Abdulmenan MohammedJanuary 16, 2021

1min2040

Over the past decade-and-half, the drive for industrialization through infrastructural expansion and mega industrial projects called for significant resource requirements. Ethiopia has little mineral exports to take advantage of a commodity price boom, so it must mobilize resources from local and foreign sources.


Abdulmenan MohammedDecember 16, 2020

1min5950

Ethiopia’s financial system is characterised by a high degree of regulation, protection and poor use of technologies. The underdevelopment and traditional practices in the sector is even worse than the standard of neighbouring countries such as Kenya. For instance, the sector to GDP ratio (a measure of financial sector development) is half, and the number of banks is also less than half of Kenya’s. This difference becomes more notable when we consider Kenya’s 54 million population size as compared to Ethiopia’s 115 million in 2020.


Abdulmenan MohammedNovember 15, 2020

2min11720
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.


Abdulmenan MohammedAugust 30, 2020

1min2390

The massive borrowing, both domestic and external, taken by state-owned enterprises (SOEs) and other agencies is causing financial stress on the government. What has made the matter very worse is that the sheer size of the debts is so gigantic that neither they can be settled by federal government budget nor are they within the financial capacity of the enterprises to repay the loans.


Abdulmenan MohammedApril 15, 2020

1min30650

Although development banks have existed since the imperial era, there has not been a time where they played as significant a role as in the past fifteen years. The developmental state paradigm, which was adopted since the mid-2000s, has given renewed impetus for development banking.

The economic policy that envisages fast-track industrialization has developed successive industrial policies. Credit policy has been the lynchpin of the industrial policies. As a result, both state-owned banks, the Commercial Bank of Ethiopia (CBE) and the Development Bank of Ethiopia (DBE) have emerged as major policy instruments.


Abdulmenan MohammedSeptember 28, 2019

1min40380

Ever since Ethiopia liberalized the financial sector in the 1990s, the country witnessed different waves of banking formation. The first wave was 1994 to 2000. Six private banks were formed during this time. Following the enactment of the Monetary and Banking Proclamation of 1994 that allowed domestic private investments in the banking sector.



1min40710

In recent decades, the size and number of informal settlements have increased on the edge of many urban areas all over Ethiopia. Following this, a large number of informal houses have been demolished in several places across the country. The demolitions have caused considerable uproar and disappointments especially in the capital and the surrounding areas. What makes the case of the capital and its surroundings different is the scale of this phenomenon.


Abdulmenan MohammedApril 15, 2018

1min55100

One of the maladies the Ethiopian economy has battled over the past decade has been inflation. This economic ailment has created noticeable changes in the purchasing power of consumers. And though it was kept below double digits between July 2012 and June 2017, the past seven months has seen inflation hit the economy with renewed vigour. Headline inflation for January 2017 and February 2018 increased to 13.4Pct and 15.6Pct, respectively. To make matters worse, food price inflation soared to 18Pct in January 2017 and 20.9Pct in February 2018.



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