The Missing Gap at NBE

For more than a decade, inflation has been a serious problem owing to expansive monetary policy. In recent years, political instability, food supply shortages, and the persistent depreciation of the Ethiopian Birr has exacerbated the inflationary phenomenon, peaking in excess of 20Pct recently. This problem is severely hitting the urban poor and the unemployed. Despite monetary tightening using reserve money as the operational target to control broad money growth, the nation’s inflation is unyielding. It has been persistently high over the past couple of years, and it seems there is no hope in sight of bringing it down to an acceptable level. Another serious trouble with the financial sector is the concentration and increased credit exposure of state banks. Unbridled lending to state-owned enterprises has increased their credit risks. Implicit and explicit debt guarantees by the government has increased the moral hazard where many state-owned enterprises have failed to service their debts according to the terms of their loan agreements, leading to the formation of a new state enterprise to take over their debts.



A Sector misunderstood by Policy Makers

Ethiopia is the leading country in Africa in terms of livestock population with more than 60 million cattle, 30 million sheep, 30 million goats and over 1.5 million camels. Livestock contributes over 15Pct of Ethiopia’s GDP and 45Pct of the agricultural GDP. In Ethiopia, livestock is a tractor for crop farming, source of cash income for millions, insurance for uncertainties, fertilizer for crops, expression of status for families, store of asset, and source of foreign currency for the country.




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