and consistent evaluation process nationwide.
The ETA’s approach follows the ADRI model (Approach, Deployment, Results, Improvement), assessing institutions across seven key areas. The first is vision, mission, and governance, ensuring clear institutional goals and governance structures. Infrastructure and learning resources will be evaluated to determine the effectiveness of physical and digital facilities.
The audit will also assess academic and support staff, focusing on recruitment, selection, and promotion processes. Student affairs and graduate outcomes will be reviewed to measure the effectiveness of student support services and employability. Program development and delivery will examine curriculum quality and relevance.
Institutions will also be assessed on research, community engagement, and industry linkages, evaluating their contributions beyond teaching. Finally, internal quality assurance measures will ensure institutions maintain high standards independently.
The audits will scrutinise governance structures, infrastructure, and learning resources to determine their effectiveness. Academic and support staff management will also be assessed to ensure a well-functioning human resources system.
The new quality audit system will also focus on student affairs and graduate outcomes. Auditors will evaluate admission policies, student support services, and mechanisms for tracking academic progress, including dropout rates and graduate employment success.
The audit will scrutinise program development and delivery, ensuring procedures for curriculum design, approval, and review align with national and international standards. Learning assessment methods and teaching quality will also be key focus areas.
Tigist Haileselassie, a quality audit executive at the Authority, says many graduates struggle to meet employment demands or secure jobs.
“The goal is to ensure institutions meet high-quality standards aligned with national and international benchmarks,” she said.
Institutions will be required to establish internal quality assurance systems (IQAS), covering academic programmes, administrative processes, and overall institutional performance. HEIs must conduct self-evaluations and submit a self-evaluation report, which will form the basis for the ETA’s external audits. Only institutions with “fully functional” or “functional” quality assurance systems will be eligible for accreditation.
Gobeze Yimer, a TVET audit desk executive at ETA, stated that introducing a national standard is crucial for TVETs, as they were previously licensed without formal accreditation.
“TVETs are primarily under regional governments, leading to inconsistency,” he said.
He argues the new system will create uniform quality across the country.
Admasu Bekele, a former deputy dean of General Winget Polytechnic College, says that previous audits were not conducted at a national level.
“It will help bridge the skills gap between TVET graduates and industry demands,” he said.
Education State Minister Kora Tushune stated that universities are responsible for more than just educating students; they must also shape productive members of society.
“Institutional metrics are necessary,” he said. “The reforms will enable institutions to evolve, specialise, and expand.”
Ethiopia has 357 private colleges and 47 government universities, yet problems over education quality persist.
In last year’s exit exam, only 13pc of students from 202 private higher education institutions passed, while 22 institutions had a zero percent pass rate. In contrast, 58pc of students from public universities passed.
In 2023, only 40pc of graduates passed, with public universities achieving a 62.4pc pass rate, while private institutions lagged behind at 17.2pc.
The draft directive aims to address these deficiencies. A key issue is the lack of research strategy and databases in most institutions. The directive mandates institutions to create comprehensive research databases to combat plagiarism and improve research quality. It also outlines publication and dissemination procedures, ensuring research output is archived and accessible.
A study by Belay Hagos, head of the Institute of Educational Research (IER) at Addis Abeba University (AAU), exposes major flaws in the higher education sector. Institutions suffer from a shortage of qualified instructors, relying on external staff, which compromises teaching standards. Program duplication, with identical courses across institutions, further dilutes academic value. Poor facilities and lax admissions policies, including low entrance exam scores and inadequate English proficiency, exacerbate the problem.
Belay says there are issues regarding graduate employability and entrepreneurial skills. The 70/30 natural science-social science studies policy has been criticised for widening the skills gap and contributing to high graduate unemployment.
The readiness of university instructors is another pressing issue. In 2017, an exam administered to 10,000 aspiring instructors revealed that only 7.16pc scored above 50pc.
Gender disparity remains a problem in higher education. In 2023, women made up only 18pc of students in second-degree programs and 10pc in third-degree programs.
In 2024, only 14pc of the 35,000 applicants scored at or above the 80th percentile of the Graduate Admission Test (GAT), the required threshold for postgraduate eligibility.
Authorities and experts argue the rapid expansion of higher education without adequate resources has led to a decline in academic standards.
Demoz Wolde (PhD), president of Andinet International College (AIC), says that many education policies are adapted from foreign models, particularly European systems, which may not always suit the country’s context.
He believes the draft directive places private and public institutions on equal footing, which could help raise the quality of private colleges. However, he argues that public universities have stronger infrastructure, funding, and faculty resources, making it harder for private institutions to compete.
“We hope this law will reduce the number of students failing exit exams,” Demoz told Fortune.
Kusse Tudishe, president of Jinka University (JKU), supports the directive but points out a key weakness: most Ethiopian curricula do not integrate international standards. He also says that research is rarely archived, making quality control difficult. He argues that the lack of global academic standards limits Ethiopian students from competing internationally.
“There are many universities today, but their quality is lacking,” he said.
Terefe Feyara (PhD), president of Hope Enterprise University (HEU) and a private higher education association board member, worries about the requirement for institutions to register again for licensing, as many may struggle to meet the new standards. However, he supports the quality audit system, noting that his institution has previously conducted self-audits.
Melese Yigzaw, dean of General Winget Polytechnic College, which has over 7,000 students, believes the new standards will enhance quality, production, service, and training in TVET institutions.
“There is nothing to be scared of,” he said.
Nardos Wendimu, project manager of Afriwork Ethiopia, argues that while many fresh graduates have theoretical knowledge, they lack practical work skills. She says that many new employees struggle with basic communication and writing skills. Nardos recommends graduates work as freelancers for six months before applying for full-time jobs.
Ermias Abelneh, a chemical engineering researcher and lecturer, stresses the importance of university-industry linkages. He believes that strong collaboration between academia and businesses can serve as a major revenue source for both sectors
“If this linkage is in place, it will improve education quality,” he said.
However, he argues the country lacks effective industry linkages, unlike countries such as China and Germany, where businesses and universities work closely together. He also points out that much of the academic research is copied from other countries and fails to address local problems. He commends the draft directive for including this issue among its 14 key guidelines, but stresses that implementation is critical.
Alemayehu Teklu (PhD), a researcher at AAU, argues that real educational quality depends on improving lecturers and teachers.
He recommends more focus on meaningful research, rather than allowing academic work to “just collect dust.” Alemayehu also calls for an education policy rooted in local realities rather than relying heavily on foreign models.
Flour Millers Struggle as Taxes, Duties, Lending Crunch Bite
Flour millers are facing severe financial strain, with rising taxes, customs duties, and financing shortages pushing many factories to the brink of closure. The Ethiopian Millers Association (EMA), which represents over 200 members, warns that tax burdens, predefined tariffs, and costly cross-border transactions, including unauthorised checkpoints, are crippling the industry.
Some flour mills have already shut down, while others are barely staying afloat, according to Dereje Tadesse (PhD), the Association’s general manager. He has documented the closure of four factories in his field research.
Among those struggling is Abat & Mehari Flour Factory. General Manager Mehari Adane says the company is being squeezed by withholding tax issues. Since most of its suppliers are small-scale traders classified under Category B and C, they lack proper receipts and pay taxes based on estimates. This makes it impossible for the company to withhold taxes when purchasing inputs, forcing it to shoulder a 13 million Br tax burden.
To sidestep this issue, the factory has turned to buying wheat directly from farmers, where withholding tax does not apply. However, sourcing 1,000qtls of wheat daily from scattered farmers is proving unfeasible.
“It does not align with our needs,” Mehari told Fortune.
Adding to the crisis, commercial banks have tightened lending, leaving millers without the working capital to sustain operations. Daily wheat purchase costs have surged from one million Birr to 6.5 million Br, making it impossible to secure months’ worth of stock.
“Banks are not lending money. The situation is exhausting,” Mehari said.
Woineshet Moges, general manager of Michu Trading Plc, faces similar tax burdens. Like many in the industry, she has often covered withholding taxes for suppliers, increasing her operational costs. Many traders and companies refuse to comply with withholding tax rules, making it even more challenging.
“The taxation system is discouraging,” Woineshet told Fortune. She has been manufacturing baby food for four years and appreciates recent changes in Merkato, where she can now purchase input products with proper receipts.
Customs duties are another major hurdle for manufacturers. Dereje says packaging film tariffs are being calculated at 3.20 dollars per kg, nearly double the actual purchase price of 2.40 dollars to 2.60 dollars per kg.
“These inputs should be duty-free,” Dereje said. If that is not possible, he urges customs officials to use company invoices for tariff calculations instead of applying inflated pricing.
The Association wrote a letter to the Ethiopian Customs Commission (ECC) last month to address these concerns. In response, Commissioner Debele Kabeta has allowed manufacturers to pay duties based on their submitted invoices. In a recent directive, Debele announced that post-release verification will be used to avoid clearance delays. Producers will now be assessed based on the legal transaction value they declare when importing goods.
Mulay Weldu, head of the tax policy department at the Ministry of Finance (MoF), says withholding tax is a form of income tax and must be paid by all businesses. However, he says this will be considered in the income tax proclamation.
Withholding tax is primarily meant to track trader income and ensure proper tax collection, explains Mulay. Manufacturers are required to deduct 30pc when purchasing from suppliers who lack a Tax Identification Number (TIN) or a trade licence. While withholding tax itself is not the problem, Mulay argues that the enforcement system needs improvement. He suggests a digitalised tax system to integrate withholding tax more efficiently and reduce compliance issues.
Checkpoints that are not authorised by the federal government have also become a major obstacle for manufacturers. Chilalo Food Complex, a key player in the industry, faces persistent demands for payments at makeshift checkpoints, adding a financial burden.
Addis Hailegiorgis, a purchasing expert at Chilalo, said that they pay between 2,000 Br and 10,000 Br per round trip at various checkpoints. With over 80 vehicles in operation, these payments have become a major expense. The issue affects every regional state where the company distributes products, except for Addis Abeba.
“It is very unfair,” Addis said.
Manufacturers also face irregular payments to individuals demanding “queue” fees, essentially queueing charges at pick-up and drop-off points. In Addis Abeba, this can reach 2,000 Br per truck. In places like Wolliso, company staff are not allowed to unload vehicles. Instead, labour associations, authorised by the city’s administration, are mandated to handle loading and unloading, charging five Birr per carton. A single truck can carry between 900 and 2,000 cartons, making these costs add up quickly.
“All these extra fees drive up consumer prices,” Addis told Fortune.
Transport & Logistics Minister Alemu Sime (PhD) stated that his office is working with local officials to remove unauthorised checkpoints. He said that fuel costs are rising due to frequent stops, which also cause delays in goods delivery.
Mesfin Hailemariam, a senior expert at the South Ethiopia Regional State Bureau of Agriculture, claimed that all unauthorized checkpoints, except those approved by the Customs Commission, were removed last year. However, transporters are still required to pay 30 cents per kg in “kote” or toll fees, a charge imposed by local towns.
The country’s wheat production is estimated at 4.2 million tonnes, while national consumption stands at six million tonnes, leaving a deficit that requires imports.
As of 2020, there were over 600 flour mills across the country, both small and large, with a combined production capacity of three to 4.2 million tonnes of wheat flour annually. One-third of these mills are concentrated in Addis Abeba and its surrounding areas. The pasta industry is also growing, with per capita consumption reaching five kilograms per year.
Biruk Nigussie, a tax expert, explains that Ethiopian commercial law does not classify farmers as traders, creating barriers between agricultural producers and factories. This legal gap makes sourcing wheat from farmers complex for flour mills. He recommends companies use purchase vouchers from farmers to document transactions and ensure compliance.
In the short run, Biruk advised that the government should tax manufacturers based on an input-output system, analysing profit margins rather than applying blanket taxes. He also warned that additional fees and taxes directly impact the final price of wheat-based products, increasing costs for consumers.
To ease these pressures, he suggested a centralized body like the Ethiopian Commodity Exchange (ECX) could facilitate receipted transactions for manufacturers, sourcing inputs directly from farmers and traders.
Biruk recommends farmer unions be authorized to issue receipts, ensuring a smoother transaction process between producers and processors.
“The tax system needs to be more progressive rather than just focusing on collection,” he said.
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