Two years after the civil war left Tigray Regional State in ruins, a contentious effort to rebuild the region is now underway as municipal tariffs have been reintroduced to fund essential infrastructure and services. The Urban Development & Construction Bureau, which had remained silent on revenue collection for four years and was under the embattled Tigray Interim Regional Administration (TIRA), has now approved sweeping changes affecting more than 1,700 services.

According to regional officials, the new tariffs, including a 0.2pc levy on services provided to investors when obtaining loans and increased annual fees for industries and commercial properties, are critical for generating the revenue needed to restore roads, buildings, healthcare centres, and schools devastated by the war.

The decision, signed by Getachew Reda, TIRA's chief administrator, comes amid growing pressure to revive the regional state's ailing economy. Municipal authorities have relied heavily on federal block grants for years, but those funds have proved insufficient to repair the extensive infrastructural damage.

“Revenues are necessary for the economy,” said Sishay Kiros(PhD), an urban development specialist with the Bureau.

The revised tariffs mirror similar measures taken by regional officials in other regional states, such as Dire Dawa city as well as Amhara Regional State. TIRA aspires to raise roughly 10 billion Br during the current fiscal year, a target regional officials believe will provide the financial source for comprehensive urban renewal.

The new tariff regulations include an increased annual service fee for investors, which may reach as high as 300,000 Br, a threefold increase from previous rates. Commercial property fees have increased to 5,000 Br monthly. Municipalities will also enforce a penalty regime for delayed payments: an extra five percent penalty in the first month and two percent for every subsequent month. In some cases, authorities have even authorised property seizures to ensure compliance.

While the authorities' intent appears to drive rapid revenue collection and fund rebuilding projects, these measures have sparked a fierce debate among business leaders. Many argue that the tariffs threaten to stifle recovery in an economy still reeling from war.

Business leaders in the region have raised concerns about the economic impact of these measures.

The Tigray Chamber of Commerce & Sectoral Associations (TCCSA) has repeatedly urged the administration to reconsider the new tariffs, especially for companies that have already suffered heavy losses. Its President, Berihu Haftu, contended that while Getachew, the TIRA chief, had announced a temporary pause on tariff implementation to ease the burden on recovering businesses, many municipalities continue to enforce the fees.

“Nothing has changed,” Berihu told Fortune, pointing to the disconnect between official proclamations and on-the-ground realities.

For many businesses, the additional costs threaten to derail efforts to restart operations, adding to an already overwhelming financial burden.

A businessman, who asked to remain anonymous due to the delicate affairs of the regional state, provided an illustration of difficulties local businesses face.

The plight of a water bottling company in Shire town that had been established six months before the onset of the war had initially secured a loan of 80 million Br. Due to accrued interest, the outstanding balance had swelled to 110 million Br. The company has struggled to obtain additional financing despite the desperate need for new capital, assessed at 180 million Br to procure machinery and cover working capital. In one recent incident, the business faced a demand for nearly one million Birr on a 30-million-Br loan, a burden compounded by the transport cost that charged six Birr for a 10Kg at every city the goods pass through.

“We need to rebuild before we are subjected to any payment requests,” the investor said, encapsulating the widespread sentiment among local entrepreneurs.

Local officials insisted that the revised tariffs are part of a broader strategy to revitalise the region's shattered economy. Yet, as business owners recount their mounting struggles, a picture of deep-seated disarray emerges. An economic recovery plan, developed in the immediate aftermath of the war, has languished for two years, stymied by bureaucratic inertia and internal political disputes among senior members of the Tigray People’s Liberation Front (TPLF) and TIRA leaders.

“The economy of Tigray hasn’t recovered," Chief Administrator Getachew lamented last week, addressing the media at the Sheraton Hotel "The state of Tigray has been neglected and needs help.”

His remarks amplified the region's persistent turmoil, where erratic essential services, widespread infrastructural damage, and shuttered manufacturing units remain the norm.

The strained relationship between the local banking industry and the region’s business community is added to the economic despair. While banks in the region continue to attract large deposits, local entrepreneurs have found it increasingly difficult to secure new loans. As of June 2024, commercial banks in the region had issued nearly 1.5 trillion Br in loans and advances while maintaining a non-performing loan ratio of 3.6pc, comfortably below the regulatory threshold of five percent. Yet, despite these measures, local businesses remain deeply concerned about the long-term prospects for recovery.