@WorldBankAfrica – Page 2 – Ethiopian Business Review

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The House of People’s Representatives has approved a series of critical agreements aimed at accelerating Ethiopia’s development across key sectors, during its 29th regular session of the 6th Parliament’s 4th year.

The House ratified two major loan agreements, endorsed the establishment of a pan-African finance institution, and approved a new air transport accord with a European partner. The proclamations were presented by Assistant Minister of State for Finance, Meseret Haile, who requested that they be moved directly to second reading. Following strong support from parliamentarians, the House deliberated on the proclamations in detail and granted approval.

Among the approvals was a budget support loan agreement with the Government of Italy, aimed at enhancing Ethiopia’s environmental sustainability and green economy goals. Another agreement, signed with the International Development Association, will support the country’s Education Sector Transformation Program, a key pillar in human capital development.

The House also ratified the agreement establishing the African Finance Corporation, with only three abstentions. Concluding the session, lawmakers unanimously endorsed a bilateral air transport agreement with the Federal Government of Austria, a move expected to bolster air connectivity and aviation cooperation.

Ethiopia is actively courting global investors with bold economic reforms and sectoral liberalization, as it hosts the Invest in Ethiopia – High-Level Business Forum 2025 in Addis Ababa from May 12–13. The event brings together international investors, senior government officials, and development partners to explore opportunities in priority sectors such as renewable energy, agribusiness, ICT, and manufacturing.

Organized by the Ethiopian Investment Commission (EIC), the Ministry of Finance, and the Development Partners Group, the two-day forum signals Ethiopia’s firm commitment to private sector-led growth. The country’s 8.1% GDP growth in 2024 and recent policy reforms have positioned it as one of Africa’s top destinations for investment.

The Forum features high-level ministerial roundtables, sector panels, networking sessions, and the official launch of a new Investment Deal Book, aimed at enhancing transparency and deal-making for foreign investors.

In his opening remarks, President Taye Atske Selassie emphasized the government’s efforts to improve the investment climate by addressing long-standing challenges in foreign direct investment (FDI). “Reforms have been designed to attract FDI, sustain growth, and drive structural transformation,” he noted, adding that infrastructure development and investor-friendly policies are being prioritized to meet Ethiopia’s goal of becoming Africa’s leading economy by 2030.

“We believe we are on the right track to ensure macro-financial stability,” he added. “Our reforms are fundamentally reimagining Ethiopia’s economic future.”

Foreign Minister Gedion Timothewos (PhD) echoed the president’s message, stating that Ethiopia’s young, energetic population, improved logistics, and rapid development of industrial parks make it a natural hub for international investment. He encouraged investors to explore opportunities not just in traditional sectors, but also in mining, energy, and tourism.

Finance Minister Ahmed Shide underlined the importance of macroeconomic stability and structural reforms. “Opening up sectors like telecom, finance, and logistics is already yielding results,” he said. He also highlighted the launch of the Ethiopian capital market as a game-changer in deepening private-sector participation.

EIC Commissioner Zeleke Temesgen Boru (PhD) reported that new investors from 59 countries are participating in the forum—a sign of growing international confidence. He stressed the government’s readiness to provide full support to investors and ensure predictability in policy implementation.

A presentation by Planning and Development Minister Dr. Fitsum Assefa showcased Ethiopia’s natural resources, strategic location, and investment-ready infrastructure, reinforcing the country’s competitive edge in attracting quality investments.

With AfCFTA integration on the horizon, Ethiopia is positioning itself as a regional gateway for investors seeking access to Africa’s fast-growing markets.

Ethiopia’s federal government and regional states have collectively shattered tax revenue records, exceeding ETB 1 trillion in the fiscal year leading up to May 2025, according to a landmark announcement by the Ministry of Revenue. This milestone signals a significant economic shift and reflects the government’s aggressive efforts to modernize its tax system and broaden its revenue base.

Revenue Minister Aynalem Nigusse presented the impressive figures to the House of People’s Representatives on May 6th, highlighting that the federal government alone contributed ETB 720 billion to the total. While this achievement represents a robust ETB 279 billion surge (74.56%) compared to the same period in 2024, the Minister emphasized that this is merely a stepping stone towards meeting Ethiopia’s ambitious development goals.

“According to my current report, in April, ours and the regions’ combined revenue will exceed one trillion [birr]. The federal government has reached 720 [billion birr] today,” Minister Aynalem declared, underscoring the momentum behind the revenue surge.

The Ministry of Revenue itself exceeded its nine-month target, collecting ETB 653.2 billion against a planned ETB 646.7 billion – a testament to the efficiency of its collection efforts. This success is attributed to key policy changes, including revisions to the excise tax, amendments to the Value Added Tax (VAT) and Export Incentive Scheme (ETI) proclamations, and a concerted push to expand the tax base. Specifically, the July 2024 shift in the foreign exchange transaction system has significantly boosted VAT collection.

The revenue breakdown reveals a balanced contribution, with ETB 345.93 billion stemming from domestic taxes and ETB 307.3 billion generated from export duties and taxes, showcasing Ethiopia’s diversification of revenue streams.

Despite the record-breaking achievement, Minister Aynalem Nigusse cautioned that challenges remain. “While our country’s tax compliance level is improving gradually, the tax administration’s efforts to collect indirect taxes in particular are being tested by various challenges,” she noted, pointing to persistent issues with taxpayer awareness and attitudes towards VAT.

Looking ahead, the Ethiopian government has set its sights on collecting ETB 1.5 trillion in taxes for the full 2024/2025 fiscal year, with the federal government expected to contribute ETB 900 billion and regional governments ETB 600 billion.

More importantly, the government is committed to increasing tax revenue as a percentage of GDP. Minister Aynalem outlined a plan to boost tax revenue from 6.8% of GDP this year to 7.8% by the end of 2025, and ultimately to 10% within the next three years.

“Achieving this will require solving problems in tax policy and administration,” she explained, highlighting the government’s commitment to streamlining processes, improving taxpayer education, and leveraging digital solutions to control economic activity and formalize the informal economy.

Source: DW Amharic

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The International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets, has appointed Ethiopis Tafara as its Vice President for Africa.

In this leadership role, Ethiopis will oversee IFC’s strategic investment and advisory operations across Africa. He will lead a team of nearly 800 staff members and manage a growing portfolio currently valued at USD17 billion, aimed at boosting job creation and accelerating private sector development in key sectors including infrastructure, agriculture, manufacturing, finance, and telecommunications.

A U.S. national of Ethiopian origin, Ethiopis brings extensive experience from previous senior roles within the World Bank Group. Most recently, he served as Vice President, Chief Risk, Legal & Sustainability Officer for the Multilateral Investment Guarantee Agency (MIGA). He also previously held the position of Vice President and General Counsel at IFC.

“Africa is an increasingly important voice on the global stage,” said Ethiopis. “Though challenges persist, the opportunities are even greater. The continent’s private sector and entrepreneurs are more dynamic than ever before.”

Born in Ethiopia and raised between Ethiopia and Italy, Ethiopis is fluent in Amharic, French, Italian, Spanish, and English. He holds a Juris Doctor (JD) from Georgetown University Law Center and an AB degree from Princeton University. His expertise spans capital markets, corporate law, governance, compliance, and risk management.

Welcoming the appointment, Makhtar Diop, Managing Director of IFC, stated:

“I am thrilled to welcome Ethiopis to this role. His deep and long-standing commitment to Africa’s development and his unique skillset are well-suited to support the continent’s development pathways.”

Ethiopis will be based in Nairobi, Kenya, and succeeds Sérgio Pimenta, who recently retired after nearly three decades of service at IFC.

In the 2024 fiscal year alone, IFC delivered record investment levels across 45 countries in Africa, including 30 classified as low-income or fragile and conflict-affected situations (FCS).

In a decisive move that signals Ethiopia’s growing appetite for foreign investment, the Council of Ministers has approved a draft proclamation that will allow foreigners to own or possess immovable property in the country. The new legislation, discussed during the Council’s 44th regular session, marks a pivotal shift in Ethiopia’s real estate policy, traditionally closed to non-citizens.

Government officials underscored that the framework has been designed to stimulate capital inflows without compromising the land rights of Ethiopian citizens. By establishing a clear legal structure for foreign ownership, authorities aim to unlock large-scale investment in housing development, address the chronic mismatch between housing supply and demand, and create new employment opportunities in construction and related sectors. The draft proclamation, now set to be debated by the House of People’s Representatives, is seen as a cornerstone in Ethiopia’s broader strategy to make its urban landscape more accessible and investor-friendly.

The session also tackled other key resolutions aligned with Ethiopia’s vision for structural transformation. One of the standout decisions was the approval of a regulation to implement the African Continental Free Trade Area (AfCFTA) tariff reduction on goods. Once published in the Federal Gazette, the regulation—set to be enforced within a month—will facilitate freer trade among African nations by cutting tariffs that often hinder intra-continental commerce. The Council emphasized that this measure is crucial for accelerating regional economic integration, expanding market linkages, and strengthening Ethiopia’s role in Africa’s evolving value chains.

The Council also ratified Ethiopia’s move to join the African Finance Corporation (AFC), an institution that offers financial and technical assistance to both public and private sector projects across the continent. Membership in the AFC is expected to unlock new funding avenues for critical infrastructure and industrial development, sectors considered vital for long-term economic resilience.

Meanwhile, two interest-free financial assistance agreements—one with the Government of Italy and the other with the International Development Association—were also endorsed. These agreements will support the country’s environmental and green economy initiatives, as well as transformative reforms in the education sector. Officials noted that both loans are in full alignment with Ethiopia’s debt sustainability framework and offer generous grace and repayment periods.

To improve institutional efficiency and customer satisfaction, the Council further discussed and approved new regulations on service fees for the Ministry of Transport and Logistics and the Civil Society Organizations Authority. The changes are intended to reflect the cost of service provision while remaining sensitive to public affordability.

Wrapping up the session, the Council approved a draft proclamation to ratify the bilateral air transport agreement signed with Austria. The pact is expected to strengthen diplomatic and commercial ties, broaden market opportunities for Ethiopian Airlines, and contribute to tourism, foreign investment, and job creation.

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The European Investment Bank (EIB) is considering financing Ethiopia’s planned new international airport, a move that signals deepening engagement in the country’s infrastructure ambitions. The announcement followed a high-level meeting between Ethiopia’s Finance Minister Ahmed Shide and EIB Vice President Ambroise Fayolle, where both sides reaffirmed their commitment to intensify development and investment cooperation.

During the discussion, Minister Ahmed Shide expressed appreciation for the EIB’s sustained backing of Ethiopia’s priority areas, particularly SME financing, water and sanitation, and women’s entrepreneurship development. These sectors are widely seen as pivotal to the country’s economic and social transformation.

Fayolle reaffirmed the Bank’s commitment to supporting Ethiopia’s long-term development goals, noting that EIB is now exploring options to contribute to the financing of the planned international airport, which is expected to serve as a major logistics and investment hub for the Horn of Africa.

Both parties agreed to deepen their collaboration, with additional sectoral discussions expected during the upcoming visit of senior EIB officials to Ethiopia.

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The International Monetary Fund has lowered sub-Saharan Africa’s economic growth projection for 2026 to 4.2%, down from its October forecast, citing mounting global policy uncertainty and tightening external conditions. Abebe Aemro Selassie, Director of the IMF’s African Department announced following the release of the IMF’s Regional Economic Outlook for Sub-Saharan Africa, April 2025.

“This fragile recovery now faces a new test,” said Abebe. “Just when policy efforts began to bear fruit, the region’s growth trajectory was overtaken by a sudden realignment of global priorities.”

According to him, growth is expected to ease to 3.8% in 2025 before edging up to 4.2% in 2026—both figures revised downward due to external shocks including weakening demand from advanced economies, softer commodity prices, and tighter international financial markets.

Abebe warned that if global financial conditions tighten further or trade tensions worsen, sub-Saharan African economies could see reduced investment, higher borrowing costs, and deeper fiscal strain.

He also flags a likely decline in Official Development Assistance to the region, further straining vulnerable populations already facing elevated inflation and limited fiscal buffers. “High debt levels continue to constrain many countries’ ability to fund essential services and development priorities,” Abebe added.

To navigate these headwinds, he said that the IMF is urging countries to focus on resilience-building policies—strengthening domestic revenue mobilization, improving public spending efficiency, and reinforcing fiscal frameworks to manage debt sustainably. The Fund also recommends governance reforms, regional trade integration, and private sector development as central to creating jobs and sustaining long-term growth.

“A prosperous and stable sub-Saharan Africa is not only critical for the continent—it is a strategic pillar for global prosperity in the decades ahead,” Abebe said, highlighting Africa’s demographic advantage as a future driver of global labor supply and consumption demand.

Since 2020, the IMF has disbursed more than USD65 billion to countries in the region, including over USD8 billion in 2024. Alongside financial support, the Fund continues to provide technical assistance and policy guidance as countries grapple with internal vulnerabilities and global disruptions.

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The Ethiopian Ministry of Agriculture has announced sweeping progress in its nationwide soil and water conservation efforts, with more than 21,000 streams rehabilitated and over 3.7 million hectares of land physically developed as part of a broader strategy to combat climate change and bolster agricultural productivity.

The initiative, which has been underway since the start of the fiscal year, is part of a larger plan to develop 4.6 million hectares through integrated watershed management and sustainable land use practices. The campaign, spearheaded under the slogan “Our Soil Resources for Our Prosperity,” has mobilized millions of Ethiopians in a coordinated push toward environmental resilience and food security.

Speaking at a high-level seminar evaluating this year’s progress, Professor Eyasu Elias, State Minister of Natural Resources Development, emphasized that the program is critical in mitigating the effects of climate change while laying the foundation for a production-led green economy.

“Our integrated watershed development works are being carried out across all regions, engaging communities to protect and restore land while enhancing agricultural productivity,” he stated. “This is not just about conservation—it’s about transforming livelihoods and ensuring sustainable growth.”

The campaign has seen unprecedented public participation, with over 19.9 million citizens contributing 30 to 60 days of labor per year in soil terracing, afforestation, and gully rehabilitation. According to Chief Executive of the Natural Resources at the Ministry of Agriculture, Fanose Mekonnen, the collective effort represents an estimated ETB 16 billion in mobilized manpower, showcasing the scale of Ethiopia’s community-driven development model.

In addition to new developments, the ministry has prioritized renovating and upgrading past conservation projects, rehabilitating an additional 589,000 hectares of previously degraded land. Efforts also include monitoring tree nurseries, identifying new afforestation sites, and preparing millions of planting pits to ensure long-term ecological benefits.

Siket Bank is positioning itself as a central player in Ethiopia’s industrial renaissance, claiming a significant role in transforming the country’s manufacturing landscape through financial innovation. At a high-level panel discussion themed “Financial Provision for Industrial Productivity”, the bank showcased its evolving strategy to empower local manufacturers and accelerate industrial productivity.

Held alongside the 2025 Manufacturing Industries Exhibition and Fair at the Addis International Convention Center, the panel attracted key figures from federal and city administrations, private sector leaders, development partners, and industry experts. The discussion aligned with the national “Ethiopia Tamirt” (Ethiopia Manufactures) movement, which champions a shift from import dependency to homegrown production and self-reliance.

Panelists discussed the broader role of finance in Ethiopia’s industrial development while spotlighting Siket Bank’s own transformation—from a microfinance institution into a commercial bank. The transition, they noted, has allowed the bank to expand its reach and offer more sophisticated services tailored to the needs of various businesses.

Testimonials from long-standing clients painted a vivid picture of transformation, micro-enterprises nurtured into competitive manufacturing firms. One such testimony came from Abemelek Degu, a plastic manufacturer, who described finance as “essential—as essential as vision itself.” He credited the bank for turning his small-scale operation into a scalable enterprise, saying Siket “transitioned me from zero to hero.”

Another compelling story came from two returnees who, after abandoning overseas migration, launched a local business with just ETB 5,000 in microfinance support from Siket. Today, they run a firm with a capital base exceeding ETB 10 million—a testament to the bank’s role in unlocking entrepreneurial potential for underserved groups.

Siket Bank also unveiled an innovative lending product developed in partnership with the World Bank, employing psychometric testing to assess loan applicants based on personality traits, behavioral consistency, and social indicators rather than physical collateral.

“We have now started piloting this model with select customers,” said Damte Alemayehu, CEO of Siket Bank. “It evaluates long-term relationships, work ethic, family context, and broader social behaviors to determine creditworthiness. This opens new doors for entrepreneurs who are typically locked out of formal finance.”

The psychometric approach is particularly significant for Ethiopia’s large informal sector, where credit exclusion is a persistent challenge. By gauging trustworthiness beyond traditional balance sheets, the bank hopes to expand access to capital for promising small business owners.

Beyond lending innovation, Siket Bank announced key digital milestones: the launch of mobile banking services and the establishment of a modern data center. These developments are part of the bank’s broader push to modernize its operations and serve an expanding customer base that now exceeds 600,000 clients.

“These may seem like simple steps for legacy banks, but for a newly transitioned institution like ours, they represent bold progress,” said Damte. He emphasized the bank’s vision to be a catalyst for inclusive growth in Ethiopia’s shifting financial landscape.

The panel closed with a unified message from stakeholders: Ethiopia’s industrial growth will remain stunted without bold financial innovation.

The Ministry of Finance has announced that it disbursed over ETB 300 billion in subsidies for basic inputs over the past eight months, while effectively managing the national budget deficit, mobilizing unprecedented levels of foreign resources, raising domestic revenue, and ensuring sound financial governance. According to Finance Minister Ahmed Shide, these measures are part of the government’s broader macroeconomic reform program, which he says is being implemented successfully through the Ministry’s adherence to fiscal discipline, inflation control, and tax policy enforcement.

The remarks were made during a review meeting with the House of People’s Representatives’ Standing Committee on Planning, Budget, and Finance, which assessed the ministry’s performance over the past eight months. Minister Shide emphasized that prudent financial management has strengthened the macroeconomic reform agenda, enabling the government to support key sectors and maintain fiscal discipline.

State Minister Dr. Eyob Tekalign highlighted additional achievements, including efforts to curb rising living costs, public awareness campaigns on tax policies, and improved cash flow management—particularly in ensuring timely budget disbursements to regional administrations. He also noted corrective actions taken on audit findings and reaffirmed the ministry’s commitment to further reducing inflationary pressures in the coming fiscal year.

Committee Chairman Desalegn Wedaje commended the ministry’s overall performance but called for improvements in public project execution, government asset management, and electronic procurement systems. He also stressed the need for better oversight of regional project financing and audit compliance.

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Ethiopian Parliament Approves Major Loan and Partnership Agreements

Ethiopia Opens Doors to Global Investors in Energy, ICT, Manufacturing, and Agribusiness

Ethiopia Exceeds ETB Trillion in Tax Revenue

IFC Appoints Ethiopis Tafara as Vice President for Africa

Ethiopia To Open Real Estate Market to Foreigners In New Draft Law

European Investment Bank Eyes Support for Ethiopia’s New International Airport

IMF Cuts 2026 Growth Forecast for Sub-Saharan Africa to 4.2%

Ethiopia Reclaims 3.7 Million Hectares Through Nationwide Soil and Water Campaign

Siket Bank Claims At the Forefront of Ethiopia’s Manufacturing Transformation

Ethiopian Govt Disburses ETB 300 Billion in Subsidies, Cuts Inflation Amid Economic Reforms