The recent findings of the National Bank of Ethiopia (NBE) Financial Stability Report have brought to light a significant trend: the ten largest borrowers hold a substantial portion, 23.5%, of the banking industry’s total loans and advances. This concentration of credit, while potentially beneficial, also poses substantial risks to the stability and health of Ethiopia’s financial system.



The Ethiopian Journey Towards a Truly Inclusive Economy

Over the past few decades, Ethiopia has embarked on a commendable journey towards creating a more inclusive economy. One noteworthy policy initiative has been the introduction of interest-free banking, initially offered through windows within conventional banks and later evolving into full-fledged institutions in 2020. This move has had a significant impact on the vast unbanked Muslim population in Ethiopia, fostering financial inclusion and empowering citizens who were previously excluded from the formal financial system. The impact extends far beyond the economic sphere, playing a crucial role in social empowerment and paving the way for a more equitable society.



The 2018 political shift in Ethiopia initially sparked optimism for the advancement of women’s rights. Under Prime Minister Abiy Ahmed, the Ethiopian government implemented reforms that garnered global attention. Women’s representation in leadership saw a dramatic increase, with half of the ministerial positions being filled by women and women taking the helm of the presidency, the Supreme Court, and the national election board. These reforms extended to regional and local levels, fostering hope of a genuinely inclusive future for Ethiopian women.



Ethiopia’s landlocked status has long constrained its economic growth and regional influence. While direct access to the sea offers undeniable benefits, achieving it remains a complex geopolitical puzzle. Direct access to the seaport brings enormous economic benefits for Ethiopia. It strengthens a nation’s regional and international standing, granting it a voice in maritime affairs and potentially boosting cooperation with other coastal countries and superpowers.



Will it Rain Relief or Ruin?

Ethiopia’s debt is undoubtedly mounting. Although the debt to GDP ratio has shown some signs of decline, the debt in actual figure is increasing.

The IMF and other economic institutions project that Ethiopia’s debt-to-GDP ratio will increase in the near term, potentially reaching 50Pct by 2024. Some analysts believe Ethiopia can manage its debt burden sustainably, while others express concerns about the potential debt crisis, which is already looming as the country missed a USD33 million Eurobond coupon payment on December 5. The default on the Eurobond coupon marks a challenging economic phase for Ethiopia. This development comes amidst internal conflicts, high public debt, and ongoing discussions with the IMF for a potential financial bailout and debt restructuring with G-20 countries.



After months and months of military showdowns between the Government of Ethiopia (GoE) and the Tigray People’s Liberation Front (TPLF), a war broke out in October 2020. Ever since that first shot was fired that historically unfortunate night, hundreds of thousands of people have lost their lives, while millions have been displaced.




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



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