A-Perfect-Storm.jpg

Ethiopia’s Banking Sector Navigates Uncharted Waters

Ethiopia’s banking sector is currently grappling with a severe liquidity crunch, causing significant distress to individuals and businesses. The effects are palpable, with delayed transfers, restricted cash withdrawals, and challenges in securing loans becoming the norm.

Why are banks struggling with liquidity? How have the government’s recent economic reforms impacted the banking sector? What are the real-world implications for businesses and consumers? And what steps are being taken to address the crisis? These are the pressing questions that need answers.

This in-depth analysis by EBR’s Munir Shemsu explores these questions, examining the root causes of the liquidity crisis, the challenges banks face, and the potential consequences for the broader economy. The liquidity crisis in the banking sector is not just a problem for individual banks or their customers. It has the potential to significantly disrupt the entire economy, affecting businesses, consumers, and investors alike.


A-Taxing-Time-Balancing-Revenue-Goals-Citizen-Concerns.jpg

Balancing Revenue Goals, Citizen Concerns

The Ethiopian Ministry of Revenue’s aggressive pursuit of tax revenue to address its widening budget deficit and ambitious development goals has sparked significant concerns. The recent introduction of new taxes and tariffs, coupled with the expansion of the Value-Added Tax (VAT) system to previously excluded sectors, has raised questions about their potential impact on the economy and the welfare of citizens.

While the government aims to broaden the tax base and improve tax collection efficiency, critics argue that the rapid pace of reforms and the singular focus on revenue targets could inadvertently harm economic growth and exacerbate inequality. This raises a pressing question: How can Ethiopia balance its fiscal needs with the imperative of fostering a sustainable and equitable economic environment?
The delicate balance between revenue generation and economic well-being is a complex challenge. That’s why the government needs to carefully consider the potential consequences of its tax policies to ensure that they contribute to fiscal sustainability and promote long-term economic growth and social equity. EBR’s Munir Shemesu reports.


Foreign-Banks-Entry-Domestic-Mergers.jpg

Foreign Banks Entry, Domestic Mergers

The Ethiopian financial sector has undergone significant transformations in re-cent years, including the proliferation of interest-free banks, new conventional banks, and digital financial services. The government’s decision to allow foreign banks to operate in the country for the first time in five decades while also seeking to strengthen domestic banks presents a potential for increased competition and enhanced efficiency. EBR’s Munir Shemesu investigates if these changes could bring about a more robust and dynamic financial sector, as seen in other African countries that have managed similar transformations.


The-High-Cost-of-Beauty.jpg

Ethiopia’s Economic Dilemma

Addis Ababa’s ambitious beautification projects have undeniably transformed the city, creating a more visually appealing urban landscape. Yet, these aesthetic improvements raise critical questions about their economic feasibility and impact on the city’s residents.

While the gardens, pedestrian walkways, cycle lanes and recreational centres undoubtedly enhance the city’s quality of life, they come at a high cost. With soaring inflation, poverty, and a struggling economy, allocating a large amount of resources to such projects raises concerns about their prioritization. Critics argue that investing in the economy’s productive sector is more crucial to addressing supply-side constraints that have plagued Ethiopia for decades. City residents also ask about the fairness of the running water shortages in many neighbourhoods while the city greening projects enjoy all-day watering.


Can-Ethiopias-Bold-Economic-Overhaul-Pay-Off.jpg

Ethiopia has boldly embarked on a radical economic transformation. The recent liberalisation of the foreign exchange market, a cornerstone of broader reforms, has sent shockwaves through the nation. Questions abound as the Birr plummets and prices soar. Will this drastic shift unleash economic growth or plunge the country into deeper turmoil?

EBR’s Munir Shemsu dissects the complexities of Ethiopia’s economic overhaul. He delves into the government’s ambitious plans, the challenges businesses and individuals face, and the potential long-term implications. Is this a risky gamble or a strategic masterstroke?


Ethiopias-Proposed-Asset-Seizure-Bill.jpg

The Need for Balancing Economic Interests With Rule of Law

Ethiopia’s proposed Asset Recovery Bill has sparked controversy. The bill grants broad powers to the government to seize assets suspected of being acquired through illegal activities, even without proven crimes. Critics fear the bill could be used to target political opponents and lacks sufficient due process protections. The retroactive application of the law is another primary concern. Legal experts, opposition parties, and even some public officials have raised concerns about the bill’s constitutionality. The lack of judicial oversight and the potential for abuse are significant risks experts raise. The Ethiopian government should carefully consider these concerns and prioritize upholding the rule of law. While asset forfeiture can be a tool to combat economic crime, strong safeguards are needed to prevent potential abuse. EBR’s Eden Teshome has spoken to experts and explored the experience of other countries to compile this report.


Beyond-Efficiency.jpg

The Cost of Ethiopia’s Reliance on Foreign Contractors

Ethiopia has seen rapid industrial growth in recent years, facilitated by the construction of new industrial parks by Chinese multinational firms. While the government initially sought to involve local contractors in building these parks as part of a capacity-building initiative, the local firms needed help with infighting, delays, and poor-quality work. In contrast, the Chinese firms completed projects on time and with reasonable quality. As a result, the construction of significant infrastructure projects in Ethiopia, from industrial parks to government buildings, has increasingly been dominated by foreign contractors, especially Chinese ones. This reliance on foreign firms highlights the shortcomings of the local construction sector in Ethiopia, which has yet to demonstrate the expertise and reliability required for such large-scale, high-profile projects. However, this has its dents on the economy as the country spends meagre foreign currency on contractors, writes EBR’s Samuel Getachew.


Tigray_forces.jpg

Once lauded as Africa’s rising economic star, Ethiopia faces a persistent challenge: conflict. Over six years, the country has navigated a period of turbulence that has significantly impacted peace and security, posing a formidable obstacle for businesses operating within its borders. This article by EBR’s Samuel Getachew delves into the multifaceted impact of these conflicts, exploring the specific hurdles entrepreneurs face. Through consultations with business leaders and a comparative analysis of other countries’ experiences, the article proposes potential avenues for addressing these issues and fostering a more conducive environment for business growth.


Proliferation-of-Halal-Business-in-Ethiopia.jpg

Catering to Growing Demands, Values

Ethiopia, known for its diverse cultural and religious tapestry, has recently experienced a significant surge in demand for Halal products and services. This trend reflects a growing awareness of Halal principles, particularly within the country’s substantial Muslim population, estimated at around 34%, according to various studies.

This heightened awareness presents a significant market opportunity. Businesses increasingly recognise the demand for Halal-certified products, primarily focusing on food. However, the need for Halal-certified cosmetics, pharmaceuticals, and other goods is also emerging. This rise in Halal businesses presents exciting new avenues to boost exports, paving the way for increased investment and job creation.

However, the expansion of the Halal business sector needs some help. Ethiopia needs a robust national Halal certification system and a well-defined policy and legal framework. The infrastructure and logistics to create a truly enabling environment have yet to be fully established. These shortcomings hinder export performance and erode consumer trust.

Despite these hurdles, Ethiopia’s burgeoning Halal market holds immense potential. By addressing certification limitations and fostering adherence to Halal standards, Ethiopia can strategically position itself as a significant player in the global Halal industry. This article explores the proliferation of Halal businesses in Ethiopia, examining the driving forces behind this growth, the opportunities it presents, and the challenges it faces.


Empowerment-Through-Equity-Closing-the-Gender-Pay-Gap.jpg

Globally, women still earn an average of 23% less than men, according to the International Labour Organization. This translates to significant financial losses for women throughout their careers, impacting their ability to save for retirement, purchase homes, and support their families. In Ethiopia, the situation is even starker, with women earning only around 63 cents for every birr (37% less than) men earn for similar works in urban and worse in rural. This disparity not only limits the economic security of women but also represents a missed opportunity for the nation’s economic development. Women constitute a significant portion of the workforce and their full economic potential remains unrealized due to this imbalance. EBR delves into the reasons why closing the gender pay gap is an urgent necessity, exploring its economic and social impacts, and outlining potential solutions to achieve a more equitable future.




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

Addis Maleda
x