Author: Yeabkal

The incumbent Prosperity Party (PP) rallied 1,200 of its ranks amid a turbulent political and economic environment, convening its second convention five years after its establishment. Mustered for two days at a time when the country has been gripped by protracted armed conflicts, including the contentious war in Tigray, strife in Oromia and Amhara regional states, and severe economic headwinds, the convention was notable for the attendance of influential figures such as former President Mulatu Teshome and former Deputy Prime Minister Demeke Mekonnen. Delegates representing ruling parties from 15 countries – from Djibouti to South Africa and Turkey, Russia and China – attended when it opened on January 31, 2025, in Addis Abeba.

The party, born in December 2019, emerged following the dissolution of the EPRDF, merging three of its coalition members but TPLF. Its victory in the 2021 national elections, however, was shadowed by persistent questions over electoral inclusiveness and credibility as it was held before its first general assembly. Its leader, Abiy Ahmed (PhD), whose administration has embarked on a sweeping economic liberalisation agenda, including the recent abandonment of the fixed exchange rate regime, defended his leadership record. Abiy emphasised the transformative ambition of his government, pledging to fast-track major national projects such as achieving food security in wheat farming and finalising the Grand Ethiopian Renaissance Dam (GERD). He also revealed plans for an extensive expansion of corridor development projects, stating that these initiatives were crucial as the country approached its next national election in a year.

Abiy called for a peaceful resolution to the deep-rooted conflicts, a plea resonating amid the broader challenges of national division and diplomatic strains with neighbouring countries like Somalia and Eritrea.

A notable wave of lending rate increases is reshaping the financial sector, following major banks adjusting their rates upward, with some reaching as high as 22pc. Several banks, including Oromia, Cooperative Bank of Oromia (Coop Bank), Wegagen, Dashen, Awash, and Sidama Bank, as well as the state policy bank, the Development Bank of Ethiopia (DBE), have adjusted their lending rates beginning the past two weeks.

These adjustments come at a time of rising operational expenses, fiscal pressures, and tighter credit availability, which have stirred public anxiety and borrower concern. However, bank executives have blamed a surge in the cost of funds as a primary reason for the adjustments. According to Asfaw Alemu, president of Dashen Bank, a liquidity squeeze across sectors is a key reason for the adjustment.

The cost of funds has surged, forcing banks to reexamine their lending strategies. Fixed-time deposit rates have increased by an average of six percent in over a year, now around 19pc.

Intensified competition among banks has further pressured lenders to revise their strategies to maintain profitability.

The impact of rising costs has been equally pronounced for Sidama Bank. According to its President, Tadesse Hatiya, the Bank’s lending rate which was previously between seven and 19pc has now increased to eight to 21pc to balance income with escalating costs better.

“The credit cap is a major obstacle for emerging banks seeking expansion,” Tadesse told Fortune.

Fourth-generation banks rely heavily on lending and interest income to fund deposit mobilisation and branch expansion. The credit cap, which limits banks’ ability to extend loans not exceeding 18pc of the previous year’s advances, has forced them to generate more income from their existing portfolios, a strategy that comes with its own set of constraints.

“The increase has put additional pressure on banks to attract premium deposits,” he said.

However, the regulatory framework gives banks considerable leeway when setting interest rates. The National Bank of Ethiopia (NBE) permits commercial banks to determine their respective lending rates as long as they report to the regulator and secure board approval. Recent data from December 2024 shows that the highest lending rate among banks had reached 23pc, while the lowest was recorded at seven percent, yielding an average of around 15pc.

According to Belete Fola, a portfolio manager at NBE, banks have the right to make interest rate decisions.

“The National Bank has no right to intervene,” he told Fortune.

DBE has increased its rates for the agricultural sector by six percentage points to 13pc, and for the manufacturing sector by five percentage points to 18pc. The new rates, approved by DBE’s board of directors, have been in effect since January 1, 2025, and formal notices have been issued to borrowers. As of December 2024, DBE had 4,000 borrowers with an outstanding loan balance of 97 billion Br, with 60pc allocated to the manufacturing sector, disclosed Getachew Wake, DBE’s vice president.

Enawgaw Belachew, a commercial farmer, is one of these borrowers who farms pulses and oilseeds on 300hcts. He now faces uncertainty about how he will manage his financial burden, taking a 50 million Br loan from DBE two years ago to buy machinery. However, security issues have halted his operations, preventing him from repaying his debt.

“I wasn’t able to pay my debt on time,” he told Fortune, shocked at the sudden rise in interest rates.

Recent shifts in monetary policy further complicate the situation. The Central Bank has moved away from quantity-targeting toward an interest-based market model that relies on indirect policy instruments to achieve price stability. Under the new regime, the policy interest rate has been set at 15pc, and the Monetary Policy Committee, chaired by Governor Mamo Mihretu, has raised the allowable credit growth rate from 14pc. These measures are designed to manage inflationary pressures, yet they have also contributed to the rising cost of bank deposits and the tightening of liquidity across the sector.

The rising rates have immediately impacted borrowers, particularly those in the export trade sector.

The Oromia Coffee Farmers’ Cooperative Union, representing more than half a million farmers, has been hit hard by the new rate adjustments. The Union’s 1.5 billion Br term loan from Coop Bank saw its interest rate jump from 8.5pc in September to 14pc by December, a change that added an extra 82 million Br in costs. The Union’s difficulties did not end there; an overdraft facility of 200 million Br with Oromia Bank, which carried an interest rate of 8.5pc, was increased to 18pc.

“We’re under financial strain,” admitted General Manager Dejene Dadi.

Coop Bank’s board approved the new rates on December 21, 2024, and they were implemented on December 23, 2024. The changes were formalised in a directive signed by the Bank’s President, Deribe Asfaw, issued to management executives and branch offices.

Facing mounting financial strain, the Union has decided to withdraw the overdraft facility entirely and is now seeking a 600 million Br loan from the Commercial Bank of Ethiopia (CBE) at a lower anticipated rate of eight percent.

While these adjustments have raised concerns among borrowers, not all banks have opted to follow suit.

The country’s largest lender, the CBE, has maintained its current lending rates, seemingly resisting the broader trend of upward adjustments.

Other banks, such as Birhan Bank, have chosen a cautious approach. According to Dagmawi Kassahun, vice president for Business & Digital Banking, the Bank deliberately withheld from revising its rates this year.

“We held off adjustments to avoid rattling our customers,” Kassahun told Fortune.

Although economic conditions have undeniably pushed costs higher, Kassahun says that future rate changes might be postponed until the next financial year. Birhan Bank has 17,000 borrowers and an outstanding loan balance of 33 billion Br, demonstrating its moderate approach in the current economic climate.

Several banks’ simultaneous rate increases have sparked concerns about possible collusion. Yehualashet Tamiru, a trade lawyer, warned that seemingly coordinated rate hikes could trigger an anti-competitive probe.

“Consumers need protection,” Yehualashet said, arguing that such moves might be scrutinised under anti-competitive laws.

The potential for regulatory intervention adds another layer of uncertainty to an industry struggling with elevated costs and an increasingly challenging market environment.

Experts warn that the broader economic implications of the rate hikes are considerable beyond the immediate impact on borrowers and banks. The Central Bank’s Financial Stability Report from November uncovered the concentration of credit within the industry. The top 10 borrowers account for 23.5pc of the 1.9 trillion Br in loans and advances. In a striking illustration of loan concentration, a mere 0.5pc of borrowers, each with credit exposure exceeding 10 million Br, hold nearly three-quarters of all bank loans. Such a high concentration of credit, combined with rising rates, may have far-reaching consequences for the overall stability of the financial system.

Deposits across the banking industry have also been on the rise, reaching a total of 2.2 trillion Br. Despite this growth, banks have maintained a high loan-to-deposit ratio. Although this ratio has slightly declined to below eight percent, it remains elevated. As of June 2024, commercial banks had issued nearly 1.5 trillion Br in loans and advances, while the non-performing loans (NPL) ratio stayed at 3.6pc, comfortably below the regulatory threshold of five percent.

However, the delicate balance between attracting deposits and managing loan growth continues to present the industry with a considerable dilemma.

Shifts in banks’ lending focus further illustrated the changing dynamics within the industry. While export-oriented lending has declined noticeably, dropping by 1.6pc, banks have increasingly targeted domestically oriented sectors such as consumer loans and real estate. The manufacturing sector, in particular, remains the largest recipient of loans, accounting for 23pc of the total, followed closely by domestic trade and services at 20.1pc.

The reorientation signals a broader strategic move by banks to concentrate on sectors deemed more stable or profitable in the current economic environment.

Critics within the financial community have raised concerns about the lack of transparency in banks’ rate-setting processes. Finance expert Worku Lemma noted that lending rate revisions appear to be driven primarily by banks’ efforts to protect profit margins rather than by an objective assessment of market conditions. Worku argued that the stagnant savings deposit rate of seven percent is no longer sufficient to attract depositors.

He believes lending rates are determined by three key factors: the cost of money linked to the deposit rate, the lender’s risk premium, which accounts for borrowers and loans, and the bank’s profit margin, which covers operational costs.

“It needs careful scrutiny,” said Worku. “Without proper regulatory oversight, unchecked rate hikes could further fuel inflation.”

The coffee industry is reeling after the Ethiopian Coffee & Tea Authority (ECTA) abruptly banned the export of grade-five coffee. The Authority is tightening regulations on vertical integration to maintain the country’s reputation in global markets.

The decision, announced on January 13 with little warning, confines coffee trade between suppliers and exporters to grades one through four. Federal authorities claim this move will reverse the slide in quality that has increasingly plagued coffee exports. According to Kassahun Geleta, the Authority’s marketing manager, the measure is part of a broader effort to prevent substandard coffee from entering the export market.

“We want to protect our country’s reputation as a leading coffee producer,” Kassahun told Fortune.

Yet, the decision has thrown the industry into disarray as the peak export season looms in the next three months, leaving many suppliers scrambling to respond to the fallout.

For suppliers like Hagos Gebreselassie, the sudden ban has created a financial quagmire. With 14 years of experience in the business, he now finds himself stuck with 210,000Kg of grade-five coffee intended for international markets.

“Bad climate conditions have resulted in low-grade production,” said Hagos, who works with 40 farmers in the Bench Sheko Zone of the South-West Ethiopia Regional State. “It’s not our fault the coffee is the way it is.”

Many suppliers, having bought coffee often using bank loans, now face the prospect of financial ruin.

“It feels like they want to push us out of business completely,” he said.

Another supplier, Engidaw Wudu, who also has 14 years in the business, faces similar distress, with 1,200Qtls of grade-five coffee now stranded. Managing 70hcts of land in Bench Sheko, Engidaw criticised the timing of the ban.

“The timing is not right,” he said, arguing that the ban came too late, after farmers had already harvested this year’s crop.

According to Engidaw, the impact of climate change on his land’s fertility to produce high-quality coffee is evident.

The latest export restrictions come when the coffee industry is wrestling with numerous challenges. The bulk of coffee is cultivated in Oromia Regional State, which accounts for 59pc of production, followed by the South-West Regional State at 15pc and Sidama Regional State at seven percent. The industry is a major employer, supporting approximately 5.8 million people nationwide. Despite strong global demand for speciality coffee, most forest coffee remains uncertified and unbranded, and only 15pc of export companies deal in speciality coffee.

Experts blame the structural shortfall for the current crisis, with regulatory loopholes in the vertical integration system, where exporters buy coffee directly from suppliers, allowing lower-quality coffee to flood the market.

Mesfin Hailemariam, market development head at the Authority’s branch in the South-West Regional State, acknowledged the multiple factors undermining quality.

“Financial shortages, climate change, and outdated farming practices are all major problems,” Mesfin said.

He observed many farmers reuse deteriorating coffee sacks for up to two years, further degrading the harvest quality.

“Achieving quality has become a difficult milestone,” he said.

The Authority plans to increase coffee production by 100,000tns from the current 760,000tns harvest. Mesfin also recommended greater use of organic inputs such as compost, which he believes could double output per hectare to 15Qtls.

The impact of the ban have been immediate. In the South-West Regional State, 40 trucks carrying over 20,000Kgs of grade-five and under-grade coffee remain stranded at dispatch sites. The Regional State, with over 100,000 farmers managing 552,000hcts of land, is a key production area, especially in Kaffa and Bench Sheko zones, contributing 90pc of the State’s coffee output. Last year, the area produced 540,000tns of coffee, though 60pc was graded as five or lower. In the past six months, only 26,000tns of coffee were cleared for export, uncovering the severe impact of declining quality.

“The goal of the decision to improve coffee quality is commendable,” Mesfin said. “But, it was rushed and failed to consider this season’s existing supply.”

Exporters have welcomed the Authority’s move, arguing that stricter quality controls could restore buyers’ confidence and secure better prices.

According to Desalegn Jena, president of the Ethiopian Coffee Association (ECA), the decision reinstates the core principles of the vertical integration system and enhances the credibility of coffee exports.

“The government should urgently address quality problems to protect Ethiopia’s position in the global coffee trade,” he said.

Desalegn’s caution carries extra weight given that key export markets — Germany, Japan, Belgium, and the United States — collectively account for 60pc of coffee exports form Ethiopia. Notably, Germany reduced its coffee imports by 36,000tns last year, while Japan’s purchases dropped by 17,400tns, with buyers blaming rising prices, declining quality, and shipping delays as major issues. Buyers from the three markets — Germany, Japan, and the United States — have lodged formal complaints about quality issues in the past year.

“These are buyers we can’t afford to lose,” Desalegn warned.

The Authority’s figures are alarming: 70pc of coffee exports in the past six months were grade-five or lower, resulting in a revenue shortfall estimated at nearly half a billion dollars. The Ethiopian Coffee Association (ECA) plans to generate over two billion dollars in coffee exports this fiscal year, affirming the high stakes involved. The financial implications of the quality crisis are evident.

According to official estimates, Ethiopia could have earned up to 1.4 billion dollars in the past six months had higher-quality coffee been exported. During the same period, coffee exports generated 908 million dollars, which pales compared to the 1.4 billion dollars earned from 300,000tns of coffee exports in the previous fiscal year. According to exporters higher-quality coffee could have commanded premium prices and boosted revenue. International buyers have grown increasingly hesitant, with poor-quality coffee undermining Ethiopia’s longstanding reputation.

Israel Degafa, general manager of Kerchanshe Trading Plc and a board member of the ECA, is among the exporters who supported the the Authority’s decision.

“This new rule will benefit exporters,” he said, noting that poor-quality coffee has caused substantial foreign exchange losses.

He stated the price disparity between grade-four and grade-five coffee, which was 1.10 dollar for a kilogram, a difference of 17.2pc.

Another exporter, Abdullah Bagersh, general manager of S. A. Bagersh, echoed similar sentiments. His company incurred a 40pc loss due to rejected low-grade coffee.

“We had to do the suppliers’ work to bring the coffee up to standard,” he told Fortune.

Coffee trade and its ecosystem have shifted dramatically in recent years, particularly with the rise of vertical integration. Traditionally, about 87pc of coffee exports passed through the Ethiopian Commodity Exchange (ECX). However, traders have increasingly turned to direct transactions, with over 60pc of exported coffee originating from the vertical marketing system.

Wondimagegnehu Negera, CEO of the ECX, attributed this trend to the price caps imposed by the Exchange, which he said made it less attractive to producers, exporters, and suppliers. The ECX, which facilitated 13 billion Br worth of commodity trades, including coffee exports, in the past six months, is now working to align its coffee prices with those on the New York Mercantile Exchange (NYMEX).

“We’re making price adjustments,” he Fortune. “We want boost traders’ profits and retain their business.”

Not everyone in the industry views the regulatory overhaul favourably. Dejene Hirpa, a coffee consultant, warned that Ethiopia’s coffee reputation suffers due to the ongoing quality decline. While he supports the intention behind the new regulations, Dejene criticised the abrupt manner in which they were implemented.

“The decision lacked sufficient consultation with stakeholders and could create further disruptions,” he warned.

Dejene urged authorities to concentrate on improving the quality of production rather than imposing blanket restrictions that primarily affect traders and farmers.

“Investment in farmers has been severely lacking,” he said.

According to Dejene, the distorted market structure means that smallholders, many of whom produce low-grade coffee out of necessity rather than choice, are not benefiting from the reforms. Some farmers, faced with the prospect of dwindling incomes, have even started shifting to more lucrative crops such as khat.

The experience of Mamush Esayas, a coffee farmer in the Gedeo Zone, vividly illustrates the problems small farmers face. Managing a modest three-hectare plot, Mamash produced 54Qtls of coffee this year under increasingly difficult conditions. Essential inputs, such as coffee sacks, have doubled in price to 600 Br, straining his already tight budget. He noted that the prices offered by suppliers are too low to cover production costs.

“My whole family depends on this harvest,” he said.

His plight illustrated a broader issue in the sector where many farmers who once experimented with other crops are now trapped in a cycle of low returns and minimum support. Mamush recalled that he sold his grade-one coffee for 7,000 Br a 17Kg bag, yet exporters were willing to pay nearly double that amount when buying directly from suppliers.

“The government should support farmers to sustain their business,” he pleaded. “I can only meet my daily needs at these prices.”

The controversy surrounding the Addis Abeba Chamber of Commerce & Sectoral Associations (AACCSA) has escalated as board member Abera Abegaz demands enforcement of a court ruling that overturned his suspension and reinstated his right to participate in the Chamber’s General Assembly.

Abera’s lawyer, Sintayehu Zeleke, submitted a letter on January 28, 2025, to AACCSA, Mesenbet Shenkute, the Ethiopian Chamber of Commerce & Sectoral Associations (ECCSA), and the Commercial & Investment Bench of the Federal First Instance Court.

The letter seeks a timeline for implementing the court-approved settlement, which includes retracting Abera’s suspension and holding the 18th General Assembly under the Chamber’s established legal framework.

The dispute began when former AACCSA President Mesenbet Shenkute expelled Abera from the board on December 18, 2024, citing disciplinary issues. She also barred him from contesting in the 18th General Assembly election.

Abera challenged the decision in court on December 25, 2024, arguing that his removal was unlawful and that Mesenbet had violated Chamber regulations by dissolving the Credential Committee, which is responsible for vetting board candidates.

Fearing that the election would render his lawsuit moot, Abera requested an injunction to halt the General Assembly. On January 8, 2025, Federal First Instance Court Judge Gerawork Yitbarek granted the injunction, suspending the assembly three days before its scheduled date. The court directed both parties to reach an out-of-court settlement or proceed with legal proceedings.

Abera also challenged the board’s decision to allow non-members to participate in the election, arguing it was a violation of the Chamber’s bylaws.

At the heart of the dispute is a controversial proposal to amend the Chamber’s constitution. Mesenbet Shenkute’s restructuring plan would make membership mandatory for all 480,000 licensed businesses in Addis Abeba, ending the long-standing voluntary system. Abera claims this violates the Chamber’s founding principles and undermines its legitimacy by forcing businesses to join.

Mesenbet defended the plan as essential to strengthening the Chamber’s financial and institutional capacity. She argued that the current voluntary model fails to meet the needs of the city’s private sector.

Abera, however, alleged that his vocal opposition led Mesenbet and the board to dismiss him, sidelining dissent and fast-tracking the bylaw changes.

A major shareholder of A.Y. NOBLE Inspection & Surveillance Service and a board member of Zemen Bank, Abera argues the mandatory membership plan is a power grab designed to consolidate control. He claims his confrontation with Mesenbet at a board meeting over the issue was later used as an excuse for his removal.

On January 14, Abera and the defendants, Mesenbet and the Chamber, agreed to settle. Their agreement required Mesenbet to retract Abera’s suspension, reinstate his candidacy, and conduct the General Assembly in accordance with the 2003 Chambers of Commerce & Sectoral Association Establishment Proclamation and the Chamber’s 2011 regulation.

The next day, the court ratified the settlement, lifted the injunction, and ordered both parties to comply with the terms.

Despite the agreement, AACCSA proceeded with a contentious election the next day, electing a new board.

In a dramatic turnaround, on January 16, 2025, just one day after the injunction was lifted, the Chamber held an election. Businesswoman Zahara Mohammed was elected president, replacing Mesenbet Shenkute. The new board also includes President Zahara Mohammed, Vice President Abebe Gurmesa, Sara Solomon, Addisu Getahun, Zahra Ahmed, Mesfin Gared, Damte Dagnew, Habtamu Hailu, Aychiluhim Kebede, Tesfaye Gebrekidan, and Girumnesh Yimer.

The previous board, before the disputed election, comprised President Mesenbet Shenkute, Vice President Fasikaw Sisay, Kibret Abebe, Asfaw Alemu, Melaku Kebede, Abera Abegaz, Alemayehu Nigatu, Sara Solomon, Abebe Gurmesa, Suleiman Fereja, and Gizachew Tekalign.

On January 28, Abera sent a letter to AACCSA, Mesenbet, ECCSA, and the Commercial & Investment Bench, demanding a timeline for the agreement’s implementation. His requests included holding the 18th General Assembly as agreed and retracting the suspension letter issued by Mesenbet.

Abera’s letter to the Chamber and the court demands clarity on when the agreed terms will be fulfilled, including the proceedings of the 18th General Assembly and the formal retraction of his suspension.

The court ordered the disputing parties to adhere to the agreement and conduct the General Assembly in compliance with the Chamber’s proclamation and bylaws. A source close to the matter explains that these include the reinstatement of the Credentials Committee, which was previously dissolved by Mesenbet, setting the date and venue for the General Assembly, and sending invitations.

The Committee is responsible for vetting candidates for the presidency and board positions to ensure they meet eligibility requirements. The bylaws of the Chamber allows only verified members to participate in the elections and the vote must be conducted via secret ballot.

Mesenbet’s reform plan aimed to restructure the Chamber, including allowing non-members to participate in board elections.

Established in 1947 and restructured in 2003, the Chamber represents 17,000 members.

Businesses and traders in the Tigray Regional State have been granted a one-year extension on loan repayments totalling 86 billion Br, offering temporary relief after the devastating two-year conflict.

The National Bank of Ethiopia (NBE) initiated this extension after the initial grace period expired on December 16, 2024, prompting commercial banks to take action against borrowers unable to repay accumulated debts.

The conflict severely impacted businesses, with debts quadrupling due to accrued interest.

The Central Bank has issued a new circular to all banks, easing requirements for loan provisions, rescheduling, and handling non-performing loans (NPLs).

This circular, signed by Vice Governor Solomon Desta, aims to support war-affected investors struggling with crippling debt and interest accumulation.

Banks must assess each borrower’s financial status and evaluate asset damage. Loan recovery plans must be developed and submitted by March 31, 2025.

Banks are required to implement more flexible repayment options for businesses impacted by the war.

The decision comes as many businesses in Tigray struggle to resume operations following the war. During the armed conflict, the NBE ordered the closure of 616 bank branches to curb widespread looting and security risks, further exacerbating the region’s economic downturn.

The central bank has temporarily suspended key provisions of its Asset Classification & Loan Provisioning Directive, allowing banks greater flexibility in rescheduling loans for businesses in Tigray.

The new circular issued by the central bank permits financial institutions to extend loan repayment timelines beyond two years, issue new loans without audited financial statements, and provide financing to borrowers with downgraded credit ratings. The circular also temporarily lifts restrictions on loan iterations, enabling additional credit for businesses that have reached their borrowing limit.

Belete Fola, a portfolio manager and principal examiner at the NBE, stated that these measures aim to facilitate economic recovery by easing financial burdens on businesses in the region. Banks are expected to assess borrowers’ financial conditions, develop loan recovery plans, and report their findings by March 31, 2025.

The Directive, introduced in June 2024, was designed to strengthen risk management by enforcing stricter loan classification and provisioning requirements. However, the latest circular temporarily overrides certain restrictions, allowing banks to refinance and reschedule loans for businesses affected by the war. Borrowers who have reached their credit limit may also be eligible for additional loans under special conditions.

As of June 2024, commercial banks have issued nearly 1.5 trillion Br in loans and advances, maintaining a non-performing loans (NPL) ratio of 3.6pc, below the regulatory five percent threshold. Banks are required to ensure that the total sum of their on-balance sheet items, including loans and advances, and off-balance sheet exposures to related parties, does not exceed 25pc of their capital. However, this requirement excludes credit risks associated with lending to investors in the Tigray Regional State.

Belete stated that waiving interest payments remains at the discretion of individual banks, based on their financial assessments and risk portfolios.

Dagmawi Kassahun, vice president of Berhan Bank, stated that the NBE’s new directives provide clear guidelines for banks operating under current economic conditions. He told Fortune that his bank has begun preparations to extend new loan provisions and has formed teams to ensure compliance with the revised regulations. However, he says that carefully analysing the implications of these directives before implementing an action plan is important, particularly concerning potential risks associated with credit exposure to related parties.

Berihu Haftu, president of the Tigray Chamber of Commerce & Sectoral Associations (TCCSA), says that investors in the regional state face severe hurdles in resuming business operations due to the lack of financial support. He revealed that the Chamber has been lobbying for a full loan write-off for investors whose assets were entirely destroyed and a 50pc debt reduction for businesses that suffered partial damage. TCCSA has also called for new loans to be provided to affected businesses.

“Nothing substantial has been done for investors,” Berihu said, expressing frustration. He questioned the rationale behind demanding interest payments when banks were non-operational during the conflict.

Business representatives in the Tigray Regional State have been pushing for a write-off of interest on loans totalling 31 billion Br in recent discussions with central bank officials. Despite their efforts, NBE has denied the request, leaving businesses to rely solely on extended repayment periods.

Berihu argues that businesses in the regional state face constraints due to the NBE’s credit growth cap and the absence of special financial provisions for recovery.

“Investors are still in crisis,” he told Fortune. He says while businesses have been unable to resume operations, commercial banks have started taking punitive actions against struggling borrowers.

Among the hardest hit is Moges Negu Commercial Ranch Plc. Established in 2006, the company suffered millions in damages during the war. General Manager Haleka Moges revealed that a 570 million Br loan taken six months before the conflict has now ballooned to nearly one billion Br due to accumulated interest.

“We requested an interest waiver and an extension of the repayment period,” he said. However, efforts to restart operations have stalled due to financial constraints, and a 3.7 billion Br loan request remains unapproved.

Another investor, whose water bottling company was completely destroyed at the start of the war, saw an 80 million Br loan swell to 110 million Br with interest. The company has struggled to recover, and a request for a new 180 million Br loan for machinery and working capital has been rejected.

“We are struggling to recover,” the investor stated, arguing that merely rescheduling existing loans is not enough.

“We need to rebuild before repaying loans,” he told Fortune.

Investors have voiced frustrations with the Tigray Investment & Export Commission (TIEC) on several occasions. Kassahun Gebregziabher, the Commission’s deputy head, stated they are still pushing for financial relief and duty-free import permits from the Ministry of Finance (MoF) and other government officials.

“Nothing has changed,” he said, noting that over 63 investors who requested duty-free permits to import construction materials are still waiting. He also states that financial pressures are worsened by unpaid demurrage costs at Djibouti ports, where machinery is being held.

The Tigray Genocide Inquiry Commission identified over 34,000 instances of damage across various sectors, including retail, manufacturing, services, agriculture, health, education, public services, and religious and cultural heritage preservation.

Credit exposure provisions have been constantly changing since the banking sector was liberalised, according to Tilahun Girma, a business and investment consultant. He said that banks are reluctant to write off loans and interest, fearing it would prompt other businesses to request similar incentives, raising their risk.

“Banks fear a slippery slope,” he told Fortune. He argues that while credit risks are high, banks must share the burden in such situations. He suggested a more sustainable approach, where government support helps banks manage the financial load while preserving their capital.

“The sustainability of their capital is crucial,” he said. Tilahun recommends measures that balance the needs of banks and businesses in the regional state.

The Ethiopian Electric Utility (EEU) is rolling out smart electric metres across Addis Abeba to combat power theft, enhance customer service, and modernise its infrastructure. The project, funded by the World Bank’s Ethiopia Electrification Program (ELEAP), involves installing 25,000 advanced metering infrastructure (AMI) units. It is part of a long-term plan to equip all five million EEU customers with smart electric metres.

The initiative has a total cost of 48 million dollars and 75 million Br. Currently, it is 69pc complete, with an additional 125,000 energy metres planned for installation in the third phase.

The EEU’s unified prepayment project began as a pilot programme in the Balderas area, where 100 condominium units received smart electric metres. It was later expanded to 2,000 houses before a broader rollout. Initially set for completion by December 2024, the deadline has been extended by nine months to adjust the building data system that houses customer information. The first three months of the extension will focus on metre installation, while the remaining six months will be dedicated to evaluation.

“The unified prepayment project will reduce power theft and improve customer service,” said Tesfaye Hirpa, EEU’s distribution automation programme director.

The new smart metres can detect theft and automatically cut off power in response to illegal activity. They pinpoint theft locations using property numbers, GPS, and contract accounts. Tesfaye says this will reduce customer complaints about incorrect billing.

The project includes a new EEU mobile application, enabling customers to check and pay bills online. Payment options will expand to include Telebirr, the Commercial Bank of Ethiopia (CBE), and Awash Bank, helping prevent power disconnections due to late payments.

A parallel project targeting medium- and large-scale industries, also funded by the World Bank, is nearing its delayed completion. The initiative, launched in March 2020 with a budget of 12.5 million dollars and 9.6 million Br, was initially set for completion in 2022 but was extended to August 2024. Its goal was to install 50,000 advanced metering infrastructure (AMI) units. So far, 40,111 enterprises have received smart metres, bringing the project to 96.2pc completion.

The EEU has long struggled with power wastage and theft. Currently, 22pc of the electricity it receives from Ethiopian Electric Power (EEP) is lost, with half of that loss attributed to technical issues. In the first three months of this fiscal year alone, the Utility lost 2.7 million Br to theft.

However, the EEU managed to recover 35 million Br through sudden inspections over the same period. Tesfaye says the new AMI metres will substantially curb electricity theft.

The EEU serves 4.9 million customers and plans to add 600,000 more this year. However, financial strain remains a major hurdle. In its first-quarter performance, the Utility covered only 71pc of its expenses. Its total expenditures reached 16 billion Br, including 5.3 billion Br paid to EEP, 938 million Br for loan repayments, and 466 million Br for reconstruction.

The EEU has introduced gradual tariff increases, set to be fully implemented over the next four years. Some customers have already felt the impact. Mintesinot Lemma, general manager of Mintu Plast Plastic Plc, a plastic raw materials manufacturer, says that while he has not seen a major change from the smart metre installation, the tariff hikes have severely affected his electricity costs. His monthly bill for four companies was around three million Br but has recently risen by nearly 20pc.

Woineshet Moges, owner of Mechu Trading Plc, has seen her electricity bills rise by more than 20pc, putting pressure on her medium enterprise.

“It is more than we expected,” she said.

The rollout of smart metres has reduced customer service workload in some districts, such as Balderas, where the initial pilot took place. Alemayehu Tadesse, a district office manager, stated that customers can now pay remotely, avoiding long queues. He told Fortune that only one complaint had been filed regarding an automatic shutoff after a usage surge.

However, power blackouts remain a major issue. The Utility reports that the country experiences an average of 46 hours of blackouts per week. The EEU is responsible for 88pc of these outages, with the remaining 12pc attributed to the EEP. Outdated infrastructure is a major factor, while power theft contributes to 24pc of shortages. Operational issues and overcurrents account for 22pc and 8pc, respectively. The most frequent cause of outages is earth faults, particularly landslides, which make up 47pc of all incidents.

The World Bank ranks Ethiopia third in Sub-Saharan Africa for energy access deficits, with nearly half the population lacking reliable electricity. While grid expansion has reached 60pc of towns and villages, the urban-rural gap remains huge. In cities, 96pc of households are connected to the grid, with Addis Abeba at 99.9pc. In contrast, only 27pc of rural households have electricity.

The situation is worse in remote areas more than 25km from the grid, where just 5pc of people have power. Even those with access face severe disruptions, 58pc of grid-connected households experience four to 14 power outages per week, with 3pc facing even more frequent blackouts.

Yemaneberhan Kiros, founder and general manager of Yomener Energy Auditing & Engineering Plc, supports the EEU’s crackdown on theft, which he says is a major cause of power shortages. He urges EEU to assess high-load areas, monitor power quality, and prevent surges that damage equipment.

“Energy management has been weak,” he stated. “EEU upgrade infrastructure with the latest technology.”