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.

In the creation of the modern state, governments in Africa have tended to impose authority on local people. In this, they have been supported by organisations which have, until not too long ago, shared the view that only through central control can sustainable development be achieved. This has resulted in policies that take little account of local needs and interests.

A strong export performance and stable balance of payment stance are the main sources of growth and prosperity. In the last decade, the government has been claiming Ethiopia achieved double-digit economic growth. Ironically however, the past ten years can be labeled as ‘the lost decade’ in relation to Ethiopia’s export performance.