Author: Yeabkal

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.

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 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.

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.

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 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.