Ethiopia Plans to Unveil 15% New Fuel and Vehicle Taxes to Bolster Public Revenue

Ethiopia Plans to Unveil 15% New Fuel and Vehicle Taxes to Bolster Public Revenue The Ethiopian government is preparing to roll out a new set of fuel and vehicle taxes as part of a broader fiscal reform aimed at boosting domestic revenue and easing pressure on state finances. The plan includes a 15% value-added tax (VAT) on fuel, a 15% excise duty, and a newly proposed vehicle circulation tax for fuel-powered cars. While no formal launch date has been announced, the Ministry of Finance recently briefed members of parliament on the proposal. Officials say the move is essential to modernize Ethiopia’s tax system and reduce the country’s reliance on unsustainable fuel subsidies. Toward a Post-Subsidy Economy Since mid-2022, the government has been gradually scaling back its fuel subsidy program, citing mounting fiscal pressures and a desire to correct market distortions. The partial removal of subsidies has already caused diesel and petrol prices to rise by over 50%. However, amid high inflation—currently at 13% annually—the government has retained some fuel subsidies, framing the new tax measures not as a substitute but as a complementary step in a long-term fiscal restructuring. Finance Minister Ahmed Shide emphasized this during a recent parliamentary session, saying, “The goal is not to generate profit from the fuel tax. It’s to create a mechanism to continue subsidizing fuel in a more sustainable way, while reducing the burden on public finances.” Political Pushback The proposed taxes have drawn swift backlash from opposition lawmakers and civil society groups. Many see the plan as contradictory and burdensome to ordinary citizens already grappling with the rising cost of living. “Why is the government claiming to protect consumers through subsidies while imposing new taxes that cancel out the benefit?” asked Desalegn Chane (PhD), an opposition MP, during the session. “This is mixed messaging that hurts the public.” The vehicle circulation tax—expected to apply only to fuel-powered cars—has raised further questions about fairness and feasibility, especially in a country with limited access to electric or alternative-fuel vehicles. Revenue Imperative Despite the controversy, economic analysts argue that the government has little choice. Ethiopia’s tax-to-GDP ratio stands below 10%, one of the lowest in Sub-Saharan Africa, leaving the state heavily dependent on foreign aid, loans, and inflationary financing. “With shrinking aid flows, constrained borrowing, and inflation risks from monetary expansion, increasing domestic tax revenue is the only option left,” said a former advisor to the National Bank of Ethiopia. Officials at the Ministry of Finance say the tax reform is part of a broader consolidation strategy, intended to improve fiscal stability and allow for targeted investments in public services and infrastructure. While many details remain unclear—including when the taxes will be enacted and how the vehicle circulation levy will be enforced—the government insists the reforms are part of a larger effort to create a fairer, more resilient tax system. Communicating that message to the public, however, may prove just as challenging as the policy itself.

Ethiopia Proposes 1.93 Trillion Birr Budget for 2018 Fiscal Year

Ethiopia Proposes 1.93 Trillion Birr Budget for 2018 Fiscal Year Addis Ababa — The Ethiopian federal government has presented a draft national budget of 1.93 trillion birr for the 2018 Ethiopian fiscal year, Finance Minister Ahmed Shide announced during a parliamentary session with the House of People’s Representatives. According to the breakdown of the proposed budget: 1.2 trillion birr is allocated for regular (recurrent) expenditures 415 billion birr for capital expenditures 315 billion birr will support regional states 14 billion birr is earmarked for the implementation of sustainable development goals at the regional level Minister Ahmed stated that 1 trillion birr, or 73% of the proposed budget, will be financed through domestic tax revenues. An additional 236 billion birr is expected from development partners, while the remaining funds will be sourced from project assistance and non-tax revenues. He also noted that the unadjusted budget deficit is projected at 2.2% of GDP, while the adjusted deficit stands at 1%. Importantly, the minister emphasized that the government plans to cover the deficit not by borrowing directly from the National Bank, but rather through the sale of treasury bills in the domestic financial market. Minister Ahmed highlighted that the draft budget reflects the government’s commitment to fiscal discipline, aiming to finance expenditures mainly through domestic revenue generation. This approach is expected to help curb inflation and ensure the efficient use of public funds. The 2018 draft budget is said to be aligned with Ethiopia’s broader macroeconomic reform agenda and the nation’s Ten-Year Development Plan. Looking ahead, the government projects economic growth of 8.9% for the 2018 fiscal year, according to the finance minister.

Dangote Reaffirms Investment Commitment in Ethiopia After Meeting with PM Abiy

Dangote Reaffirms Investment Commitment in Ethiopia After Meeting with PM Abiy Dangote Group Signals Renewed Commitment to Ethiopia’s Industrial Growth Following High-Level Meeting with PM Abiy Ahmed Addis Ababa, Ethiopia – June 7, 2025 In a major show of confidence in Ethiopia’s economic potential, Aliko Dangote, Africa’s richest man and Chairman of the Dangote Group, met with Prime Minister Abiy Ahmed today in Addis Ababa. The high-profile meeting signals renewed cooperation between the Ethiopian government and the Nigerian industrialist’s conglomerate, which has been a major player in the country’s cement and construction sectors for over a decade. During their meeting, Prime Minister Abiy welcomed Mr. Dangote and emphasized Ethiopia’s commitment to facilitating foreign investment and industrial partnerships that benefit both the local economy and regional integration. He reiterated that Ethiopia remains open to international investors who align with the country’s development goals and are willing to collaborate on sustainable projects that create jobs and transfer skills to local workers. Aliko Dangote, in turn, expressed his appreciation for the reforms and development initiatives being undertaken under the leadership of Prime Minister Abiy. He reaffirmed the Dangote Group’s dedication to expanding its operations in Ethiopia and highlighted opportunities in cement production, construction materials, and potentially agro-industrial ventures. “We are not just here to invest; we are here to be long-term partners in Ethiopia’s prosperity. The Dangote Group sees Ethiopia as a key strategic hub in East Africa,” Dangote said during the discussion, according to EBC’s coverage. The meeting comes at a time when Ethiopia is actively seeking to attract foreign direct investment to revitalize its manufacturing sector, address foreign currency shortages, and create employment for its growing youth population. Dangote Cement, which launched its Ethiopian operations in 2015, has remained one of the country’s largest cement producers. The company has faced challenges over the years, including foreign exchange constraints and logistical hurdles, but today’s meeting suggests a fresh chapter in government-private sector cooperation. The Ethiopian Broadcasting Corporation, which first reported the meeting, stated that the Prime Minister emphasized the importance of strengthening ties with visionary African business leaders and creating a conducive environment for intra-African investment flows. He also noted that the government is working to resolve bureaucratic bottlenecks that hinder investor confidence. This meeting is also symbolic in light of Ethiopia’s efforts to modernize its economic institutions, including the recent operationalization of the Ethiopian Securities Exchange and the launch of the Ethiopia Startup Act. With Dangote’s renewed interest, the country could attract further pan-African industrial investment. Photos from the event show Prime Minister Abiy Ahmed and Aliko Dangote smiling and standing side by side in front of the Ethiopian flag, signaling unity and optimism for future collaboration. #AbiyAhmed #Dangote #EthiopiaInvestment #EthiopiaEconomy #EBC #AfricanBusiness

Jaquar Group Opens Flagship Bath & Light Showroom in Ethiopia, Reinforcing Commitment to Innovation and Skills Development

Jaquar Group Opens Flagship Bath & Light Showroom in Ethiopia, Reinforcing Commitment to Innovation and Skills Development “Jaquar is investing in community upliftment through professional training initiatives and certification programs aimed at building a skilled workforce.” Addis Ababa, Ethiopia – June 5, 2025 – Jaquar Group, a global leader in complete bathroom and lighting solutions, proudly announces the opening of its flagship showroom in Ethiopia. Located on the 1st floor of the Joburg Building near Kazanchis Total, the showroom will serve as a one-stop destination for premium bath and lighting solutions tailored to the Ethiopian market. This launch marks a significant step in Jaquar’s long-term vision for Ethiopia, highlighting its dedication to quality, innovation, and local development. In addition to showcasing its globally recognized product range, Jaquar is also investing in community upliftment through professional training initiatives, including free plumbing certification programs aimed at building a skilled workforce. “Our goal is not only to supply quality products but to become a reliable partner in Ethiopia’s development journey by building skills, setting industry standards, and creating job opportunities,” said Mr. Ricardo Lage, Business Head – Africa and Francophone Countries. Jaquar World Addis Ababa, officially launched in 2017, stands as a testament to the exclusive partnership between Jaquar and Romina, combining their expertise to deliver exceptional quality and innovation. The showroom opening event brings together key industry players, media, and stakeholders, and offers an immersive experience of Jaquar’s latest innovations. About Jaquar GroupWith a presence in over 55 countries across APAC, Africa, Europe, and the Middle East, Jaquar Group is known for its high-quality, sustainable, and design-driven bathroom and lighting solutions. The company is committed to improving lives through technology, design, and social responsibility. Media Contact:Nigist Berta+251 919 152 297

Ethiopia’s Birr Falls to 134.95 in Latest Foreign Exchange Auction as NBE Continues Biweekly Adjustments

Ethiopia’s Birr Falls to 134.95 in Latest Foreign Exchange Auction as NBE Continues Biweekly Adjustments June 5, 2025 – Addis Ababa The Ethiopian Birr fell to a new low of 134.9519 per U.S. dollar in Thursday’s foreign exchange auction, marking a continued slide in the local currency as the central bank faces growing pressure to manage dwindling reserves and rising demand. The National Bank of Ethiopia (NBE) announced that 12 banks received foreign currency at the auction, down from 14 in the previous round and 16 in early May, signaling tightening access to foreign exchange in the formal market. The result underscores Ethiopia’s shift toward a managed depreciation strategy, as the central bank attempts to bridge the gap between official and parallel market rates while navigating economic reforms and external imbalances. “The weighted average exchange rate of all successful bids was 134.9519 Birr per USD,” the NBE said in a statement. “The next foreign exchange auction will be held in two weeks.” A Steady Climb Toward Market Correction The latest figure represents a 1.34% drop in the Birr’s value since the previous auction on May 22, when the weighted average rate was 133.1715. In early May, the rate stood at 132.9643, indicating a consistent uptick over the past month. Ethiopia, which has been undergoing structural economic reforms and negotiations with international lenders, has signaled plans to gradually ease its decades-old currency controls as part of a broader liberalization agenda. Policy Strategy Amid Fragile Fundamentals Analysts say the NBE’s biweekly auctions are acting as a pressure valve, allowing the central bank to release limited reserves to priority sectors while slowly realigning the official exchange rate with real market demand. The declining number of successful bidders could indicate either shrinking foreign exchange availability or intensified competition among commercial banks as importers scramble for hard currency. The foreign exchange shortfall has been one of Ethiopia’s most persistent macroeconomic challenges, with the IMF and World Bank repeatedly advising more flexibility in currency management. Implications for Business and the Economy Importers are facing higher input costs, pushing inflationary pressure on goods ranging from industrial equipment to consumer staples. Manufacturers and pharmaceuticals dependent on imports are increasingly vulnerable to pricing volatility and delivery delays. Ride-hailing platforms, retailers, and logistics firms are already reporting cost adjustments as the currency weakens. Meanwhile, informal currency markets are trading the dollar at a significantly higher rate—often 15–20% above the official auction rate—despite ongoing government crackdowns. Outlook: More Auctions, More Volatility With the next auction scheduled in mid-June, traders and businesses will be watching closely to assess whether the NBE accelerates the pace of devaluation or introduces parallel reforms to improve liquidity. The Birr’s trajectory is likely to remain under pressure as Ethiopia seeks to rebuild reserves, restore investor confidence, and close financing gaps through concessional loans and diaspora bond issuance. Still, without a meaningful boost in forex inflows from exports, remittances, or foreign direct investment, analysts warn that the NBE may be forced to make deeper adjustments in the second half of 2025.

Ethiopia Proposes Record ETB 2 Trillion Federal Budget for 2025/26 Fiscal Year

Ethiopia Proposes Record ETB 2 Trillion Federal Budget for 2025/26 Fiscal Year In a landmark move signaling the government’s commitment to economic transformation, Ethiopia’s Council of Ministers has approved a historic draft federal budget of nearly ETB 2 trillion (approximately $35 billion USD) for the 2025/2026 fiscal year. This record-breaking budget—the largest in the country’s history—has now been submitted to the House of People’s Representatives (HoPR) for further scrutiny and deliberation. Prioritizing Development, Stability, and Innovation The proposed budget is structured to reflect the nation’s strategic priorities as outlined in Ethiopia’s Ten-Year Development Plan and the 2026–2030 Medium-Term Macroeconomic and Fiscal Framework (MTFF). These priorities include: Strengthening national security and public order Revitalizing economic productivity across key sectors Investing in infrastructure and capital projects Supporting displaced populations and vulnerable communities Accelerating progress toward the Sustainable Development Goals (SDGs) The Council noted that this expansive fiscal package is essential to respond to complex challenges while ensuring that Ethiopia remains on a path toward inclusive and sustainable growth. Budget Composition and Allocation Focus The ETB 2 trillion budget proposal is expected to include: Recurrent expenditure: Funding to maintain essential public services such as education, healthcare, and public administration. Capital expenditure: Significant investment in physical infrastructure—roads, energy, water, and public works—critical for stimulating economic activity. Block grants and subsidies to regional states: Reinforcing Ethiopia’s federal structure and supporting regionally-led development efforts. Special programs for job creation, youth empowerment, and technology infrastructure Moreover, the Council of Ministers advised the House to explore additional funding sources, such as concessional loans and external partnerships, to ensure the successful implementation of high-impact national projects. A Legislative Leap for Startups and Innovation Alongside the draft budget, the Council also endorsed a new draft startup proclamation, a progressive legislative move aimed at catalyzing Ethiopia’s emerging tech and innovation landscape. The proclamation, if passed, will: Establish a legal and institutional framework to support startups Create mechanisms to close financing gaps that limit early-stage business growth Provide incentives and regulatory clarity for entrepreneurs and investors Enable cross-sector digital transformation, fostering innovation in agriculture, health, education, logistics, and finance Officials noted that this legislation is a strategic step in transforming Ethiopia into a regional tech hub, and part of broader economic reforms to attract private investment, both domestic and international. What’s Next? The House of People’s Representatives will now engage in detailed discussions, amendments, and eventually a vote on the proposed budget and accompanying legislative initiatives. If ratified, the budget will go into effect at the start of the Ethiopian fiscal year in Hamle 1, 2017 (July 8, 2025). This fiscal proposal not only reflects the administration’s ambitions for economic modernization but also underlines the challenges of balancing development goals with macroeconomic stability in a complex domestic and global environment. As the debate unfolds, stakeholders across the private sector, civil society, and international development community will be watching closely to see how Ethiopia aligns its bold fiscal vision with tangible impact on the ground.

Ethiopia Enacts Landmark Startup Proclamation to Boost Innovation and Youth-Led Enterprises

Ethiopia Enacts Landmark Startup Proclamation to Boost Innovation and Youth-Led Enterprises Addis Ababa, June 5, 2025 — Ethiopia has taken a significant step toward fostering a vibrant startup ecosystem with the official endorsement of its first-ever Startup Proclamation. The new legal framework, announced by the Office of the Prime Minister, is aimed at creating a favorable environment for innovation-driven enterprises, particularly those led by youth, while stimulating technological advancement and entrepreneurship across the country. The proclamation, referred to officially as the Startup Ethiopia Proclamation, is part of Ethiopia’s Ten-Year Development Plan (2020–2030), which recognizes innovation and the digital economy as key drivers of sustainable development. The government emphasized that this is not just a policy move, but a strategic transformation aimed at reducing unemployment, encouraging self-employment, and elevating Ethiopia’s global competitiveness. Key Features of the Proclamation: Legal Recognition and Support: For the first time, startups in Ethiopia will be legally recognized as a distinct category of businesses. This recognition will enable access to a variety of incentives, protections, and support services, including simplified licensing, tax holidays, and government-funded incubator and accelerator programs. Startup Ethiopia Council Formation: A new body, the Startup Ethiopia Council, will be established to oversee the implementation of the proclamation. The Council will include stakeholders from the government, private sector, academia, and civil society. It will play a strategic role in policy formulation, resource allocation, and monitoring impact. Innovation Fund and Incentives: The government will establish a Startup Innovation Fund to provide early-stage funding and grants to promising entrepreneurs. Startups will also be eligible for customs and tax exemptions on imported equipment and software essential for product development and scaling. Focus on Youth and Inclusion: The policy explicitly aims to empower youth entrepreneurs, women-led startups, and rural innovators. It seeks to bridge the urban-rural digital divide and promote inclusion by providing resources in regional hubs and universities outside of Addis Ababa. Public Procurement Access: Startups will be granted better access to public procurement opportunities, allowing them to offer tech and service solutions to various government ministries and agencies—a move that could enhance local innovation and reduce dependency on foreign solutions. Strategic Significance The proclamation arrives at a time when Ethiopia is increasingly viewed as a rising hub for African innovation. With its large, youthful population and expanding internet connectivity, the country holds tremendous potential for growth in sectors like fintech, agri-tech, health tech, and green technology. Speaking on the importance of the proclamation, the Prime Minister’s Office emphasized that supporting startups is essential for job creation, national productivity, and the shift from an import-driven to an innovation-led economy. The office also highlighted the role of the private sector and international partners in building a robust startup ecosystem. A New Horizon for Entrepreneurs The Startup Ethiopia Proclamation has been welcomed by entrepreneurs, investors, and development partners alike. While challenges remain in terms of financing, regulatory enforcement, and digital infrastructure, the proclamation is a hopeful signal that Ethiopia is ready to embrace a future built on innovation, inclusion, and enterprise. As Ethiopia continues its journey toward economic transformation, this bold legislative step may very well mark the beginning of a startup revolution in the Horn of Africa.

Ethiopia Introduces Sweeping Tax Reforms Targeting Digital Creators, Consultants, and High Earners

Ethiopia Introduces Sweeping Tax Reforms Targeting Digital Creators, Consultants, and High Earners Addis Ababa – June 4, 2025 The Ethiopian government has tabled a comprehensive amendment to its federal income tax proclamation, signaling a major shift in the country’s fiscal framework to align with digital economy realities and bolster domestic revenue mobilization. The newly proposed changes, referenced as the “Income Tax Amendment Proclamation /2017,” were submitted to Parliament late last month. Key Highlights: 1. Taxation of Digital Content Creators: For the first time in Ethiopia’s tax history, digital content creators—including YouTubers, podcasters, influencers, and online platform earners—will be required to pay taxes on their earnings. The law defines “income from digital content” as revenue generated from: Advertisements and sponsorships Brand partnerships and affiliate marketing Product sales, both physical and digital Donations, crowdfunding, and fan subscriptions Digital earnings exceeding a certain annual threshold will be classified as business income and taxed accordingly. Content creators will also be required to register for a tax identification number, keep financial records, and file annual reports. 2. New Classification of Taxpayers: The amendment introduces two taxpayer tiers: Level A: Businesses or individuals with annual gross income exceeding 2 million birr. Level B: Individuals with income below 2 million birr, excluding corporate entities. 3. Technical and Advisory Services Targeted: Consultants offering services in fields such as law, engineering, IT, architecture, auditing, and project management—especially foreign nationals operating in Ethiopia for over 91 days—will now be subject to stricter tax obligations. These services are recognized as taxable even if rendered digitally or remotely. 4. Rental Income and Business Profit Tax Changes: Companies earning rental income will now pay a flat 30% tax. Individual rental income will be taxed based on a revised graduated schedule. The same 30% flat tax will apply to corporate business profits, while individuals will follow adjusted brackets. 5. Anti-Cash Economy Measures: The new law prohibits cash payments above 10,000 birr per day per individual, aiming to formalize the economy and enhance traceability. Transactions must now occur via banking channels such as transfers, cheques, or mobile money platforms. 6. Optional Presumptive Tax for Small Enterprises: Small businesses whose total tax liability falls below 2% of gross annual revenue may opt into a simplified presumptive tax regime. However, this does not apply to businesses under the broader simplified tax schedule or those already receiving tax holidays under investment laws. 7. International Workers and Digital Services: Foreign professionals working in Ethiopia or broadcasting content from abroad but generating Ethiopian-source income (e.g., through Ethiopian audiences or data) will now be taxed locally. The government has tasked the Ministry of Foreign Affairs and tax authority with developing new registration and enforcement mechanisms for such cases. Implications for the Private Sector These reforms come at a time when Ethiopia is pushing to diversify its tax base and digitize its economy. The formal inclusion of digital content creators and service providers into the tax net reflects both the growing size of the sector and the government’s effort to capture untapped revenue streams. Businesses will need to improve their accounting practices and embrace digital payment tools to remain compliant. Meanwhile, the tech-savvy youth, many of whom generate income online, are urged to seek awareness about their new obligations under the law. Industry Reactions Early reactions among professionals and small business owners are mixed. While some praise the government’s move toward modernization, others raise concerns about enforcement challenges, especially among informal digital actors and self-employed consultants. Analysts argue that successful implementation will require aggressive taxpayer education campaigns and incentives to transition into the formal economy. If ratified, the Income Tax Amendment Proclamation could reshape Ethiopia’s tax architecture by broadening the base, modernizing definitions, and incorporating the digital and freelance economy. It also underscores the government’s shifting focus toward fiscal sustainability, equity, and technological adaptation in public finance.

Wegagen Capital Investment Bank Becomes Ethiopia’s First Private Investment Bank

Wegagen Capital Investment Bank Becomes Ethiopia’s First Private Investment Bank Addis Ababa, June 4, 2025 – In a landmark development for Ethiopia’s emerging financial sector, Wegagen Capital Investment Bank S.C. has officially launched operations, becoming the country’s first private investment bank. The announcement was made during a high-profile inauguration event held at the Hilton Hotel in Addis Ababa, attended by key figures from government institutions, regulatory bodies, and the private sector. The launch marks a critical step in the growth of Ethiopia’s nascent capital market and reflects the increasing momentum around private sector-led financial innovation following the establishment of the Ethiopian Securities Exchange (ESX). Dr. Tilahun Ismael, CEO of the Ethiopian Capital Market Authority, along with Hanna Tehelku, Director General of the Ethiopian Capital Market Authority, and representatives from the Ministry of Trade and Regional Integration, were among the prominent guests in attendance. Also present were board members from the Ethiopian Securities Exchange and other invited stakeholders. A New Model for Investment Banking Dr. Aklilu Wubet, Chairperson of the Board of Directors of Wegagen Capital Investment Bank, underscored the strategic importance of the institution’s launch, emphasizing that the bank was established with a paid-up capital of 385 million birr, funded by visionary institutions and individuals. He noted that the bank received its operating license from the Capital Market Authority on March 21, 2025 (Megabit 12, 2017 EC), and registered as a trading member of the Ethiopian Securities Exchange on May 14, 2025 (Ginbot 6, 2017 EC), thereby securing early mover advantage in Ethiopia’s newly liberalized capital market. The bank’s Chief Executive Officer, Bruktawit Dawit, stated that Wegagen Capital is designed to be a pioneering force in the investment banking space by offering cutting-edge, customized, and trusted services to public institutions, development enterprises, private companies, and high-net-worth individuals. Services Tailored to Capital Market Growth Wegagen Capital Investment Bank will provide a wide range of services including: Investment advisory for government and corporate clients participating in the capital market Brokerage services for institutional and retail investors in both primary and secondary securities markets Underwriting and placement of securities for capital raising Capital restructuring and acquisition advisory Mergers and acquisitions (M&A) services Market-making and deal execution on behalf of clients The CEO noted that the bank will also support the development of alternative investment solutions, including debt instruments and structured products, in alignment with the regulatory framework laid out by the Capital Market Authority. Strategic Role in Ethiopia’s Financial Future Bruktawit emphasized that Wegagen Capital Investment Bank is not a subsidiary of Wegagen Bank but a fully independent entity with its own governance, management structure, and operational strategy. This structural distinction allows it to form partnerships across the financial industry, including with commercial banks and fund managers, to co-create mutually beneficial opportunities. “Ethiopia’s economic transformation depends on a deep and efficient capital market,” she said. “We are committed to driving that change by channeling capital to productive sectors, supporting investor confidence, and introducing new financial instruments tailored to Ethiopia’s development needs.” Positioning for the Long Term As the first mover in the private investment banking space, Wegagen Capital aims to play a catalytic role in accelerating private capital mobilization, enhancing investor participation, and fostering transparency and professionalism within Ethiopia’s financial ecosystem. The launch of Wegagen Capital Investment Bank represents a foundational shift—from a state-dominated financial landscape toward one shaped by innovation, competition, and private sector dynamism.