Shiferaw Taps Daily Transactions to Fund Disaster Relief

Jan 24 , 2026. By NAHOM AYELE ( FORTUNE STAFF WRITER )

A new federal regulation will soon require citizens to pay into the Ethiopian Disaster Risk Response Fund Office (EDRRFO) every time they use services from digital banking to buying a flight ticket. The measure, set to launch next month under the stewardship of Shiferaw Teklemariam (PhD), attempts to mobilise disaster relief funds by levying small fees, such as five percent on digital transactions and one percent on insurance premiums and dividends, on a wide array of daily activities.

The federal government is to implement a far-reaching scheme to finance its disaster-response infrastructure by drawing on micro-contributions from millions of everyday transactions.

Spearheaded by Shiferaw Teklemariam (PhD), commissioner for Disaster Risk Management, the new campaign, under the Ethiopian Disaster Risk Response Fund Office (EDRRFO), marks a strategic shift from reliance on foreign aid toward domestic resource mobilisation. However, its structure has ignited debate over the implications for economic equity, service affordability, and institutional readiness.

Under a new regulation signed by Prime Minister Abiy Ahmed (PhD) and approved by the Council of Ministers, the Ethiopian Disaster Risk Response Fund Office (EDRRFO), an institution accountable to Shiferaw, the federal steward of solace, will mobilise funds from a broad range of daily transactions. Citizens will be required to pay into the fund through various service fees, including charges imposed on digital banking users, insurance premiums, corporate dividends, flight tickets, and voice and data airtime fees collected by telecom service providers.

Additional revenue streams include fees for passport and visa services, income generated by petroleum suppliers, lump-sum fees during trade license registrations and renewals, and charges for services at the Federal Documents Authentication & Registration Services (DARS). The Office also expects contributions from federal agencies and private companies, with the Customs Commission tasked to transfer proceeds from goods and money seized in alleged trafficking cases, whether sold directly or through auctions.

Chemical manufacturers, tobacco and alcohol producers, and shipping and logistics companies are included in the pool of contributors. Government budget allocations from the federal government, the Addis Abeba City Administration, and the Dire Dawa City Administration will supplement the fund. Donations from development partners, charitable organisations, and individuals are also anticipated.

The regulation details revenue rates and collection responsibilities for each sector, with banks and telecom providers required to collect and transfer the funds. Digital banking users will face a five percent charge on service fees, matched by a similar five percent contribution from those buying airtime or data. A one percent levy applies to insurance premiums, loan disbursements by banks and microfinance institutions, and dividends received by shareholders.

Citizens are expected to pay each time they use a listed service, a structure that has triggered criticism for effectively requiring repeated payments for the same fund.

Banks and service providers responsible for collecting funds are required to deposit the funds at the end of each month into an account opened under the Office, with oversight from the Ministry of Finance and the National Bank of Ethiopia (NBE). Any organisation or institution that fails to deposit the collected money within the specified period will be subject to repayment of the principal with interest, as determined by the NBE, and a 10pc penalty on the unpaid amount.

“No institution is exempt, and everyone must follow the law strictly,” Alehegn Kassa, head of the legal affairs department at the Commission.

According to Alehegn, who once served as the Supreme Court Justice in the Amhara Regional State, the Office will deploy these funds only in the event of a confirmed budget gap or an emergency disaster. The funds will be used to procure humanitarian relief supplies, build strategic food and non-food reserves, expand storage infrastructure, and strengthen reserve warehouses.

The Office is in the final stages of organisation, with appointments of a director general and deputies underway. Last week, insurance companies in Addis Abeba were summoned to an awareness session on the fund’s implementation.

According to Fasil Asfaw, risk and compliance director at Nyala Insurance, the meeting was more of "a directive than a forum for discussion."

“It would've been better if insurers had been given the opportunity to share their views and discuss the contribution rates imposed on the sector,” he said. "The contribution could be particularly burdensome for large insurers."

Abraham Mebrat (PhD), a lecturer and researcher at the Institute of Disaster Risk Management & Food Security at Bahir Dar University, argued that the scheme, though placing pressure on the financial sector and the public, is necessary for national self-reliance. He believes the fund reflects Ethiopia’s longstanding tradition of risk-sharing, pointing to the “Busa Gonofa” system in the Borena area of Oromia Regional State as a precedent for collective responsibility.

"After the suspension of foreign aid, the responsibility for disaster response has shifted to the government and the public," he told Fortune.

Disaster relief funds are not a new concept for Ethiopia or globally.

Kenya, for example, operates a similar fund but with a crucial difference in funding mechanics. Its model follows a top-down approach, with the government allocating a portion of its tax revenue to a dedicated disaster fund. Citizens are not required to pay additional charges when buying goods or services. Ethiopia, by contrast, is taking a bottom-up approach, collecting small amounts from millions of daily transactions. While this system allows for rapid accumulation of funds, it also increases the cost of living for ordinary residents.

Yohannes Hailu, a founding shareholder of Berhan Bank and a businessman, is among those who have voiced frustration.

“When I borrow money, I contribute," he told Fortune. "When I buy insurance for my car, when I buy airtime for my phone, when I fuel my car, I contribute.”

Yohannes found it unfair to require contributions on borrowed money, arguing that taking a loan already involves risk and high interest rates. He warned that adding another contribution on top of this discourages business activity. He also questioned the logic of imposing fees on businesses that incur losses, noting that there is no reciprocal support when businesses become unprofitable.

For Yohannes, such duplicated charges are not contributions in the spirit of solidarity but resemble extortion. However, he acknowledged that contributions can be justified in some cases, such as when profits are earned through dividends.

“When someone earns dividends, it means they've made a profit," he said. "Asking for a contribution from that profit is reasonable.”

Yohannes was careful to emphasise his support for the humanitarian response fund. He described it as a “good initiative” that could strengthen Ethiopia’s ability to respond to sudden disasters, provided that implementation does not place an excessive burden on the public and is informed by public discussion.

Not all officials share these concerns. They pushed back against such public criticism, insisting that the office was established to enable citizens, communities, and institutions to fulfil their social responsibility by supporting each other in disaster risk prevention and response, as well as in recovery and rehabilitation. Federal relief officials argue that because disasters can affect anyone, it is reasonable for everyone to contribute to a fund that enables timely and effective responses. They believe the existence of a federal fund helps the country become more resilient and able to respond independently to human-made and natural disasters.

“The Fund is also intended to strengthen humanitarian relief efforts, strategic reserve stocks, emergency machinery, reserve supplies, and disaster-related technologies,” said Alehegn.

The federal government’s rationale has taken on new urgency following the drop of USAID support, which led the country lose billions of dollars in aid.

“How should disaster response efforts be sustained without external assistance?” Alehegn asked.

For Alehegn and his colleagues at the Commission, relying on domestic contributions has become indispensable. He argued that many routinely pay service charges without objection, but take issue when a portion is redirected to disaster relief.

"The contribution scheme is designed to collect small amounts from a wide range of services, spreading responsibility and promoting solidarity," Alehegn told Fortune. “This approach reduces dependency on external aid and strengthens the country’s ability to respond to disasters using its own resources while distributing risk across society.”

When the amendment to the law governing disaster risk management was introduced last March, it initially proposed deducting contributions from the salaries of public and private sector employees. That provision sparked widespread public backlash and was removed before Parliament ratified the bill. However, the final regulation and the subsequent implementation directive have retained the broad array of levies on banking and insurance services, igniting debate among sector leaders and service users.

The Commission's officials have informed executives of banks and insurance firms of the regulation through letters they dispatched last week. With the short implementation time they are given, banks now should complete costly core system integrations and adjustments within weeks, after being officially notified only recently.

Demissew Kassa, secretary general of the Ethiopian Bankers Association, welcomed the idea of a federal fund for emergency and relief works but voiced concern about the pressure it would place on the public. While banks primarily serve as collection agents under the new regulation and may not be directly affected, Demissew believes users, particularly the middle class and businesspeople who rely heavily on banking and insurance services, will bear the brunt of the additional costs.

Tadesse Hatiya, president of Sidama Bank, expressed even stronger concerns. He sees the fund as an issue to worry about, not only for individuals but also for banks, arguing that the scheme exerts direct pressure on the financial sector.

“Banking is a competitive industry, and banks may not be able to transfer the full cost to customers if they want to attract and retain clients through fair pricing," he told Fortune. "They may absorb part of the cost, which could affect their bottom line.”

He found the five percent contribution on digital transactions particularly problematic, particularly at a time when the government is encouraging digital finance. With the existing 15pc VAT, he warned, users could end up paying as much as 20pc in different charges. Tadesse warned that repeated fees could make digital services prohibitively expensive and push customers back toward traditional banking methods.

While not opposed to contributing to disaster relief, Tadesse argued that the required rates, particularly for loans and digital payments, are too high.

“Revenue collection is necessary, but it should not harm banks, businesses, or citizens, nor be treated as just another revenue exercise,” he said.

Tadesse also questioned the logic of a one percent contribution on loans. He argued that businesses already repay principal and interest and that the new charge further increases their burden. He warned that they might pass these costs on to consumers, making it more difficult to tame inflation.

For Abraham, the lecturer, the fund could help cultivate a sense of ownership and belonging among citizens. However, he urged the Shiferaw and his team at the Commission to consider alternative sources of revenue, such as the sale of unused public assets, to ease the burden on denizens.

PUBLISHED ON Jan 24,2026 [ VOL 26 , NO 1343]