@UNECA – Ethiopian Business Review

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Ethiopia has been ranked as the first expensive country to live in Africa, according to new global data from Numbeo, the world’s largest cost of living database. The report titled “Cost of Living Index by Country 2025” shows that, compared to other African countries, people in Ethiopia now spend more money on basic things like food, transportation, and dining.

Ethiopia is ranked 53rd in the world with cost of living index 46.5, higher than any other African country listed. The high cost of groceries is one of the main reasons for Ethiopia’s top ranking. This shows that it is becoming harder for people to afford their weekly shopping, especially for families living on fixed or low incomes.

Ethiopia’s position stands in contrast to other relatively high-ranking African nations on the cost-of-living scale. Botswana, Mozambique, Ivory Coast, Somalia, Cameroon, and Mauritius follow behind, with Zimbabwe trailing these countries.

Although rent in Ethiopia is still relatively low compared to many parts of the world, the combined cost of rent and living expenses remains very high for most people. Eating at restaurants, transportation, and general services are all getting more expensive. The transportation index shows that traveling inside the country, whether for work or personal needs, is more costly than in most other African countries.

These rising costs come during a time of economic change. Over the past year, Ethiopia has made big shifts in its economy such as adjusting its currency system and reducing government spending. While these changes are meant to help in the long term, they are causing short-term pain for many citizens. Prices have gone up, but salaries have not kept pace, which means that many people are struggling to afford the same standard of living they had a year or two ago.

For example, Numbeo estimates that a single person living in Addis Ababa would now need around USD800 per month (excluding rent) to cover basic living costs. A family of four would need more than USD2,700 per month. This is far above what most Ethiopian households actually earn.

This situation is affecting not only families but also small businesses. With fewer people able to spend money, many shops and restaurants are seeing fewer customers. Some companies are cutting jobs or closing down altogether. The pressure is felt most strongly in cities like Addis Ababa, where prices have risen faster than incomes.

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The Addis Ababa City Administration Cabinet has proposed a substantial budget increase for the 2025/2026 fiscal year, submitting a draft budget of ETB 350 billion to the city council, as reported by Fana Media Corporation (FMC). This represents a major expansion compared to the approved ETB 230.39 billion budget for the current 2024/2025 fiscal year.

The current fiscal year’s budget already marked a significant 64% rise from the previous year, with capital expenditures accounting for nearly two-thirds of the total allocation. Priorities included infrastructure development, job creation, housing projects, and poverty alleviation initiatives designed to support the city’s rapidly growing population.

Building on this foundation, the newly proposed budget allocates approximately 249.9 percent of its resources to critical sectors such as sustainable development, infrastructure expansion, poverty reduction, job creation, and subsidies for essential public services. The remaining ETB 100.1 billion is reserved for the city’s regular operational costs, managed with a strong emphasis on fiscal discipline and savings.

In parallel, the cabinet approved revisions to land lease bid prices following recommendations from the Land Development and Administration Bureau. The city’s Communication Bureau explained to the FMC that this adjustment is in response to improved infrastructure within corridor development zones, stable land prices, and future urban expansion requirements.

Heineken Ethiopia, in partnership with Addis Meter Taxi, the Addis Ababa Traffic Management Agency, and the Addis Ababa Traffic Police, has deployed 50 taxis across the city tagged with a powerful public safety message: “When You Drink, You Don’t Drive.”

The initiative, which spans six months, is expected to reach over two million residents daily, targeting behavioral change at scale. The campaign comes at a time when traffic-related fatalities and alcohol-induced accidents remain a pressing public concern in Ethiopia’s rapidly growing urban centers.

“As a company, we take our responsibility seriously to ensure this message is not only heard but remembered,” said Bart De Keninck, Managing Director of Heineken Ethiopia. “Driving under the influence isn’t just dangerous, it’s deadly. When someone is drunk, they can’t think clearly, and the consequences can be irreversible.”

The initiative extends beyond the city’s streets. In a parallel campaign targeting youth, Heineken has launched an awareness program across 11 Ethiopian universities, educating students under the theme “No for Drinking.” The program emphasizes that alcohol consumption is not appropriate for those under 21, aiming to foster early awareness and responsible behavior.

“This isn’t about promoting our brand, our name isn’t even visible on the taxis,” explained Fekadu Beshah, External Relations and Sustainability Manager at Heineken. “It’s about standing up and taking responsibility as a corporate citizen.”

Ethiopian Airlines has emerged as the leading player in Africa’s cargo aviation sector, now holding 35 percent of the continent’s market share, according to a new report by the African Finance Corporation (AFC). The airline has significantly expanded its annual cargo capacity, growing from 266,000 tons in 2016 to 715,000 tons by 2023.

The AFC report also highlights persistent gaps in intra-African air transport. In regions such as West Africa, European carriers continue to dominate cargo and passenger traffic. Kenyan Airways and Royal Air Maroc, the next closest competitors, together account for only 25 percent of the cargo market, signaling a sharp contrast in competitiveness.

The report commends Ethiopia and Kenya for using their national airlines to strengthen export trade and urges other African countries to adopt similar strategies. Ethiopian Airlines currently operates 16 dedicated cargo aircraft and serves 60 international destinations, with half located within Africa. The airline plans to expand its cargo fleet to 37 aircraft by the year 2035, reinforcing its long-term commitment to the sector.

In addition, the report praises Ethiopia’s advances in digital infrastructure, particularly in the rapid growth of telecom service users and the increasing adoption of digital technologies. These developments are positioning the country as a leader in Africa’s digital transformation.

Despite such progress, the AFC identifies weak infrastructure as a major constraint to the growth and competitiveness of Africa’s aviation sector. Addressing these limitations is seen as critical to unlocking further potential.

The report also identifies other high-potential sectors across the continent. These include mining, agriculture, logistics, and digital infrastructure. Ethiopia is highlighted as the top wheat producer in sub-Saharan Africa, with wheat cultivation rising from 5,000 hectares in 2018 to 650,000 hectares in 2023.

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The Trade and Development Bank Group (TDB Group) has been named Africa’s Bank of the Year at the 2025 African Banker Awards, held during the Annual Meetings of the African Development Bank. The honor recognizes TDB’s continued commitment to inclusive finance, service innovation, and its contribution to Africa’s sustainable economic growth.

TDB’s strength lies in its ability to adapt and lead through reform. Despite a rapidly changing financial landscape, the Bank has maintained its development impact by innovating its capital structure—most notably with the introduction of hybrid capital in 2024—and attracting institutional investors aligned with long-term development goals.

The Bank continues to deliver impactful project and trade financing, while also addressing upstream challenges through concessional finance, technical assistance, and development programs. Its work supports critical priorities such as women’s empowerment, youth employment, and responsible investment across African economies.

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Ethiopia has officially launched the Ethiopian Insurance Women Association (EthIWA), a national milestone set to foster professional advancement, ethical leadership, and continental collaboration among women in insurance.

The launch took place during the 51st Conference and Annual General Assembly of the African Insurance Organization (AIO), held this week in Addis Ababa. After nearly two decades of absence from the African Insurance Women Association (AIWA) due to the lack of a national women’s platform, Ethiopia now joins the continental network through the formation of EthIWA.

At the helm of this groundbreaking association is none other than Meseret Bezabih, CEO of Hibret Insurance S.C. and one of the most respected figures in Ethiopia’s insurance landscape. Elected as the first president of EthIWA, Meseret brings decades of experience, a record of corporate leadership, and a passion for women’s advancement to the role.

“Today, I am here to herald good news about the establishment of Ethiopian Insurance Women Association (EthIWA) at the 20th birthday of the African Insurance Women Association (AIWA) established in 2005,” she announced in her keynote speech at the launch event.

She highlighted AIWA’s core principles as a non-religious, non-political, and non-ethnic professional association, dedicated to the growth of women in the African insurance industry.

“The success of any goal is unattainable without the active participation of women,” she emphasized, adding, “Africa and Ethiopia are home to numerous thriving institutions led by women, a testament to the value of empowering female professionals.”

Meseret also reflected on the deeper qualities women bring to leadership: care, resilience, and commitment, traits often nurtured through personal roles such as motherhood and caregiving, yet deeply impactful in corporate governance and sectoral growth.

EthIWA’s establishment is expected to catalyze mentorship, leadership development, and cross-border collaboration. As a member of AIWA, the association will give Ethiopian insurance professionals a long-overdue voice on continental platforms and help elevate local standards to global levels.

In closing, Meseret reaffirmed EthIWA’s dedication: “We are determined and ready to work in full solidarity with AIWA to promote the advancement of women in Africa’s insurance industry.”

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Ethiopia has managed to satisfy 76 percent of its national water demand during the current fiscal year, benefiting more than 17 million citizens. The update was delivered by Eng. Habtamu Etefa, Minister of Water and Energy, during the 32nd regular session of the 6th House of People’s Representatives, where he addressed questions from lawmakers on the country’s progress toward full drinking water coverage.

In a wide-ranging discussion, Eng. Habtamu acknowledged persistent gaps in water supply across several cities and rural areas, including delays in drilling, the spread of invasive weeds, and challenges posed by polluted water bodies. Nonetheless, he emphasized that Ethiopia is on a clear path toward universal access to drinking water by 2030, citing steady year-on-year progress and a more integrated approach to water basin management.

The Minister explained that the country’s water development strategy now relies heavily on accurate data mapping of surface and groundwater resources. He also noted that, beyond federal allocations, achieving the 2030 target requires stronger collaboration and support from regional governments.

Addressing environmental concerns, Eng. Habtamu highlighted that the recently approved Water Body Demarcation, Development and Care Proclamation is expected to significantly reduce the impact of pollution and invasive species on Ethiopia’s freshwater ecosystems. He added that sustainable water management depends on the coordinated efforts of all stakeholders, including communities living near water sources.

A newly released 22-year economic assessment by the Ethiopian Economics Association (EEA) has revealed that Ethiopia’s total public debt has surged to USD 62.5 billion, triggering renewed concerns over fiscal sustainability and the country’s broader economic trajectory. The report, which comprehensively reviews the nation’s economic performance and governance from 2001 to 2023, delivers a stark warning about the consequences of weak macroeconomic management, civil conflict, and slowing growth.

The 2025 edition of the assessment marks a turning point in methodology and depth, employing standardized and rigorous analytical tools to examine sectoral performance with greater consistency than previous editions. According to the findings, Ethiopia’s economic expansion has slowed considerably since 2016. Both gross domestic product (GDP) and GDP per capita have declined, signaling a reversal from the high-growth period of the 2000s and early 2010s. Inflation has accelerated during the same period, eroding purchasing power and weakening macroeconomic stability. Investment activity has also contracted, while the country’s productive capacity, which expanded until 2019, has since plateaued—limiting opportunities to enhance output and improve livelihoods.

The agricultural sector, historically the backbone of Ethiopia’s economy, has seen a steady decline in its share of GDP, particularly after 2004/05, as the service sector gained prominence. Despite its critical importance, fertilizer usage in the country remains far below international standards, and only 7.8 percent of total loans issued over the past two decades have supported agriculture. The consequences of this underinvestment have become evident in the nation’s food security. From 2020 to 2022, more than 21 percent of Ethiopians experienced food insecurity, with rural communities bearing the greatest burden.

The report also paints a grim picture of the manufacturing sector. In 2023, industrial output accounted for only 4.48 percent of GDP—well below the global average of 12.33 percent. Its contribution to employment was equally modest, at just 6.47 percent. Although import substitution efforts have yielded limited results, progress remains constrained by persistent shortages of raw materials and unreliable utility services. The report notes that challenges in electricity and water supply continue to limit productivity.

Ethiopia’s financial sector, described as shallow and underdeveloped, is struggling to support structural transformation. Credit allocation remains skewed toward non-productive areas, with key sectors like agriculture and industry often bypassed. While financial inclusion has improved overall, significant disparities remain between urban and rural populations, as well as between men and women.

On the fiscal side, government revenues have grown by over 200 percent in nominal terms between 2002 and 2022. However, these gains have been offset by rising inflation, which has reduced the real value of public spending. The country’s debt burden now equates to USD 575.6 per capita. With high levels of debt stress and an underperforming export sector, the report urges the government to improve revenue mobilization and expand foreign currency earnings.

Poverty trends also reveal troubling setbacks. Although the poverty rate dropped from 30.9 percent in 2018/19 to 26.1 percent in 2021/22, it remains higher than the 24 percent recorded in 2015/16. The poorest households have experienced the sharpest decline in living standards, worsened by inflation and recurring conflict.

Governance issues are another central concern. Since 2020, the report observes a deterioration in public trust and governance, contributing to increased unpredictability, internal conflict, and weak economic oversight. The erosion of investor confidence, rising unemployment, and stagnation in growth are all linked to prolonged instability and institutional weakness.

To address these challenges, the EEA emphasizes the need for consistent, prudent, and well-coordinated development policies. It advocates for stronger governance systems, renewed efforts to restore investor confidence, and the integration of peace-building initiatives into national development planning. In particular, the report recommends reallocating public spending towards long-term capital investment, broadening the tax base in a non-inflationary manner, and designing more inclusive financial policies.

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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.

The Ministry of Transport and Logistics, in partnership with Ethio telecom, has officially launched three national digital systems: the Cross-Country Public Transport Service System, the Integrated Fuel Supply System Solution, and the National Traffic Point-Based Penalty Management System.

These comprehensive platforms are designed to significantly enhance Ethiopia’s transport infrastructure, modernise public service delivery, and foster transparency across the fuel and traffic management chains.

The Cross-Country Public Transport Service System introduces a unified digital framework for managing bus ticketing, licensing, compliance, and payments. Travellers can now book and pay for tickets using their mobile phones, in multiple local languages including English, via platforms such as telebirr and other financial institutions. This solution is set to reduce delays, prevent fraud, improve data transparency, and enhance the overall efficiency of public transport nationwide.

The Integrated Fuel Supply System Solution enables fuel stations across the country to accept payments from all banks and wallets, offering real-time data integration for government oversight. By connecting all financial institutions with a central fuel management system, it improves market control, curbs illicit fuel trade, and ensures accountability from distribution to retail. Drivers can now refuel anywhere in Ethiopia using their preferred digital payment method.

The National Traffic Point-Based Penalty Management System digitises the enforcement of traffic laws, replacing outdated manual systems. It facilitates centralised recording of driver data, tracks infractions through a point-based mechanism, and streamlines penalty payments. This modern system is expected to promote safer roads, improve legal compliance, and support policymaking with reliable data. It also reduces the administrative burden on regional transport offices and supports integration via Ethio telecom’s TeleCloud without additional infrastructure investment.

Ethio telecom emphasised that the systems were developed by local private software developers and feature full API integration for interoperability with financial institutions.

Older Posts

Ethiopia Tops Africa’s Cost of Living Index Amid Economic Reform Pressures

Addis Ababa City Plans Major Budget Expansion to Tackle Infrastructure and Poverty

Heineken Rolls Out Awareness Taxis in Addis to Promote Sober Driving

Ethiopian Airlines Controls Over One-Third of Africa’s Cargo Market

TDB Group Named Africa’s Bank of the Year

Veteran Insurance Leader Meseret Bezabih to Chair Historic Women’s Association in Ethiopia

Ethiopia Satisfies 76% of National Water Demand, Eyes 100% by 2030

Ethiopia’s Public Debt Hits USD 62.5 Billion as New Report Sounds Alarm on Economic Stability

Ethiopia, Hungary Move Closer to Double Taxation Accord

Ethiopia Unveils Nationwide Digital Systems to Transform Transport, Fuel and Traffic Management