Following the spread of COVID-19, the Ethiopian government has taken a large number of prevention and containment measures since mid-March 2020. The economic impacts of these measures are considerable. According to the International Monetary Fund (IMF), Ethiopia’s GDP growth will decline to 3.2Pct from a previously projected 6.2Pct.

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.

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.

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.

The recent decision of the government to privatize state-owned enterprises (SOEs) which are operating in various industries has caused unease. What worries many is the inclusion of massive enterprises such as Ethiopian Airlines and Ethio-Telecom for partial privatization.

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.

A chronic housing shortage is one of the grimiest realities in Addis Ababa. The problem is manifested in squatter settlements, living in squalid and overcrowded conditions without regard for health and safety, long commutes, abject poverty, and exorbitant rent with minimum rights for tenants. The capital has vast slums. The inner-city, which covers 12Pct of the land, of which 70Pct is comprised of government- owned mud houses, is home to 40Pct of the population, according to the Central Statistical Agency.

Ethiopian Business Review | EBR is a first-class and high-quality monthly business magazine offering enlightenment to readers and a platform for partners.

2Q69+2MM, Jomo Kenyatta St, Addis Ababa

Tsehay Messay Building

Contact Us

+251 961 41 41 41