In the lobby of its headquarters, Ethio Post, one of Africa’s oldest postal services, has repurposed old post boxes as metal benches. Established in 1894 by imperial edict, the Ethiopian national postal service has a long history. While initially part of the broader communications infrastructure, postal and telecommunications services were separated in 1953. Ethio Post’s head office building was finished in 1969.
Author: Yeabkal
Shipping Behemoth Beats Profit Target Despite Cargo Dip
Ethiopian Shipping & Logistics (ESL) announced its six-month performance report for the fiscal year, revealing a mixed outcome. While it achieved 95pc of its operational service target, handling 2,880,187tn of cargo, this represents a slight decrease compared to the same period in the previous fiscal year. The ESL attributed this dip primarily to global difficulties, notably Red Sea shipping disruptions.
Despite these hurdles, the company reported exceeding its profit targets. Projecting 6.21 billion Br in pre-tax profit, the ESL was able to generate 9.3 billion Br. Revenue also surpassed expectations, with 46.7 billion Br collected against a planned 44 billion Br.
In terms of cargo movement, the ESL transported over 2,051,000tn of goods via its own and chartered vessels, and moved 59,930 TEU containers through its multimodal transport system. The company also handled over 220,500 TEU containers at dry ports and terminals. The ESL stressed its ongoing digitalization efforts, accounting updates, capacity building initiatives, and project monitoring application as contributing factors to its positive financial performance.
Customs Hits Revenue Target, Cracks Down on Smuggling
The Ethiopian Customs Commission announced that it has exceeded its revenue collection target for the first six months of the fiscal year. The Commission collected 203.75 billion Br, surpassing the planned 190.9 billion birr by 106.73pc, representing a 106.7 billion Br increase compared to the same period in the previous fiscal year. Commissioner Debele Kabeta noted that coordinated efforts with other institutions to prevent contraband contributed to the successful outcome, resulting in the seizure of more than 1.1 billion Br worth of goods in the Semadiyo district in Somali Regional State, which originated from Somaliland.
He noted that the government has provided 120.76 billion Br in duty-free incentives to eligible domestic investors and producers which is a 148pc increase, or 72.06 billion Br, compared to the 48.7 billion Br provided during the same period in the previous year.
Italy Boosts Ethiopian Tech Innovation
A 4.69-million-dollar (4.5 million Euro) grant to establish an incubation centre for high-technology innovation enterprises has been availed by the Italian government. Minister of Finance, Ahmed Shide, and the Italian Minister of Universities & Research, Anna M. Berini, joined by Italian Ambassador to Ethiopia, Agostino Palese, signed the agreement at the ministry’s headquarters last week.
The project includes the development of a Fabrication (FAB) Lab equipped with advanced manufacturing and prototyping tools, a training facility, and a talent development lab.
This project would align with the country’s goals to create employment opportunities, enhance service delivery, and foster innovation and entrepreneurship through technologies and digital infrastructures. Ahmed noted that the agreement will enhance long-term strategic partnerships in agriculture, industry, health, and education.
Ethiopia’s youth is caught between a rock-hard place and a formal education route that fails to accommodate entrepreneurial ambitions. A start-up proclamation drafted by the Ministry of Innovation & Technology which entails the creation of an innovation fund, a national start-up council, and tax incentives has yet to see the light of the day.
President Taye Aspires for Lofty Universal Electricity by 2028
The government has set an aggressive goal to achieve universal electricity access by 2028, which requires electrifying 3.4 million households annually. The Mission 300 Africa Energy Summit in Dar es Salaam, Tanzania concluded with a focus on coordinated strategies to address the continent’s energy crisis with President Taye Atsqeselassie noting that despite achieving a 54pc electricity access rate, 60 million Ethiopians still lack access.
Over 571 million people in Africa are still without electricity, representing 83pc of the global population lacking access. Financial commitments to address the issue included a joint 48-billion-dollar pledge from the World Bank and African Development Bank, and a new one-billion-dollar fund from the IFC for decentralized renewable energy projects.
France pledged over one billion dollars toward universal access to electricity and an additional 10 million dollars to the Sustainable Energy Fund for Africa (SEFA). Several other nations also contributed to SEFA, including Denmark, the UK and Spain. It was also relayed that African countries suffer from a clean cooking crisis which causes approximately 600,000 deaths annually and health and economic costs of 800 billion dollars annually.
The summit ended with the Dar es Salaam Declaration which commits governments to reforms in utility management and procurement transparency while also calling for private sector participation through supportive regulations and innovative financing. The declaration will be presented for continent-wide adoption at the African Union Summit in February.
Electric Utility Progresses with Rehabilitation Ambitions
The Ethiopian Electric Utility’s project to upgrade the power distribution infrastructure in Addis Abeba and its surrounding areas within a 50km radius is 88pc completed. It includes replacing old wooden poles with concrete ones and upgrading lines to reduce power outages related to aging infrastructure. So far, 9,644 wooden poles have been replaced and 347.39km of covered medium-voltage lines have been installed to prevent power interruptions caused by contact.
The project also incorporates SCADA technology, which allows for remote monitoring of lines, facilitating quicker repairs by pinpointing the exact location of a problem.
A technology that connects 41 power distribution stations and 226 switching stations is also 65pc complete, according to the Utility. Four new power distribution stations have also been built, and five existing ones have been upgraded with another one under construction.
Officials at the EEU noted that the rehabilitation so far has proved successful, and power disruptions have lessened.
The year-end report by the EEU indicated that 4.9 million households in the country had formal access to the electric grid and that it averages a little over 200,000 new customers each year.
MOTORISTS HIT BRAKES ON TOUGHER FINES
Many motorists face new and stricter traffic regulations introduced by the Council of Ministers. The regulations include a three-tier penalty system with higher fines and demerit points, hitting offenders for everything from running a red light to improperly seating a child. A new demerit point system means licenses can be suspended for six months to a year or more once a driver accumulates between 14 and 21 points. Fuel price hikes and costly vehicle maintenance add further pressure, prompting many taxi drivers to consider leaving their jobs in search of better prospects.
Taxi association leaders argue the regulations were implemented without sufficient consultation. They raise concerns that drivers are being penalised for mistakes caused by pedestrians, and that the city government should focus on improving infrastructure, including parking facilities, before levying heavy fines. Addis Abeba Traffic Management Authority officials counter that they carried out extensive public awareness campaigns, insisting that increased fines will save lives by curbing driver negligence. Although traffic-related fatalities dropped from 480 to 401 over the last year, the total number of traffic violations rose from 1.2 million to 1.4 million in six months. Officials credit stricter enforcement for the declining death toll, though many drivers fear the new fines will devastate those with limited incomes. The Authority also reports a drop in fined drivers from 14,716 to 11,174 in two consecutive weeks, attributing the latest measures to prompting greater caution on the roads.
Yet experts caution that fines amounting to over 25pc of many drivers’ monthly earnings are unrealistic, noting that penalties represent one or two percent of drivers’ average incomes in most countries. They call for modernised approaches such as cameras and digital tracking systems, combined with continued public awareness, to achieve the intended safety benefits without imposing a crushing economic burden on those who keep the city’s transport network running. Drivers say they have switched to night shifts to avoid fines of up to 1,500 Br for infractions such as stopping in no-parking zones. A driver says he makes around 800 Br a day after expenses, but each fine can easily wipe out two days’ earnings, an amount he and others view as unsustainable.
Birr in Tumble, Reform Rhetoric Meets Bitter Economic Realities
Grand ambitions have long driven Ethiopia’s successive leaders, but they remain weighed down by deep structural vulnerabilities. But, nowhere is this more evident than in the monetary policy front, where policymakers let market forces guide Birr’s value against a basket of major currencies.
The bold policy measure, introduced after 50 years, initially reduced the gap between the official and parallel exchange rates from more than 100pc to around five percent. Yet, barely six months later, the gap has climbed toward 25pc, raising doubts about whether the reform will be truly maintained. It should be no surprise if the liberalisation slide reinforces concerns that the economic policy goals remain hostage to the authorities’ reluctance to accept short-term pain mainly due to worries about a weaker currency rooted in the country’s debt position.
Nearly 45.8pc of Ethiopia’s external obligations are denominated in dollars; each depreciation of the Birr drives up debt-servicing costs when converted into local currency. Although external debt rose by two percentage points in the 2022/23 fiscal year – a modest expansion – currency swings alone added 133.84 million dollars to the overall burden. Debt-service payments for last year were 2.21 billion dollars, with nearly half going to external creditors. The balance is consumed by domestic-debt servicing, which has climbed toward a billion dollars, reducing the money available for development programmes in areas like education and health.
Foreign currency reserves remain too thin. Although they have improved considerably compared to the years before the forex regime liberalisation, they cover about 2.3 months of imports, short of the three months the International Monetary Fund (IMF) advises for economies in Ethiopia’s position. The balance of payments showed a small surplus of 59.4 million dollars in the fourth quarter of 2023/24, but this bright spot conceals deeper weaknesses.
The current account deficit widened from 826.3 million dollars the previous year to 1.1 billion dollars during the fourth quarter of last fiscal year, in large part because the trade gap swelled by 30.8pc. Exports rose by 27.3pc, reaching 1.3 billion dollars, helped by stronger earnings from coffee, live animals, gold and electricity. Yet, during the same quarter, imports grew even faster, by 29.9pc, to 5.1 billion dollars, as demand for capital goods, fuel and other essentials climbed in an economy seeking to industrialise and meet rising consumer needs.
However, those headline export figures hide structural constraints.
Coffee exports earned 34.3pc more than before, but revenues from oilseeds fell by 5.6pc, and khat exports plunged by 39.4pc. The bigger picture is also discouraging. External debt claimed 179.8pc of exports, above the 150pc threshold considered risky for low-income countries. This mismatch between debt obligations and forex inflows uncovers a long-running problem. One or two star exports cannot carry a country of over 100 million people.
Efforts to limit non-essential imports have had limited success. The economy still needs machinery, fuel, and pharmaceuticals to keep infrastructure projects and daily life running.
Such strains become more apparent when looking at the federal government’s broader debt position. By June 2024, total public debt reached 68.9 billion dollars, equivalent to 32.9pc of gross domestic product (GDP). At first glance, that number may not seem alarming for a growing economy. The trouble emerges in the details. Domestic debt of 39.97 billion dollars, having grown by 12pc in dollar terms in one year, comes from Treasury bills, government bonds and direct advances from the central bank. It created a large rollover risk in a capital market that is still nascent.
State-owned enterprises (SOEs) account for over one-third of domestic debt, adding to the government’s liabilities and leaving less room for private borrowers.
External debt, at 28.89 billion dollars, created its own difficulties. About 65pc of this is concessional, with terms easier than market rates. But, many SOEs have variable-rate loans due to the large share of these debts in dollars. Birr’s depreciation can only heighten repayment costs. Servicing external debt amounted to 1.27 billion dollars last year, nearly matching the 1.48 billion dollars in fresh disbursements, a scenario that makes it challenging to build up foreign exchange reserves over time.
At 11.3pc, the external-debt-service-to-export ratio exceeds the 10pc threshold, which is considered a warning sign. Reducing non-concessional borrowing, matching the currency of debts with that of major exports and developing more sophisticated debt-management skills will all be essential.
Officials have tried to keep inflation in check and defend the Birr, setting high interest rates and imposing large reserve requirements. Commercial banks are compelled to buy government bonds, diverting funds that might otherwise support private investment. These measures prop up the Birr in the official market but at the cost of higher borrowing expenses for everyone else, with an outcome that stifles growth.
Federal authorities insist that they still maintain a market-determined exchange rate. Yet, the renewed divergence between the official and parallel rates is not in their favour. Interventions persist behind the scenes. The state-owned Commercial Bank of Ethiopia (CBE) often quotes lower rates for foreign currencies than private banks do, acting more like an arm of policy than a commercial lender.
However, there are signs of progress. Foreign direct investment (FDI jumped by 49.4pc in the fourth quarter of 2023/24, while private-sector long-term financing rose by 24.4pc. Nonetheless, short-term capital flows reversed from a surplus of 23 million dollars to a deficit of 195.3 million dollars, a shift that may signal the jitters of lenders who can withdraw funds at the first sign of trouble.
Public-private partnerships (PPPs) may help them tap private capital for infrastructure projects. However, investors complain about a tangled and unpredictable regulatory environment, frequent policy shifts, unreasonable tax law enforcement, and a cumbersome logistics sector. The federal government still places SOEs at the front of the line for credit, crowding out private firms that might be more nimble exporters.
The economy needs to diversify beyond commodities like coffee and livestock to raise more revenue. Better roads, smoother customs procedures and more reliable power could encourage greater investment in manufacturing and agro-processing. This would allow Ethiopia to wean itself off high levels of borrowing gradually. Policymakers hope that multilateral lenders will offer some breathing room. The 3.4 billion dollars from the IMF, 3.75 billion dollars from the World Bank and relief from the G20 Common Framework for debt restructuring are in the pipeline. But, success depends on convincing these creditors that reforms are genuine.
Ambition without discipline, however, can easily turn into peril. Previous administrations’ drive to build roads, dams and industrial parks might have fuelled growth, but it has also heightened vulnerability to exchange rate shocks and global interest rate rises. The large stock of dollar debt from previous years remains a drag on the economy. Debt re-profiling can ease payment pressures in the short term, but it does not fix deeper problems like an underperforming export sector and uneven policy enforcement in a country under political spells that have led to ongoing violent conflicts.
A more realistic exchange rate could spur exporters and attract foreign investors, although it would likely push up prices in the short run. A fully floating Birr might drop quickly, lifting inflation and triggering public discontent. Yet letting the currency drift into a grey zone between official and parallel markets simply drives people toward unofficial channels. When policymakers trumpet reforms, then reverse course the moment the Birr trembles, they damage the credibility they need to bring in new capital. That wariness can spark the very flight of funds the authorities are trying to avoid.
New Traffic Rules Add Financial Strain on Addis Abeba Drivers
Binyam Tesfaye, a 31-year-old father of two, is struggling under the weight of Addis Abeba’s new traffic regulations. Earning 7,000 Br a month, he spends 5,000 Br on rent, leaving little for other expenses.
“Living in Addis Abeba on this salary is very difficult,” he said. Biniyam and his wife, a teacher earning 5,800 Br, find it hard to make ends meet. To cover his child’s 2,100 Br school fees, he had been relying on part-time work and borrowing money. However, this fragile financial balance has been disrupted by the city’s newly enforced traffic fines.
In just a few days, Biniyam has been fined twice. The first fine, 1,500 Br, was for transporting furniture that extended out of his pickup truck (oversize load), a common practice. Unable to pay, he had to borrow the money.
Shortly after, he was fined another 1,000 Br for stopping on a pedestrian crossing to avoid running a red light and being hit by a car from behind. Despite explaining the situation, he says, the traffic officer dismissed his plea.
These fines, totalling 2,500 Br, amount to over 35pc of his monthly income. “Being a driver is becoming too costly,” he said. Biniyam is considering resigning, but the tough job market makes him hesitant. He admits migration might be his only option.
He is not alone. Many drivers face job losses and financial strain due to new traffic regulations recently implemented by the Council of Ministers. The higher fines add to the burden of rising fuel and car maintenance costs.
Gebre Mengiste, a taxi driver, has also been hit hard by the new rules. “The only way to avoid these fines is to work at night,” he said. He had to switch to night shifts after being fined 1,500 Br for picking up a passenger in a no-stopping zone. Though the night shift disrupts his family routine, including taking his daughter to school, it helps him avoid fines.
Working from 8 PM to 6 AM, Gebre earns 2,000 Br daily after expenses but must pay 1,200 Br to the car’s owner, leaving him with just 800 Br. “The fines are equivalent to two days’ income, which is unsustainable,” he said. The driver says that the lack of parking spaces worsens the situation. “The government should improve infrastructure before enforcing these rules.”
Nuredin Ditamo, chairperson of the Bilen Taxi Association, criticised the regulations, saying they threaten the livelihoods of taxi drivers. Rising fuel and spare part costs have already forced many drivers to work without assistants to cut expenses.
He worries about the new demerit point system and the three-tier penalty structure for minor offences. “We were not consulted as stakeholders,” he said. “They only involved us when the regulation was being released.”
Nuredin says drivers are being unfairly fined for penalties caused by pedestrians. “Even when pedestrians cause accidents, taxi drivers are fined and suspended,” he said.
Drivers causing accidents with bodily injuries now face strict penalties under the new Council of Ministers regulation 557/2016. A driver causing bodily injury may have their license suspended for six months and receive 14 demerit points. For accidents resulting in serious injuries, the suspension increases to one year, with 17 demerit points.
The regulation enforces a three-tier penalty system for traffic violations. Stage one offences which include smoking while driving, seating a child under 13 in the front, or giving money to beggars result in a 500 Br fine and one demerit point.
Second-tier violations including using earphones, driving without lights, signalling incorrectly, or failing to yield to pedestrians result in a 1,000 Br fine and two demerit points. Stage three penalties incur a 1,500 Br fine and three demerit points for more severe infractions, including running red lights, driving out of lane, stopping on bridges, using phones while driving, and exceeding passenger limits.
Speeding also carries heavy fines. Driving up to 5 km/h above the speed limit incurs no penalty, but exceeding it by 6-10 km/h results in a 1,500 Br fine and three demerit points. Speeds 11-20 km/h over the limit attract a 1,700 Br fine and three points.
A Bloomberg Philanthropies Initiative for Global Road Safety (BIGRS) study revealed widespread speeding in Addis Abeba. Around 44pc of drivers exceed speed limits, averaging 57 km/h, while 46pc of motorcyclists were also found speeding.
The new traffic regulations include offences with fines up to 20,000 Br and legal consequences. Driving with a suspended license incurs a 3,000 Br fine and eight demerit points.
A point-based driver suspension system is also introduced. Accumulating 14-16 points in a year leads to a 6-month suspension, 17-20 points a one-year suspension, and 21 and more points 18-month suspension.
Suspended drivers must complete mandatory training and retesting for license reinstatement.
For child safety, children under seven must use secured safety seats in the rear, although this will be enforced once the Ministry of Transport & Logistics (MoTL) issues a directive. Children under 13 are prohibited from sitting in the front passenger seat.
Amare Tarekegn, deputy director of the Addis Abeba Traffic Management Authority (TMA), stated that enforcement began after extensive public awareness efforts. “We have worked with schools and the media to educate the public,” he said.
Despite a decline in fatalities, traffic violations increased from 1.2 million to 1.4 million in the past six months. Over 18,000 pedestrians were also caught breaking traffic rules. Fatalities from traffic accidents decreased from 480 to 401 last year.
“Driver carelessness needs to be reduced, and this regulation will help us,” Amare said. The new law consolidates scattered road safety rules into one regulation.
“The only way to avoid fines is to drive carefully and stay aware,” he said.
Recent data from the Authority shows a drop in fined drivers, from 14,716 between December 24, 2024, and January 8, 2025, to 11,174 between January 9 and January 23, 2025, a decrease of 3,542 after the enforcement of new traffic regulations.
Genet Dibaba, TMA’s communication head, praised the regulation for addressing key causes of road accidents, including speeding, drunk driving, red-light violations, and phone use. She says the Authority is working on educating the public before implementation. To reduce traffic congestion, TMA has also enforced basement parking requirements in over 145 buildings, creating 2,490 additional parking spaces.
“The accessibility of parking spaces is very crucial,” she said.
The Addis Abeba Police Commission’s (AAPC) traffic department collaborates with TMA to ensure road safety. Solomon Adane (inspector) stated that over the past six months, more than one million drivers were fined for violations. These include over 27,600 for speeding, more than 100,000 for ignoring traffic lights, over 1,000 for driving without a license, and more than 11,000 for operating vehicles without quality licenses.
Abiy Aleneh, a lecturer at Kotebe University of Education (KUE), supports the regulation but worries about the steep fines, which he believes are disproportionate to drivers’ incomes. He says that most countries fine one percent to two percent of drivers’ average income, while the current system fines over 25pc of many drivers’ salaries.
“While the regulation will boost government revenue, the fines are not fair for many drivers,” he said.
Abiy recommends the application of advanced solutions like cameras and digital tracking systems, along with public awareness campaigns, to enhance road safety and reduce accidents.
Capital Crossfire Catches Geez Bank, Promoters Bicker Over Future
Geez Bank, a nascent commercial bank, currently under formation, is embroiled in a tense dispute that has overshadowed its promoters’ plans to begin operations. Organisers are divided over whether to proceed and meet strict capital requirements, invest in other banks, or shift to services such as microfinance and insurance.
The result is a tangled process in which the Bank’s future remains in limbo, with two groups claiming control. Differences have surfaced over negotiations with an existing bank, Lion International Bank, over a possible share transfer.
Geez Bank’s troubles can be traced back to November 2020, when the civil war in the north erupted as organisers were racing to meet a deadline set by the National Bank of Ethiopia (NBE). In April 2021, the NBE raised the minimum capital requirements for commercial banks from two billion Birr to five billion Birr, with existing banks given time until June 2026. For emerging banks, the deadline was set two years later. Geez Bank needed to collect half a billion Birr in paid-up capital within six months to begin operations.
However, the war upended much of the process and caused disruptions, leading the Bank to miss key windows. The initial plan was to close share sales by July 2021, with 345 million Br in shares. The war, however, derailed that goal and left the Bank struggling to stay on track.
Despite this setback, and once the conflict subsided, organisers resumed selling shares about two years later. They have since raised 610 million Br equity, with a subscribed capital of two billion Birr from around 12,200 shareholders.
Compounding the challenge is a deep rift among those responsible for Geez Bank’s formation. Led initially by a team of individuals that included Abraha Gebrewahed, the founding committee’s chairman, Gebremedhin Hailu, and Abraha Hailemariam, the committee ran into internal disagreements over strategy and direction. Other members included Azenaw Berhe, Tesfay Hadera, Meresa Tsehaye, Mihret Mehari, Thomas Hailu, Gebrewahed Weldegiwergis, Mulugeta Hagos, Habte Hadush, and Fatume Siraj.
In July last year, a new committee was formed to resolve the disputes and find ways to quickly boost paid-up capital. It comprises Etsegenet Berhe, Angesom Haile, Isaias Tadesse, Gebregziabher Gebremariam, Mulualem Gebrehiwet, Gebremedhin Gebremariam, Tsigabu Belay, Tesfay Gebregergis, and Seid Mohammedbirhan.
Yet, individuals close to the process attributed the stalled transition to “certain members in the old committee” refusing to hand over responsibilities. The alleged refusal has prevented a smooth change in leadership and heightened tensions over the Bank’s future direction.
“The bank is in a mess,” said a member.
Organisers have debated three options, deadlines looming and capital requirements being more pressing than ever. To continue raising capital to reach the five-billion-Birr threshold by 2026, which requires an aggressive push for funds in a market with intense competition. Consider investing equity mobilised in other banks. Transform Geez Bank’s effort into a microfinance institution, investment bank, or insurance company.
In November 2024, a mediation committee comprising civil society groups, religious leaders, and public figures tried intervening, hoping to calm nerves and chart a path forward. Among those who joined the mediation were Tigray Public Diplomacy, Gerealta Forum, Fiseha Asgedom (Amb.), and religious leaders such as Selama Woldesamuel (Abune). The group recommended reforming the organising committee, bringing in new investors and influential figures considered capable of steering Geez Bank out of its current troubles. A provisional assembly approved the plan on December 24, 2024.
Despite nine founding committee members agreeing to the proposed transition, three key figures — Abraha Gebrewahed, Gebremedhin Hailu, and Azenaw Berha — did not go along with the plan. However, they began discussions with Lion Bank about the potential to buy its shares at par value, effectively putting the transition on hold and deepening the institutional split. According to a member of the mediation group, the three, along with Lion Bank executives, have been meeting with shareholders in Adigrat, Meqele, and Addis Abeba for about a month, hoping to seal a share transfer deal.
The first committee sent a report to the NBE on January 10, 2025, signed by Abraha Gebrewahed. The report revealed that some shareholders are considering share transfers to other banks or forming an investment firm. Others consider converting the initiative into microfinance, insurance, or investment banking. According to the document, there is limited time available and an urgent need to find better options for shareholders after their equity has been idle for five years.
“We’ve to unlock shareholders’ accounts,” said Gebrelibanos Gebremariam, executive manager, from his office in Addis Abeba.
He disclosed that Geez Bank is running short on time and that its shareholders should explore all options. Multiple meetings have been held to let investors decide how to proceed, while members of the previous organising committee, such as Thomas, believe in trying to rally enough supporters to keep Geez Bank alive.
“The bank’s future is at stake,” said Thomas Hailu, a member of the existing committee. “The opportunity to raise more equity has not disappeared. It should be quickly seized.”
According to observers, Lion Bank stands to gain from any takeover or acquisition of Geez Bank’s shareholders. With deposits of 35 billion Br, total assets of 43 billion Br, and 30.4 billion Br in loans and advances, the Bank is already a sizable player in the banking industry. Worku Lemma, a financial consultant, sees such a deal would allow Lion Bank to expand its capital, customer base, and liquidity instantly.
“It provides an opportunity to increase its overall capacity,” he said.
However, he cautioned shareholders to consider the costs of buying shares in an existing bank.
Another industry veteran, Eshetu Fantaye, echoed his caution and urged organisers to avoid making decisions based on emotions or immediate resolution. He believes the Lion Bank proposal could improve liquidity without a high-interest burden. However, he also recommends that treasury bills (T-bills) offer a risk-free return of 15pc and that other banks might have higher earnings potential than Lion Bank could eventually deliver.
“Shareholders should consider better returns,” he said, adding that a close look at Lion Bank’s finances, including general reserves and paid-up capital, is essential.
Lion Bank, which has 3.1 billion Br in capital and close to meeting the Central Bank’s minimum requirement, has reportedly offered to allow Geez Bank shareholders to buy its shares at par value and potentially access non-collateralised loans. Lion Bank directors reportedly indicated they might be willing to hire 23 Geez Bank employees on board, a move that one organising committee member described as an “attractive investment opportunity.”
“We’re still discussing with shareholders,” said Mulugeta Teklu, Lion Bank’s director of secretary. “It’s too early to provide detailed information.”
Nothing is set in stone until late last week, as negotiations continue, and opinions vary widely among Geez Bank shareholders.
“There is a divide among shareholders, delaying final decisions,” said Thomas.
Most newly elected organising committee members prefer establishing Geez Bank as a commercial bank. They believe that strong leadership and more capital can steer the initiative to success, even though the losses caused by the war have doubted the Bank’s viability.
However, Eshetu wondered if Geez Bank could compete with well-established domestic lenders and the potential arrival of foreign banks. He predicted that small and recently formed banks would struggle to survive without adequate capital or strong management.
“Commercial banks lacking enough resources will face serious challenges,” he warns.
Geez Bank’s shareholders say they are under pressure. Roughly 10pc of Geez Bank’s shareholders are from the Tigray Regional State, which was severely affected by the two-year conflict. Many shareholders say their money has been tied up for too long. Some blame the founding committee as “weak” for the dispute, alleging that Geez’s leadership should have adapted more quickly to wartime conditions and changing regulations.
“I’ve lost faith in the initiate,” said Tesmegen Demoz, who joined in 2021 with high hopes. “A stronger team would have served the Bank better.”
He believes the crisis comes from inadequate leadership, arguing that a more capable team could have handled the war’s challenges and prevented the current deadlock.
Central Bank officials have shown no sign of relaxing the capital requirements or bending the rules to accommodate newcomers struggling to raise sufficient equity.
“All banks should comply with the rules,” said Vice Governor Fikadu Digafe. “There’ll be no exceptions.
When the Brewed Buck Bucks, Banks Play Tug-of-War in Forex Frenzy
The foreign exchange market has been quirky lately, marked by sudden shifts and divergent strategies among commercial banks and the Central Bank.
Abay Bank (ABY) captured the limelight with an unexpectedly low buying rate of around 120.062 Br to the Dollar, departing sharply from the 124.9 Br range common among its peers. An anomaly spanned three days last week; this might have come from internal liquidity strains or a misalignment in pricing to attract short-term forex inflows. By January 24, Abay Bank appeared to revert to near-market levels, signalling exceptional measures its forex managers had taken to boost dollar receipts that were no longer in play.
Most banks maintained a two percent spread between their buying and selling rates during this period, but the National Bank of Ethiopia (NBE) was distinctly more volatile. On January 21, the Central Bank’s spread was 0.99pc, climbed to 1.23pc between January 22 and 23, then dipped toward one percent by January 25. The swing could be part of an ongoing regulatory fine-tuning or testing of short-run policy tools meant to keep the market in balance.
Yet, the unpredictable approach by the Central Bank contrasted with the more uniform tactics used by most commercial lenders, who largely kept their margins within its imposed limits.
Enat Bank (ENT) and Tsehay Bank (TES) established themselves at the upper end of the market, with buying rates surpassing 125 Br. They were vying to secure hard currency from exporters and remittance senders, a possible indicator of intensifying competition for scarce forex. Global Bank (GBE) and Hibret Bank (HB), meanwhile, took a more conservative position, showing lower-than-average rates in GBE’s case and a steady, albeit premium, selling price of 127.98 Br at HB. This pricing could result from an effort to avoid sudden shocks, even if it means letting high-rate banks scoop up a greater share of forex transactions.
Nib Bank also joined the ranks of lenders that quoted above 125 Br for buying last week. Tsehay Bank, whose executives have already taken an assertive position, edged closer to 126 Br and has now led the market for four consecutive weeks. The state-owned Commercial Bank of Ethiopia (CBE) continued offering the lowest buying rate — still below 125 Br — a clear sign it remains a crucial policy tool for containing volatility. CBE’s status as the largest bank in the country and as a quasi-policy instrument has historically exerted downward pressure on private banks’ attempts to adjust their rates aggressively.
A downward drift of the Brewed Buck against the Green Buck accelerated for roughly six days, beginning on January 20. The market’s average buying rate was 124.8 Br, and the average selling rate topped 127 Br. Banks such as Goh Betoch Bank (HoH) and ZamZam Bank frequently posted higher numbers than their competitors, while the major players, including CBE, generally maintained more moderate quotes. Tsehay Bank remained at the forefront of private banks, frequently nearing the 126 Br thresholds in its drive to capture larger forex from exporters and the diaspora.
A catalyst behind the continued drop in the rate of Brewed Bucks was the Central Bank’s daily weighted average crossing 125 Br (for a third week), an event many see as psychologically important. Faced with persistent forex shortages, officials appear to be weighing whether to let the Birr weaken further or inject more dollars into the system. The four biggest private banks — Awash, Dashen, Abyssinia, and Wegagen — have all responded by setting more conservative rates, generally below the new 125 Br benchmark.
There appears to be a conscious effort among these banks’ forex managers to slow Birr’s decline and uphold Governor Mamo Mehirtu’s monetary policy objectives.
Yet, a handful of private banks have pursued a different path.
Gadaa, Goh Betoch, and ZamZam banks have consistently offered higher rates on both ends of the exchange. Goh Betoch’s buying rate has been north of 125.4 Br, with selling hitting 128 Br, while ZamZam has also positioned itself to draw inflows from remittances and exports. Such steps might help smaller banks carve out a niche, though they risk fueling greater volatility if the Central Bank’s efforts with tighter monetary policies.
The market has effectively sorted banks into tiers as Tsehay and Nib banks were at the upper end with buying rates that exceed 125 Br, revealing an eagerness to absorb hard currency. By comparison, CBE anchors the lower end near 124 Br, acting as a stabilising ballast. Banks such as Dashen, Awash, Wegagen and Abyssinia occupied a middle zone, largely heeding Central Bank signals to avoid triggering bigger shocks.
In the coming days, a mild appreciation of the Birr could be anticipated, with forecasts showing a modest rise in the average buying rate from 125.18 Br to around 125.41 Br, and the average selling rate inching up from 127.57 to roughly 127.80. While not dramatic, this gentle upward shift could signal the Birr might benefit from a combination of steady external inflows and a slight easing in import demand. Commercial banks could see more uniformity in their quotes, aligning their spreads with the NBE’s signals if that holds.
Nib Bank Sees Year of Reckoning
Nib International Bank’s (NIB) financial results for the 2023/24 fiscal year painted a picture of a financial institution determined to steady its footing despite difficult economic conditions. In an industry long regarded for strong growth and profitability, NIB’s recent performance displayed a year marked by resource constraints, corporate governance reforms, and an ambitious desire to refocus on core strengths.
Yet, despite NIB’s setbacks, its directors, executives, and shareholders showed optimism that the steps now underway will help restore depositors’ confidence, improve liquidity, and eventually deliver steadier profits from a year that has been all but flattering.
The Bank’s total assets decreased by 12pc to 67 billion Br, signalling pressure on a balance sheet that had once tracked consistently with the broader industry’s expansion. Its deposit base contracted by 24.1pc to 45.1 billion Br, contrasting with the trend observed at many other private banks, where deposit mobilisation has generally held up despite inflationary headwinds. Over the last decade, private banks have seen moderate to robust deposit growth, which they have channelled into new loans.
At NIB, these pillars weakened during the year as the Bank scrambled to replace outflows with external financing, demonstrated by borrowings that jumped by over 105pc. The growing reliance on external funds has come with added costs, creating what executives recognise as a short-term measure they hope to ease as more stable deposits return.
Abdulmenan Mohammed (PhD), a finance analyst based in London, has called for a strategic overhaul to reverse the downward trend, as this decline has likely unsettled shareholders.
“The performance ought to be disappointing, if not shocking,” he said.
However, the newly appointed President of NIB, Henok Kebede, remained optimistic that the Bank’s strategic realignment, from attracting longer-term deposits to streamlining its credit portfolio, will improve the situation. Executives see technology as key to regaining a competitive edge and drawing new accounts.
“The customer base has now been significantly increased,” Henok told Fortune.
However, liquidity remained an ongoing concern. Cash and bank balances dropped by 48pc to 6.27 billion Br, while the liquid assets-to-total-assets ratio slipped to 9.4pc from 15.7pc. Executives conceded that the loan-to-deposit ratio of 109.2pc was higher than the Bank’s internal threshold, and above the previous year’s 89.8pc. The heavy borrowings, which more than doubled to 5.33 billion Br, unveiled the liquidity pressures.
According to the President, NIB is now in the process of settling overdue commitments, including borrowings, and expects the ratio to fall closer to industry norms. Across the private banking industry, the loan-to-deposit ratio generally stayed closer to 80pc. While NIB’s total outstanding loans and advances declined by about nine percent to 48.47 billion Br, the majority remain concentrated in the construction and manufacturing sectors.
Analysts saw the aggressively pursued lending activities as a double-edged sword. While they may have presented opportunities, they can also pose heightened risks if an industry-specific slowdown arises.
NIB executives remain confident that a system is in place to manage credit risk, pointing to ongoing monitoring and a commitment to allocate loans to reliable borrowers who can generate the needed liquidity. According to the President, the Bank’s lending approach is built around partnering with borrowers who can generate steady cash flow. He believes these strategic partnerships can reinforce liquidity.
“NIB’s internal risk appetite allows it to maintain a balanced approach to sectoral exposure,” Henok told Fortune.
Profitability metrics uncover the strain.
Net profit declined by 49.6pc to 957.9 million Br, positioning Nib behind newer players such as Berhan Bank, which posted 1.19 billion Br, and Abay Bank’s 1.5 billion Br. Return on Equity (RoE) fell from 27.7pc to 14.1pc, while Return on Assets (RoA) slipped by one percentage point to 1.7pc. Most private banks have shown consistent double-digit asset growth and improved profits over the past decade. NIB, however, experienced a contraction in its net profit margin on total assets to 1.43pc, signalling a noted departure from this industry-wide trend.
The Bank’s dependence on interest income, which accounted for almost 89pc of overall earnings, also revealed a concerning issue. There is less of a buffer from non-interest-based revenue sources, which many other banks leveraged to diversify their income. The environment dissuades some depositors from parking large sums in bank accounts, but NIB has felt the effects more directly than many of its peers.
Executives say that they recognise depositor confidence needs rebuilding. Indeed, NIB has been susceptible to negative real interest rates, as inflation was about 19.9pc year-on-year (YoY).
Despite the difficulties, NIB increased its paid-up capital to 7.6 billion Br, raising its capital-to-asset ratio to 15.47pc, compared with 11.53pc a year earlier. This injection offers a stronger cushion against systemic shocks and positions NIB to meet regulatory requirements comfortably. The Bank’s executives see this development as a foundation for restoring stability.
Some cost control measures appear to be paying off, although higher administrative outlays, attributable to governance changes and operational adjustments, raised total costs.
Private lenders have increasingly outpaced state-owned competitors in loan disbursements in the broader banking industry, expanding their networks and product offerings to attract deposits and borrowers. NIB remains among the sizable credit providers, holding a loan portfolio of 49.2 billion Br, yet its deposits per branch trail the industry average.
With deposits per branch at about 102 million Br, Henok says the Bank will focus on digital banking enhancements, including partnerships with fintech providers, to give customers more efficient and innovative banking experiences. Though the total branch count remains at 441, some offices were relocated to more visible or accessible areas, and three conventional branches were converted to full-fledged interest-free banking services in response to shifting market preferences. One was reverted to a conventional branch for the same reason.
According to Gizachew Abebaw, manager of the Bank’s premium branch at the Head Office, on Dejach Wolde Michael St., the Bank has undergone changes since March, spurred by a leadership team intent on identifying and catering to high-value clients. He acknowledged that recent governance issues, widely covered in local media, briefly unsettled some customers.
“They paused for a moment,” he said, describing a period when operational disruptions forced many to re-evaluate their banking options. “But it was temporary.”
The premium branch, overseen by Gizachew, offers specialised services to top-tier clients, including on-site service deliveries for large transactions. He reported robust progress in resource mobilisation, digitisation initiatives, and foreign exchange investments, attributing these as indicators of the Bank’s ongoing recovery.
“We’re on an upward trajectory,” Gizachew said.
He is confident that NIB Bank’s renewed focus on high-value account holders will reinforce its position in the industry.
His senior executives have introduced a 120-day liquidity recovery plan designed to revitalise deposit flows, refine governance structures, and tighten costs. The President attributed much of the pressure to surges in the cost of funds, prompting the Bank to focus on rebalancing its deposit mix. The aim was to secure more stable sources by attracting new customers willing to maintain deposits for longer periods.
According to Henok, these efforts have already led to a substantial expansion of the customer base, which he hopes will stabilise the deposit profile over time.
The past fiscal year also saw the Bank’s Earnings per Share (EPS) halved to 70 Br. The decline can be attributed to a combination of lower profitability and the capital boost that spread earnings more thinly across shares.
However, provisions for loan and other asset impairments rose to 401.8 million Br from 104 million Br, revealing more cautious risk assessments. Wage expenses and operating costs climbed considerably as well. Interest expenses reached 4.44 billion Br, a 36.6pc rise, while wages and benefits increased by 15.5pc to 2.91 billion Br. Other operating expenses jumped to 1.76 billion Br, 67.6pc growth.
Costs expanded faster than revenues, hitting 9.6 billion Br and reducing net profits. Losses from foreign exchange dealings more than doubled, reaching 256.25 million Br, and penalty expenses soared to 140.25 million Br from a mere 3.9 million Br the previous year.
A further complication came from a prior year adjustment of over one billion Birr, surpassing last year’s net profit and pushing retained earnings into negative territory at 378.17 million Br. The adjustment was attributed to several factors, including the application of incorrect exchange rates on a Letter of Credit (LC) payment, an expanded severance pay reserve calculation, unrecorded fees for MasterCard and VisaCard services, and an exchange rate regime shift that affected a dollar payment.
This revelation led to an overstatement of earlier earnings and dividends, making dividend payments for shareholders unattainable in the current year. Analysts expressed concern about the scale of these adjustments and called for careful review to ensure that the Bank’s financial statements accurately reflect its standing.
“Management should provide an adequate explanation for this,” said Abdulmenan.
According to Henok, improved controls and oversight are in place, arguing that many of these additional outlays are tied to cleaning up legacy issues and making the Bank more efficient in the long run.
The President stated that NIB’s capital structure is still robust, with a capital adequacy ratio of 19.8pc, more than double the regulatory minimum. While current standards are being met, he wants to strengthen capital further for the Bank to respond to unanticipated shocks and continue expanding. He also sees balancing the push to grow capital with preserving shareholder returns as important.
Incorporated 25 years ago with a paid-up capital of 27.6 million Br raised from 717 founding shareholders, NIB increased its paid-up capital by 26pc to 7.6 billion Br. Its capital adequacy ratio (CAR) stood at 19.8pc, more than twice the regulatory minimum. According to Henok, while the capital structure meets acceptable standards, it needs further strengthening to establish a strong capital base.
“We’re working to further strengthen capital base without compromising the returns to the shareholders,” he said.
Shareholders convened at Millennium Hall, where they learned that dividend payouts would not be possible this year, were disappointed. The news arrived at a time when NIB was restructuring its corporate governance and senior managment team, following the departure of more than a dozen senior staff and directors. A new board chaired by Shisema Shewaneka briefly appointed Emebet Melese (PhD) as president; she later moved to the Development Bank of Ethiopia (DBE), the state policy bank, making way for Henok to take the helm two months ago.
Henok brings two decades of industry experience, having served at the state-owned Commercial Bank of Ethiopia (CBE), Dashen Bank, and as founding president of Amhara Bank, where he spent two years. A graduate of management and international business studies from Addis Abeba and Greenwich universities, he took the reigns at NIB at a moment when the Central Bank’s tight monetary policy influences borrowing costs and pushes banks to compete more aggressively for deposits.
For longtime shareholders like Nigussie Ambo, who has held shares for over a decade and has not attended the annual meeting, the situation was disheartening, especially since no dividends were declared this year.
“I held a negative view,” he told Fortune, speaking of his absence.
He recalled signing forms related to the capital market initiative and learning the news about the Bank’s earnings shortfalls. Although he worried that the departure of experienced staff could affect the Bank’s future, he remained hopeful that fresh leadership and employees would be willing to undertake the hard work required to restore the Bank’s reputation.
“I don’t expect an immediate solution,” he said. “I believe NIB can return to its former glory, provided the new team is willing to dedicate themselves to the necessary hard work.”
Another shareholder, Haimanot Tessema (MD), who has held shares for seven years, attributed the dividend loss to “historical mismanagement.”
“Our dividends went away to mask the mismanagement of the previous leadership and their associates,” he said.
He called the new board and executives to ensure qualified professionals fill key roles and that strict oversight prevents past mistakes from resurfacing. The management team acknowledged these concerns and pledged a thorough review of prior practices while promising a merit-based approach, prioritising stability and sustainable growth. Henok disclosed that risk management structures have been upgraded, credit policies refined, and international best practices more closely followed. He revealed plans for revenue diversification, potentially through capital market ventures that allow for expanded product lines.
According to Henok, NIB has increased interest income by 20.9pc to 9.65 billion Br, primarily from loans and treasury investments. Fee and commission income rose to 713.34 million Br (11.4pc growth), helping total income climb by 21.3pc to 10.8 billion Br.
“We’re diversifying income sources through product diversification and capitalising on the new capital market to balance our revenue portfolio,” he told Fortune.
More banks are seen increasingly broadening income streams beyond interest earnings in the face of foreign exchange constraints and tightening local credit markets.
Some analysts see positive signs in NIB’s liquidity recovery plan, capital growth, and management overhaul. They believe the Bank will move toward greater stability if it can attract reliable depositors and methodically reduce high-cost borrowings. However, the concurrent growth of private banks, combined with evolving regulatory changes, may test Henok and his team’s ability to maintain a competitive edge. Still, analysts believe the Bank’s stronger capital position, combined with a refocused strategy, has the potential to boost its resilience against external shocks.
Whether NIB can regain the traction lost in 2023/24 will depend on its directors and executives ability to reinforce liquidity buffers, manage credit risk in their core lending segments, and reclaim the confidence of depositors at a time when all banks are trying to defend their franchises in a difficult market.
Loading your updates...