After a year-long Struggle, Manufacturers, Exporters see a Glimpse of Hope

In 2020, the spread of COVID-19 affected the global economy in large magnitude by reducing economic growth and slowing down business activities. Manufacturers and exporters operating in Ethiopia is also hit by the pandemic in a massive scale because of the cancelation of orders by international retailers and apparel. But after a yearlong setback, industry players say that foreign buyers are starting to place orders as the world’s economy is now under recovery. However, they argue to capture the opportunity, difficulties that hinders the performance of export-oriented manufacturers in Ethiopia should be solved quickly. EBR’s Ashenafi Endale explores.


Reduced physical engagement with cash due to COVID-19 triggered an increased demand for digital transactions and was coupled with the central bank’s measurements towards limiting cash withdrawals. The number of digital payment and online delivery companies has boomed to 35. Although the time is ripe for fintech companies and software developers, newly placed regulatory frameworks by the central bank are stunting the sector along with banks’ stubbornness in sticking with bricks and mortar. Ashenafi Endale, explores how de facto payment and delivery companies are struggling to transform into independent operators under the new directives of the central bank.


Despite Excess Liquidity, Banks are Disbursing Less Credit

Following the replacement of currency notes, the banking industry’s liquidity level grew six-fold compared to the previous year. Close to ETB45 billion of fresh savings entered the banking system, while 2.5 million new saving accounts were opened. Despite surplus liquidity, commercial banks are not disbursing credit as per their capacity. Some attribute this to the political violence and instability in Ethiopia in the past five years, which has diminished the appetite of credit seekers. Others claim banks are currently holding back from giving loans because economic and business activities are slowing down and default rates are increasing. EBR’s Ashenafi Endale explores.


The Role of Public Enterprises in Ethiopia

Ethiopia’s economic policies of the past two decades indicate the growing role and significance of state-owned enterprises (SOEs). Essential services such as electricity, telecommunications, shipping and logistics, and transport are mainly provided by SOEs. In addition to giant public enterprises, like Ethiopian Airlines, Ethio Telecom, and Ethiopian Electric Power, there are also SOEs engaged in railways, industrial parks, hotels, sugar, and other manufacturing industries. Although SOEs are increasing in the volume of transactions they involve, most remain inefficient and unable to service their debts. Their accumulated debt is especially skyrocketing, putting a huge stress on the national economy. The current accumulated debt of 21 SOEs is ETB846 billion, which is more than half of the total national debts. EBR editors explore the issue.


Why it Remains a Daunting Task

Historically, fish has played an important role in food security for many countries. Globally, it contributes 15-20Pct of current total animal protein intake requirements. Ethiopia is among nations with a vast potential in this regard. The country has many lakes and rivers for fish production and various species exist in these bodies of water. But the current annual production—57,360 metric tons—only satisfies a fraction of the demand. Instead of becoming a commercialized and thriving industry, the fishery sector in Ethiopia still remains a small scale and artisan-oriented industry. EBR’s Kiya Ali investigates.


The world has been in a state of shock since January 2020. Every corner of the globe is struggling to survive the health and economic impacts of the Coronavirus. Ethiopia is already experiencing the brunt of the virus as it reports a fall in economic growth and bankruptcy of several private companies. The most powerful states in the world that were perceived to have economic prowess, developed health system and educated society were apparently not ready for a challenge like the Coronavirus. Supply gaps in essential medical equipment showed their neglect of the most basic products; their health systems were simply overwhelmed by the large amount of cases coming in and their educated population proved to be undisciplined and not so smart after all.


Coronavirus disrupted everything. It has altered the way people work, communicate and get basic services. It has also killed businesses, leading to loss of thousands of jobs. However, not everyone lost. Some, in fact, are capitalizing on the new realities under the pandemic. Taxi hailing companies, delivery service providers, producers of sanitizers, mobile money operators and mobile retailers are among a few of the businesses that cater to the changing demands of customers. EBR’s Kiya Ali explores.


Power outages are a common problem faced by everyone in Ethiopia. From households to industries, it is a major challenge that affects productivity, thereby contributing to inflationary pressure as it results in supply shortage in many sectors. Amidst the COVID-19 crisis, interruption has become more frequent due to the rise in household consumption. Although many citizens and expats have been told to work from home to curb the spread of the virus, this has proved to be quite a challenge due to power interruptions. EBR’s Samson Berhane explores.


The major scare on Ethiopia’s international image is its incessant association with famine. Ethiopia has a cycle of drought that recurs every decade. Despite efforts to break the cycle and rise above the embarrassing and life threatening challenge, drought and famine still creep up. Despite decades of experience fighting the vice, Ethiopia still regularly struggles against food self-sufficiency problems. The lingering problem necessitates keeping dependable food reserves. EBR’s Ashenafi Endale investigates the problems behind this chronic problems and sheds light on the road ahead.


There are no options in sight for Addis Ababa’s horizontal expansion now that border disputes with Oromia regional state have become one of the hottest political agenda in the country. This horizontally fixed landmass has, however, been receiving an unprecedented huge influx of rural urban migrants. With most of the city’s farm lands used up for constructing residential areas, residents of Africa’s capital are left to depend on regional states for the supply of agricultural products. EBR’s Ashenafi Endale looks into the problem and the fresh efforts being taken to avert the situation.

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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