@UNCTAD – Ethiopian Business Review

The Institute of Foreign Affairs (IFA), in collaboration with the Ministry of Foreign Affairs, held a high-level conference on Tuesday at the Sheraton Hotel under the theme “Exploring New Avenues: Economic Diplomacy as a Mainstay of Ethiopian Foreign Policy.”

The forum brought together leading government institutions — including the Ministry of Finance, Ethiopian Securities Exchange, Ethiopian Investment Holdings, Ethiopian Investment Commission, and the Ministry of Foreign Affairs — to discuss how to align foreign policy with Ethiopia’s economic ambitions.

Central to the discussions was the Homegrown Economic Reform Agenda, launched in September 2019, which aims to liberalize and modernize Ethiopia’s economy. Panelists explored how the reform program is positioning the country to better integrate with the global economy and attract quality investments.

In his opening remarks, IFA Executive Director Jafar Bedru stressed the need to shift diplomatic efforts beyond traditional political frameworks. “Our diplomatic engagements must transcend conventional paradigms and adopt a proactive, business-oriented approach — one that prioritizes investment and trade facilitation,” he said.

Ambassador Workalemahu Desta, Political and Economic Diplomacy Advisor, MoFA, acknowledged that while Ethiopia’s economic and business diplomacy is making progress, it still falls short of matching the opportunities created by recent reforms. He noted the growing global demand for competitive investment destinations, emphasizing Ethiopia’s strategic potential.

“Globally, production and labor costs are soaring. Multinational companies are actively seeking low-cost, stable, and business-friendly environments — and Ethiopia is emerging as a top destination,” he said.

Ambassador Workalemahu also underscored Africa’s growing strategic importance, pointing to the African Continental Free Trade Area (AfCFTA) as a transformative platform. “AfCFTA is unlocking a vast market for investors across Ethiopia. Additionally, our membership in BRICS and the New Development Bank enhances our positioning within the evolving global economic order,” he added.

Dr. Tilahun Kassahun, CEO of the Ethiopian Securities Exchange (ESX), highlighted the need to diversify Ethiopia’s financial landscape to sustain economic growth. He emphasized that beyond traditional financing mechanisms, both local and foreign private investors require access to alternative financial instruments such as portfolio investments. He mentioned that amid the launch of the capital market in Ethiopia, the Ministry of Foreign Affairs must attract investments from abroad as the old technical way of investment has changed to easy and Central Securities Depository. “Beyond simply counting how many remittance accounts are opened, a new key performance indicator (KPI) should be how many CSD accounts are created,” he added.

He also revealed that the capital market is expected to integrate with the interbank lending system in the first week of July. Just six months after its launch, the interbank market has already facilitated over ETB 800 billion in transactions, with daily volumes reaching several ETB billion, he reported.

This comes on the heels of the launch of a Diplomatic Guide for the Homegrown Economic Reform Agenda, unveiled on Monday by the Ministry of Foreign Affairs in collaboration with the Ministry of Finance, the Ethiopian Securities Exchange, and Ethiopian Investment Holdings.

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Ethiopia is set to receive USD 260 million in fresh funding from the International Monetary Fund (IMF), as part of a broader USD 3.4 billion loan program aimed at supporting economic recovery and ongoing reforms.

This latest installment brings the total IMF support disbursed under the Extended Credit Facility (ECF) to nearly USD 1.85 billion. The fund’s staff and Ethiopian authorities have now reached a staff-level agreement to complete the third review of the program.

The news comes as Ethiopia shows strong signs of macroeconomic improvement. According to the IMF, inflation is cooling down, exports are rising, and international reserves are growing faster than expected.

“Ethiopia’s economic performance has gone beyond expectations,” said Alvaro Piris, head of the IMF team that visited Addis Ababa in April. “The shift to a more flexible exchange rate has gone smoothly, and government efforts to modernize monetary policy, improve tax collection, and reform state-owned enterprises are starting to bear fruit.”

Despite the progress, challenges remain. The gap between official and black market exchange rates has widened again in early 2025. The IMF notes that fees and commissions in the foreign exchange market are still high, making currency access difficult for many businesses.

To fix this, new measures are being rolled out to make the FX market more transparent and efficient. These include easing restrictions, reducing costs, and improving regulation.

The IMF also emphasized the importance of keeping up the reform momentum. Continued discipline in monetary policy, better tax systems, and a stronger private sector are all seen as key to building long-term growth.

The ECF program, approved in July 2024, is designed to help Ethiopia stabilize its economy, support vulnerable communities, and unlock growth by encouraging private investment and reforming outdated financial systems.

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The International Monetary Fund (IMF) is expected to convene this summer to consider the third review of Ethiopia’s USD3.4 billion support program, according to a spokesperson cited by Reuters. The review remains on track with the original schedule, signaling continued confidence in Ethiopia’s reform trajectory despite recent delays in securing a staff-level agreement.

An IMF delegation visited Addis Ababa in mid-April for routine assessments. At the time, Ethiopian authorities anticipated a swift announcement of a staff-level agreement. However, no official update has since been issued, leaving observers awaiting clarity as the Executive Board meeting nears.

If approved in June, the review will unlock a 191.70 million Special Drawing Rights (SDR) tranche—equivalent to about USD265 million—to support the country’s sweeping macroeconomic reform agenda. The disbursement would represent a crucial injection of liquidity as Ethiopia navigates fiscal consolidation, foreign exchange liberalization, and structural adjustments.

The IMF program, agreed upon last July, was a key requirement for Ethiopia’s participation in the G20’s Common Framework for debt restructuring. Since then, the government has secured a preliminary deal with official creditors and is preparing to engage with private bondholders in the coming weeks and months.

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The National Bank of Ethiopia (NBE) has sold USD 50 million in its sixth bi-weekly foreign exchange auction, part of its ongoing commitment to a market-based forex mechanism aimed at enhancing price discovery and external stability.

The weighted average rate of successful bids in this round reached ETB 133.1715 per US Dollar, compared to ETB 132.9643 in the previous auction held on May 7, 2025. This reflects a slight depreciation of the Birr by approximately 0.16%, consistent with the central bank’s strategy to gradually align the official rate with real market dynamics.

A total of 14 commercial banks received foreign currency allocations in today’s auction. The results suggest continued demand for USD among local banks, while the Birr’s modest weakening indicates a controlled shift towards a more competitive exchange rate regime.

The auction mechanism, introduced as part of broader monetary reforms in 2024, is designed to narrow the gap between official and parallel market rates, foster transparency, and ensure equitable foreign currency distribution.

The next forex auction is scheduled to take place in two weeks, with details to be announced ahead of time.

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Ethiopia and Hungary have resumed negotiations to finalize an agreement on the avoidance of double taxation—an important fiscal policy tool that could unlock new opportunities for cross-border investment and trade.

Held in Addis Ababa, the second round of talks builds on earlier discussions that took place in Budapest, Hungary, where both sides reached preliminary understandings on most of the core issues.

Representing Ethiopia, Tewedaj Mehammed, Head of the Legal Affairs Department at the Ministry of Finance, emphasized that the agreement would not only eliminate the burden of double taxation but also foster a more predictable and investor-friendly environment. “This agreement will pave the way for enhanced business development and deepen economic cooperation between our two nations,” he noted during the opening session.

From the Hungarian side, Ms. Gyongyi Antal, Head of the Division of International Taxation at Hungary’s Ministry for National Economy, expressed optimism about the ongoing dialogue. “The removal of double taxation barriers creates a conducive environment for companies to thrive and connect. Most technical issues were addressed in the first round, and we are hopeful this session will bring consensus on the remaining points,” she said.

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Ethiopia has recorded its highest-ever coffee export revenue, with the sector generating USD 1.868 billion over the past ten months of the current fiscal year — a historic milestone for the nation’s most iconic export.

The Ethiopian Coffee and Tea Authority announced today that 354,302 tonnes of coffee were exported during the period, exceeding the national target by 147% in volume and 142% in revenue. This performance surpasses all previous annual records in the country’s export history.

According to Dr Adugna Debela, Director General of the Authority, the figures represent an increase of 70% in volume and 87% in revenue compared to the same period last fiscal year. The sector exported 145,316.3 more tonnes, generating an additional USD 869.13 million, reflecting both growing global demand and Ethiopia’s enhanced export capacity.

Dr Adugna highlighted that Germany, Saudi Arabia, and the United States ranked as the top three destinations for Ethiopian coffee exports during the reporting period. Germany imported 61,239 tonnes, contributing USD 295 million (17% of total revenue), followed closely by Saudi Arabia with 60,182 tonnes valued at USD 290.7 million (20%), and the United States with 28,299 tonnes accounting for USD 192 million (10%).

“This outstanding achievement is the result of a well-coordinated national effort,” said Dr Adugna. “From farmers and cooperatives to exporters, regional authorities, and federal institutions — all stakeholders played a vital role. We are deeply grateful for their commitment and determination.”

He further expressed optimism that the final two months of the fiscal year will build upon this momentum, reinforcing Ethiopia’s status as a world leader in premium coffee production.

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Ethiopia’s ambition to join the World Trade Organization (WTO) by March 2026 received renewed momentum as the U.S. voiced firm support during high-level talks at the 2025 IMF-World Bank Spring Meetings. In a strategic meeting, Ethiopia’s Minister of Finance, Dr. Eyob Tekalign, updated Neil J. Beck, Assistant U.S. Trade Representative for WTO and Multilateral Affairs, on Ethiopia’s reform-driven progress toward accession.

Beck praised the ongoing efforts and reaffirmed America’s commitment to supporting Ethiopia’s integration into the global trading system. The two officials pledged to deepen cooperation, marking a key step toward Ethiopia’s long-sought WTO membership—one expected to enhance the nation’s investment climate, trade capacity, and economic diplomacy on the world stage.

Ethiopia’s Maritime Transit Service has reached a major milestone in its national fertilizer import initiative, with over 1.07 million metric tons of soil fertilizer successfully delivered to Djibouti Port as of April 6, 2025. This achievement represents nearly half of the country’s total planned imports for the 2017/18 agricultural production cycle, which targets 2.4 million metric tons by the April 2025 deadline.

The Ethiopian Customs Commission has announced sweeping changes to the regulation of goods imported without foreign currency payments (Franco-Valuta), as part of a broader financial sector overhaul.

The National Bank of Ethiopia (NBE) confirmed the repeal of the decades-old Establishment Proclamation No. 691/2000, replacing it with the more robust NBE Proclamation No. 1359/2017. The move grants the central bank stronger oversight powers while scrapping the previous Council of Ministers Regulation No. 88/1995, which governed Franco-Valuta imports.

In a transitional measure, the Customs Commission will continue processing foreign exchange license requests under existing procedures—but with stricter scrutiny. Non-commercial Franco-Valuta requests from government agencies, NGOs, and international organizations must now be vetted by Customs Operations Managers and approved only by senior Customs Office Managers.

The NBE has ordered meticulous record-keeping, requiring monthly reports on Franco-Valuta transactions to prevent misuse. The changes signal Ethiopia’s push to modernize trade finance controls while managing forex shortages—a critical issue for import-dependent industries.

Businesses and institutions must adapt quickly, as further directives are expected. The reforms aim to curb abuse of forex exemptions, ensuring hard currency is prioritized for essential imports.

Ethiopia’s trade sector has shown remarkable growth, with foreign trade volumes reaching USD 4.5 billion in just the first eight months of the current fiscal year. This represents a significant leap from the USD 2.6 billion recorded for the entire year in 2010, highlighting the country’s expanding economic footprint.

Trade and Regional Integration Minister Kassahun Gofe (PhD) shared these figures during a stakeholder forum discussing Ethiopia’s draft trade policy. The government has set an ambitious target to surpass USD 6 billion in total trade by the end of the fiscal year, building on current momentum.

A key development in Ethiopia’s trade landscape is the creation of its first comprehensive trade policy framework. For years, the country operated without a formal trade policy, but after extensive efforts, officials have now prepared a draft document to guide future commerce.

The ministry has also been busy implementing structural reforms, including issuing 2.5 million new business licenses to stimulate entrepreneurship. To boost consumer access and commercial activity, authorities have established over 1,300 weekend shopping malls across the country.

In a major push for quality control, Ethiopia has invested ETB 8.2 billion to build a state-of-the-art Quality Assurance Center. This facility will monitor more than 4.5 million tons of imported and exported goods annually, ensuring standards compliance.

Minister Kassahun connected these developments to Ethiopia’s broader macroeconomic reforms and its bid to join the World Trade Organization. He expressed confidence that the new trade policy demonstrates the country’s readiness for WTO membership while aiming to create a more competitive and sustainable trade environment.

The draft trade policy specifically focuses on facilitating regional economic integration, reflecting Ethiopia’s growing role as a commercial hub in East Africa. These collective efforts represent a comprehensive approach to modernizing Ethiopia’s trade ecosystem and positioning the country for greater global economic engagement.

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Ethiopia Conducts Sixth Forex Auction, Birr Weakens Slightly

Ethiopia, Hungary Move Closer to Double Taxation Accord

Ethiopia Breaks Coffee Export Record, Earning USD 1.87 Billion

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Ethiopia Imports 1.07 Million Tons of Fertilizer, Nears Half of Annual Target

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