Ethio-post Turns Branches into Banks as Banks Close Theirs

Aug 15 , 2026. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

EthioPost is preparing to turn its 3,000 branches into banking agents, letting customers deposit and withdraw cash, pay utility bills and access accounts held at any commercial bank. A pilot has begun at 700 branches with EthSwitch, the payment network owned by the commercial banks and the National Bank of Ethiopia (NBE). A nationwide launch is expected within a month. It is the boldest bet yet that a 132-year-old letter carrier can remake itself as a financial network.

Ethio-post is preparing to turn its thousands of branches into banking agents, allowing customers to deposit and withdraw cash, pay utility bills, and access accounts held at any commercial bank.

It is the boldest bet yet that a 132-year-old letter carrier can remake itself as a financial network. Whether the 3,000 counters that once sorted mail can now win the public's trust with its money is the question the rollout will answer.

For its critics, the same counters belong to a model being overtaken by the mobile phone.

The state enterprise has begun a pilot at 700 branches with EthSwitch, a national payment infrastructure owned by all the commercial banks and the National Bank of Ethiopia (NBE). A nationwide launch of its Digital Financial Services (DFS) operation and wider agency network is expected within a month, Belayneh Mamush, communications head at Ethio-post, disclosed.

According to Belayneh, it is an “integrated banking system” through which customers can make cash-in and cash-out transactions at postal branches, regardless of which bank holds their accounts. The plan is one piece of a recently approved three-year roadmap Belayneh called "Breadth and Depth", built on five pillars, including human resources and institutional culture, digital transformation and sustainable growth.

A surge in express delivery and government business pushed sales to 2.88 billion Br in the year ended July 2025, almost double the previous year. However, soaring transport costs and a 377 million Br currency hit exposed the financial pressure behind the postal operator’s expansion. Its gross profit increased by 58pc to 1.35 billion Br, yet net profit fell by 48pc to 71.7 million Br, narrowing the net margin to 2.5pc from 9.5pc.

The paradox captures the state postal operator's central problem. It has found ways to grow at speed but is finding it far harder to turn scale into earnings.

Most of the expansion came from a business that looks less like a post office each year. Express mail generated 1.52 billion Br, up by 88pc and more than half of turnover. The National ID and other government services opened a new stream of 631.1 million Br. Together, they supplied nearly three-quarters of sales and almost 88.5pc of the year's revenue increase.

The rest was patchier. Transport and logistics fell by 20pc and telecom commissions by 22pc, leaving more of the company riding on fewer engines.

Direct costs jumped by 151pc, far outpacing revenue, as mail-transportation expense alone climbed from 494 million Br to 1.32 billion Br, nearly 46 cents of every Birr of sales. Gross margin fell to 47pc from 58.6pc.

There was discipline elsewhere, with operating expenses up only 26pc despite the near-doubling of turnover, cutting overheads to 29.8pc of revenue from 46.6pc. A 376.9 million Br foreign-exchange loss sharply eroded the gains from the company’s operating expansion. The loss was equivalent to about 28pc of gross profit and more than five times net profit, helping push net earnings down despite the strong growth in revenue

International payables of 1.88 billion Br were offset by about 1.09 billion Br in receivables, resulting in a net position of near 799 million Br, larger than the company's 759 million Br of equity. Total liabilities increased by 89pc to 2.74 billion Br while equity grew less than three percent, taking liabilities to about 3.6 times capital.

Trade and other payables accounted for about 52pc of Ethio-post’s total liabilities, with the postal operator increasingly relying on amounts owed to suppliers and other counterparties to finance its operations.

The company is “re-engineering” its core operations towards financial services, e-commerce and logistics, according to Belayneh.

The early numbers point up. Revenue increased by 30pc to more than 3.8 billion Br in the last fiscal year, while it handled more than 600,000 customer inquiries. Its logistics arm moved more than six million parcels in 2025/26 at a 98pc delivery rate. It wants to lift parcel traffic by at least 70pc over three years in pursuit of what Belayneh called "market dominance".

Post Gebeya, an e-commerce platform built with the Ministry of Industry and the World Bank, now carries more than 1,200 small and medium vendors. It ranks among the Enterprise's five largest revenue lines.

There is a physical logic to the timing, too. Rising fuel prices and shipping disruptions have pushed Ethio-post to reconsider transport costs. It plans to transition its domestic fleet to electric vehicles to reduce its exposure to fuel price swings. The push carries the imprint of new leadership.

Director General Dagmawi Hailliye, who worked at DHL for six years beginning in 2014 before joining as Chief Operating Officer, leads the Enterprise, which sits under Ethiopian Investment Holding. He succeeded Hana Arayaselase, now minister of Justice and Ethio-post's Board Chairperson.

The expansion into finance is part of a product-diversification drive running across state-owned enterprises.

However, it arrives at an awkward moment for the branch itself. According to data from the National Bank of Ethiopia (NBE), the banking industry opened a net 312 branches in 2024/25, taking the national total to 12,590.

Yet, several banks pulled back, revealing they treat the branch as a cost to trim, the very footprint Ethio-post is betting on.

The state-owned Commercial Bank of Ethiopia (CBE) closed 55 branches, Bunna Bank 18, Nib Bank 16, Berhan Bank 11, and Oromia Bank 10. Private banks' share of the network edged up from 81.3pc to 82.3pc, and deposits increased by 40.7pc, helped along by the spread of digital services.

Access is still uneven. One branch serves about 8,868 people, and 30.1pc of all branches sit in Addis Abeba.

That backdrop frames the central doubt. Demessew Kassa, secretary general of the Ethiopian Bankers Association, questioned whether Ethio-post's counters can draw the trust and traffic the Enterprise model needs.

"It’s one thing to have permission from the National Bank, but the real test is whether they will work,” he told Fortune, noting that other entities, including Ethio telecom, have won similar approvals. "Whether the public will actually have the trust to line up at a post office to deposit their money is a major test.”

Demessew sees Ethio-post as an intermediary, not a bank in its own right.

“Behind the scenes, they’re just collecting the money to deposit it back into the commercial banks eventually," he said. "Unless they find a specific benefit in the transfer fees, they are essentially doing middleman work for the banks".

Drawing on his years leading business-process re-engineering at a commercial bank, Demessew called branch-based banking an "outdated model".

"To say you have 3,000 branches today is an outdated model when people can already pay, receive, and manage their accounts with their mobile,” he said. “They shouldn't have to stand at a counter.”

Nonetheless, Demessew’s pessimism has limits. He likened the shift to the arrival of mobile phones in rural Ethiopia, when many feared the devices were too complex for farmers, who now use Nokia handsets while hauling goods on carts.

"It isn’t a matter of a single day,” he said. “It’s about building public awareness over time.”

Demessew expects digitalisation to lead banks to slow hiring and shrink networks to contain staffing and lease costs. The future bank, in his view, is not a brick-and-mortar building but the phone in a customer's hand.

A second voice is more forgiving. Mekbib Tesfaye, a London-based financial analyst, sees room for a profitable operation, noting that post offices elsewhere have diversified into foreign exchange, insurance premium collection and remittance payouts. He agreed that banks do not always judge branch performance well, arguing that they should not be measured solely by deposits or loans, since their functions differ.

“Ethio-post's largely owned network could let banks gather deposits at little cost, especially now that overnight lending is available to them,” Mekbib told Fortune.

But he too wondered how far the Enterprise could stretch beyond its core postal work.

PUBLISHED ON Aug 15,2026 [ VOL 27 , NO 1372]