Zemen Bank Achieves Record 3.77 Billion Birr Profit Amid Economic Challenges

Zemen Bank has reported a significant profit of 3.77 billion birr for the 2023 fiscal year, marking a milestone achievement in its 16th Annual General Meeting. The bank’s president, Dereje Zebene, highlighted the performance, emphasizing the bank’s growth amidst a challenging economic environment. The profit per share for shareholders stood at an impressive 37.6%, reflecting the bank’s resilience and strategic approach in navigating complex market conditions. This profit is a substantial increase compared to the previous year, representing a growth of 36.8%, or 1.01 billion birr more than last year’s figures. Dereje Zebene attributed this success to the bank’s ability to adapt and innovate in a year characterized by inflationary pressures, ongoing macroeconomic reforms, and a severe foreign currency shortage that has strained many sectors across Ethiopia. Zemen Bank’s overall assets experienced a notable increase of 23.9%, now totaling 59.2 billion birr, underscoring its expanding footprint in the banking industry. The bank’s paid-up capital has also seen a healthy rise, reaching 7.5 billion birr, and the total signed capital is now at 14.97 billion birr, positioning Zemen Bank among the top financial institutions in the country in terms of capitalization. The bank has also seen a surge in customer deposits, growing by 17.6% from the previous fiscal year to reach 43.61 billion birr. This growth in deposits is a testament to the trust and confidence customers place in Zemen Bank, as it continues to offer competitive financial services in a highly competitive banking market. However, the president also expressed concerns about the broader challenges facing the financial sector, particularly the impact of inflation and the National Bank of Ethiopia’s decision to impose credit limits on banks. According to Zebene, these credit restrictions may dampen business activities, potentially limiting access to credit for businesses and consumers and thereby affecting profitability across the banking sector. Despite these challenges, Zemen Bank has demonstrated resilience by maintaining its growth trajectory and continues to play a pivotal role in Ethiopia’s financial sector. Zebene remarked that the bank is committed to leveraging its strong capital base and expanding its services, while staying vigilant of economic headwinds and regulatory changes that could affect its future growth. As Zemen Bank looks ahead, the institution remains focused on optimizing its operations, introducing innovative products, and deepening customer engagement, all while navigating the ongoing economic reforms and addressing the critical shortage of foreign currency. Save my name, email, and website in this browser for the next time I comment. Δdocument.getElementById("ak_js_1").setAttribute("value",(new Date()).getTime())

Latest NBE directive introduces terms for banking liquidity crisis bailouts

A new directive from the central bank sets the terms for a mechanism that would allow it to supply commercial banks with cash in the event of a liquidity crunch. The ‘Emergency Liquidity Assistance’ directive enables the National Bank of Ethiopia (NBE) to inject cash into solvent banks “experiencing temporary liquidity challenges” against collateral and with interest. The assistance, which is to be denominated solely in Birr, is available to all 32 banks licensed to operate in the country. Regulators say the measure is intended to guard against “unforeseen liquidity shortages arising from external or internal shocks, which could potentially threaten the stability of the banking system.” A bank looking to access a cash bailout from the NBE will need to present adequate collateral, which can include financial instruments such as treasury bonds, and reach a bilateral agreement with regulators. It will also need to demonstrate that it has exhausted all other options for solving its liquidity problems, including the recently established interbank market. The directive does not set a flat ceiling on the amount of cash a bank can access under an Emergency Liquid Assistance (ELA) deal, indicating it will instead be based on “the identified liquidity gap, the applicant’s ability to repay, the adequacy of eligible collateral made available” and the bank’s ability to apply the terms and conditions set by regulators. The directive does, however, set a six-month maximum for repayment for ELA agreements with an option to extend the repayment period by a further six months with prior approval. It also sets the interest rate on par with the overnight standing lending facility rate plus two percentage points. The NBE will not disclose information regarding the provision of ELA to a bank unless there are legal or public interest grounds for doing so, according to the directive. The directive is the latest in a series of legislative moves from central bank regulators following the liberalization of the foreign exchange market in late July. The value of the Birr has plummeted in the months since, with one US dollar trading for more than 113 birr at most banks. Experts and banking industry insiders have long been cautioning of an imminent liquidity crisis as inflation continues to take its toll. Earlier this week, the NBE instructed commercial banks to cap their forex trading spreads at close to two percent. Many of them had been selling forex at margins of 10 percent or higher than their buying rates.

Latest NBE directive introduces terms for banking liquidity crisis bailouts

A new directive from the central bank sets the terms for a mechanism that would allow it to supply commercial banks with cash in the event of a liquidity crunch. The ‘Emergency Liquidity Assistance’ directive enables the National Bank of Ethiopia (NBE) to inject cash into solvent banks “experiencing temporary liquidity challenges” against collateral and with interest. The assistance, which is to be denominated solely in Birr, is available to all 32 banks licensed to operate in the country. Regulators say the measure is intended to guard against “unforeseen liquidity shortages arising from external or internal shocks, which could potentially threaten the stability of the banking system.” A bank looking to access a cash bailout from the NBE will need to present adequate collateral, which can include financial instruments such as treasury bonds, and reach a bilateral agreement with regulators. It will also need to demonstrate that it has exhausted all other options for solving its liquidity problems, including the recently established interbank market. The directive does not set a flat ceiling on the amount of cash a bank can access under an Emergency Liquid Assistance (ELA) deal, indicating it will instead be based on “the identified liquidity gap, the applicant’s ability to repay, the adequacy of eligible collateral made available” and the bank’s ability to apply the terms and conditions set by regulators. The directive does, however, set a six-month maximum for repayment for ELA agreements with an option to extend the repayment period by a further six months with prior approval. It also sets the interest rate on par with the overnight standing lending facility rate plus two percentage points. The NBE will not disclose information regarding the provision of ELA to a bank unless there are legal or public interest grounds for doing so, according to the directive. The directive is the latest in a series of legislative moves from central bank regulators following the liberalization of the foreign exchange market in late July. The value of the Birr has plummeted in the months since, with one US dollar trading for more than 113 birr at most banks. Experts and banking industry insiders have long been cautioning of an imminent liquidity crisis as inflation continues to take its toll. Earlier this week, the NBE instructed commercial banks to cap their forex trading spreads at close to two percent. Many of them had been selling forex at margins of 10 percent or higher than their buying rates.

Authority backs Telebirr as ideal vessel for Ethio telecom IPO

Heads of the Authority in charge of regulating capital markets have defended their decision to permit the state-owned Ethio telecom to conduct its landmark initial public offering (IPO) through its Telebirr application ahead of the imminent launch of the Ethiopian Securities Exchange (ESX). The Ethiopian Capital Markets Authority (ECMA) say Telebirr’s know your customer (KYC) and security features as well as its simplicity make it an ideal vessel for offering 10 percent equity in Ethio telecom to the general public. Experts and analysts, however, warn that low financial literacy and unfamiliarity with securities trading could spell disaster for potential investors. Prime Minister Abiy Ahmed launched the IPO on October 16, 2024, during a ceremony at the Sheraton Addis, where 100 million shares in the state-owned giant were put up for sale at a value of 300 birr per share. Investors can acquire a minimum of 33 shares in the company for 9,900 birr or a maximum of 3,333 shares for close to one million birr. The IPO is taking place solely through Ethio telecom’s Telebirr application and is scheduled to last through January 3, 2025. Potential investors can apply for equity through Telebirr, and are required to submit payment for their bid within three days of the offer. The payment will also include a 1.5 percent service fee and the applicable value added tax (VAT), according to a statement from the operator. Only Ethiopian citizens are permitted to purchase equity in Ethio telecom, and the company reserves the right to select which prospective investors will be allocated equity following their application and payment through Telebirr. Ethio telecom executives and government officials hail the unconventional method as equitable and inclusive, but analysts warn of risks involved in using Telebirr to conduct the IPO. Some question the application’s capacity to handle such a large volume of applications and transactions efficiently. Hanna Tehelku, newly appointed ECMA director-general, said the Authority endorsed the decision to use Telebirr due to its efficient KYC capabilities. “The application also has elements of brokerage and dealership services not offered by banks, insurance firms, or other financial service providers in Ethiopia. That is why Telebirr was chosen for share issuance,” said Hanna. Financial experts, however, caution the need to take measures against possible risks in investor education, security, and transparency. They urge the Authority to be on its guard to guarantee a just and safe market space. Particularly for novice investors, the quick uptake of Telebirr for mobile money transfers may not always translate into a profitable stock market involvement, they warn. The experts observe that many Telebirr users have never engaged in stock trading before and that inadequate financial literacy may result in poor choices and, in the worst scenarios, monetary losses. The terms of the offering dictate that once bought, the shares will be subject to a lock-in period during which they cannot be sold or traded until Ethio telecom is officially listed on the ESX.

Authority backs Telebirr as ideal vessel for Ethio telecom IPO

Heads of the Authority in charge of regulating capital markets have defended their decision to permit the state-owned Ethio telecom to conduct its landmark initial public offering (IPO) through its Telebirr application ahead of the imminent launch of the Ethiopian Securities Exchange (ESX). The Ethiopian Capital Markets Authority (ECMA) say Telebirr’s know your customer (KYC) and security features as well as its simplicity make it an ideal vessel for offering 10 percent equity in Ethio telecom to the general public. Experts and analysts, however, warn that low financial literacy and unfamiliarity with securities trading could spell disaster for potential investors. Prime Minister Abiy Ahmed launched the IPO on October 16, 2024, during a ceremony at the Sheraton Addis, where 100 million shares in the state-owned giant were put up for sale at a value of 300 birr per share. Investors can acquire a minimum of 33 shares in the company for 9,900 birr or a maximum of 3,333 shares for close to one million birr. The IPO is taking place solely through Ethio telecom’s Telebirr application and is scheduled to last through January 3, 2025. Potential investors can apply for equity through Telebirr, and are required to submit payment for their bid within three days of the offer. The payment will also include a 1.5 percent service fee and the applicable value added tax (VAT), according to a statement from the operator. Only Ethiopian citizens are permitted to purchase equity in Ethio telecom, and the company reserves the right to select which prospective investors will be allocated equity following their application and payment through Telebirr. Ethio telecom executives and government officials hail the unconventional method as equitable and inclusive, but analysts warn of risks involved in using Telebirr to conduct the IPO. Some question the application’s capacity to handle such a large volume of applications and transactions efficiently. Hanna Tehelku, newly appointed ECMA director-general, said the Authority endorsed the decision to use Telebirr due to its efficient KYC capabilities. “The application also has elements of brokerage and dealership services not offered by banks, insurance firms, or other financial service providers in Ethiopia. That is why Telebirr was chosen for share issuance,” said Hanna. Financial experts, however, caution the need to take measures against possible risks in investor education, security, and transparency. They urge the Authority to be on its guard to guarantee a just and safe market space. Particularly for novice investors, the quick uptake of Telebirr for mobile money transfers may not always translate into a profitable stock market involvement, they warn. The experts observe that many Telebirr users have never engaged in stock trading before and that inadequate financial literacy may result in poor choices and, in the worst scenarios, monetary losses. The terms of the offering dictate that once bought, the shares will be subject to a lock-in period during which they cannot be sold or traded until Ethio telecom is officially listed on the ESX.

Navigating Dubai’s Real Estate Market: Insights from Ethiopian Property Consultant Samrawit A. Kassaye

As an Ethiopian who has successfully transitioned into Dubai’s highly competitive real estate industry, Samrawit A. Kassaye offers a unique perspective on navigating this dynamic market. With a passion for real estate sparked at a young age, Samrawit’s career journey is an inspiring tale of perseverance, strategic thinking, and deep industry knowledge. Her insights into the market, particularly for Ethiopian and African investors, provide invaluable guidance for those looking to enter or expand their portfolios in Dubai. From Addis Ababa to Dubai: A Seamless Transition Fueled by Passion Samrawit’s story begins in Addis Ababa, where her interest in real estate was kindled by shows like MTV Cribs. “I’ve always had an interest in architecture, design, and the intricacies of homes,” she recalls. After studying Marketing Management at Addis Ababa University, she applied her skills in a local real estate firm, quickly rising to the top. Her early success in Ethiopia gave her the confidence to explore opportunities abroad, which eventually led her to Dubai—one of the world’s fastest-growing real estate markets. Dubai’s vibrant property market, coupled with its international appeal, provided the perfect environment for Samrawit to expand her expertise. She joined Eagle Hills, a global real estate brand, where she gained exposure to luxury and international markets. This experience was crucial in preparing her for the challenges of Dubai’s competitive market. Navigating Challenges in a Competitive Market Entering Dubai’s real estate market, Samrawit quickly realized that success required more than just selling properties. It involved thoroughly understanding each project, its potential for growth, and its long-term returns. “I took the time to study each project thoroughly, looking beyond the marketing to understand the value and potential it could deliver to investors,” she explains. This meticulous approach helped her build trust with clients and establish herself as a certified property consultant in one of the UAE’s leading real estate firms. Staying competitive in Dubai’s ever-evolving market demands continuous learning. Samrawit stresses the importance of keeping up with new projects, regulations, and market shifts to provide the best advice to clients. “Not every property in Dubai guarantees strong returns,” she cautions. Her approach involves advising clients to take a calculated approach, considering each property’s long-term potential and value. A Defining Moment: Finding Success Early On Samrawit’s career-defining moment came early when she sold a luxury villa in Ethiopia at just 21 years old. “It was a turning point for me. It made me realize that when I believe in something, I can achieve it,” she recalls. This success solidified her passion for real estate and set her on the path to becoming a top-performing consultant. Her ability to overcome challenges and turn doubt into success is a testament to her perseverance and skill in the industry. Culture as a Bridge: Working with Ethiopian and African Clients As one of the few Ethiopians working for a global real estate brand in Dubai, Samrawit is uniquely positioned to serve her community. “There’s an immediate sense of trust that comes from speaking the same language and understanding cultural nuances,” she says. Ethiopian and African clients, in particular, appreciate working with someone who understands their needs and can navigate the complexities of international investment. Samrawit’s position allows her to offer a diverse portfolio of properties to both local and international buyers, helping them achieve their broader goals, whether they’re looking for rental income, property appreciation, or international exposure for their investments. Dubai’s Appeal to African Investors When asked why Dubai is an attractive destination for Ethiopian and African investors, Samrawit highlights several key factors. Dubai’s accessibility, with direct flights from Ethiopia and other African countries, makes it a convenient option for investors. Additionally, Dubai’s tax-free environment and interest-free payment plans provide financial incentives that are hard to find elsewhere. Dubai’s status as a global tourist hub also plays a crucial role. With a large expat population and high demand for rental properties, investors can expect strong returns on their investments. “The tax-free environment, large expat population, and high demand for rentals make Dubai a very attractive market for investors,” Samrawit notes. Understanding Ethiopian Buyers’ Preferences Ethiopian buyers in Dubai typically invest for various reasons, including securing visas, providing housing for their children attending university, or generating rental income. Samrawit advises first-time investors to start small—perhaps with a studio or one-bedroom apartment—before considering larger investments. “For first-time investors, I recommend starting with something manageable and then expanding once they see positive returns,” she suggests. Her focus on understanding each client’s specific goals allows her to provide tailored advice, ensuring that her clients’ investments align with their long-term objectives. Addressing Misconceptions About Dubai’s Real Estate Market Samrawit frequently encounters misconceptions about Dubai’s real estate market, especially from first-time investors. One common belief is that Dubai’s market is only accessible to luxury buyers. “In reality, there are a variety of investment options, including affordable properties like studio and one-bedroom apartments that cater to different budgets,” she explains. Another misconception is that Dubai’s market is too volatile. While there are fluctuations, Samrawit emphasizes that the market has shown resilience, particularly in prime locations. She advises investors to do thorough research and work with experienced property consultants to navigate the market’s complexities. Long-Term Growth and Investment Opportunities Looking ahead, Samrawit predicts continued growth in Dubai’s real estate market, driven by major infrastructure projects like the development of Dubai South and the upcoming Etihad Rail project. These developments are expected to increase property values and make Dubai an even more attractive destination for investors. For Ethiopian investors seeking long-term returns, Samrawit recommends focusing on emerging areas like Dubai South, where property prices are still accessible but expected to appreciate significantly in the coming years. “Investing in these areas allows investors to benefit from future growth while mitigating risks associated with higher entry costs in more established areas,” she explains. Final Thoughts: A Path to Success in Dubai’s Real Estate Market Samrawit’s journey from Ethiopia to Dubai is a story of determination, strategic thinking, and deep expertise in real estate. Her insights into the market, particularly for Ethiopian and African investors, provide a clear path to success. By focusing on thorough research, understanding clients’ goals, and staying informed about market trends, Samrawit continues to help her clients achieve their investment goals in one of the world’s most dynamic real estate markets. For those interested in exploring opportunities in Dubai, Samrawit offers free consultations and is always available to provide tailored advice. As she proudly notes, “It’s never too late to invest if you approach it with the right information and foresight.” For inquiries and consultations, Samrawit A. Kassaye can be reached at s.kassaye@axcapital.ae or +971529180516.

Don’t Confuse Ethio Telecom with GERD Bonds: The Investment You Need to Understand

By- Tsegamlak Solomon Ethio Telecom is Not GERD: Your Money is Not a Matter of Patriotism! Misguided Patriotism in the Ethio Telecom IPO Following the announcement of the Ethio Telecom IPO, several media outlets, particularly government-affiliated ones, have been framing the sale of shares as a matter of national pride and patriotism. While such enthusiasm is understandable, it’s important to clarify that Ethio Telecom is not the GERD (Grand Ethiopian Renaissance Dam), and its shares are not comparable to the GERD bonds. Lessons from the GERD Bonds: Patriotism vs. Financial Investment From a securities law perspective, one of the major shortcomings in Ethiopia’s capital market history was the handling of GERD bonds. These bonds were primarily presented to the public as a patriotic contribution to the country rather than a financial investment. Many viewed it as their duty to support the nation through purchasing GERD bonds. For the record, I would have preferred to see the GERD bonds listed on the exchange. However, back then, Ethiopia lacked formal capital market regulation, and the initiative was driven more by national sentiment than financial returns—rightly so, at that time. A New Era: The Capital Market Framework Today, we are in a very different era. Ethiopia now has a formal capital market framework and a regulatory authority overseeing how securities are offered and advertised to the public. It’s crucial to note that in the case of Ethio Telecom’s IPO, the public is essentially buying out the government’s stake. This is not a direct investment in Ethio Telecom itself. I will expand on this point in a later discussion, but for now, the public should make decisions based on financial merits, not patriotism. The Risk of Misguided Investments The current narrative, particularly pushed by state media, framing the Ethio Telecom IPO as a national project, carries significant risks. If this approach leads to misguided investments based on patriotism rather than sound financial judgment, the outcome could be catastrophic. It risks eroding public trust in Ethiopia’s budding capital market. Public confidence is essential for the market’s growth, and undermining it at this early stage could have long-lasting negative effects. Your Money is Not Going to Ethio Telecom! The Distinction: Buying Government Stake vs. Investing in Growth One important aspect of the Ethio Telecom IPO that needs to be clearly understood is that the public is essentially buying out the government’s stake, rather than directly investing in Ethio Telecom. This is a critical distinction for potential investors to grasp. No New Capital for Ethio Telecom When purchasing shares in this offering, the capital raised is not being injected into Ethio Telecom for growth, expansion, or operational improvements. Instead, the funds go to the government as it sells its existing equity in the company. As a result, Ethio Telecom will not receive new capital from this transaction. So, to put it clearly: you are buying Ethio Telecom shares, not investing in its growth. Understanding the Financial Dynamics There is nothing wrong with buying the shares, but it’s essential to approach this investment with a clear understanding of the financial dynamics involved. Of course, this also means that the capital raised is less than what would be required if the public were to acquire a 10% equity stake in Ethio Telecom through a dilution process. This is an important factor to consider when evaluating the investment opportunity. Save my name, email, and website in this browser for the next time I comment. Δdocument.getElementById("ak_js_1").setAttribute("value",(new Date()).getTime())

Venture Meda Program Unveils Expert-Led Online Learning Bot to Empower Entrepreneurs, Marketplaces, and Gig Workers

Addis Ababa, 17/10/2024 Venture Meda Program is proud to announce the official launch of the Venture Meda Learning Bot, a new Learning Management System (LMS) and e-learning platform. This is an iceaddis initiative a partnership between Iceaddis, the Ministry of Innovation and Technology, and the Mastercard Foundation, aimed at boosting the digital economy by aiding successful digital enterprises, particularly in e-commerce, through well-structured incubation and acceleration programs. The Venture Meda Learning Bot offers a unique opportunity for aspiring entrepreneurs, business enthusiasts, and gig workers to “acquire knowledge at your own pace.” The mission of the Venture Meda Learning Bot is to empower individuals with the knowledge and tools necessary for success in the business world. It provides flexible learning, allowing users to access courses at any time and from anywhere, enabling them to progress at their own pace. Targeting startups, youth interested in digital entrepreneurship, and third-party marketplaces, the initial product is a Telegram Bot named “@venturemeda_bot.” This bot offers three Micro-Learning courses: The Business Model Canvas (Video Course in Amharic), E-Commerce: From Novice to Digital Retail Pro (Text Course in English and Amharic), and Reading, Understanding & Utilizing Maps (Four-Module Video Course in Amharic). The bot is designed to reach a wide audience, leveraging the popularity of Telegram in Ethiopia. The bot is designed in collaboration with Minab IT Solutions and different industry leaders and experts craft the content. The main wen-based Venture Meda Learning platform, Mager, has been in beta testing for the last few months, showing great learning results. scheduled to launch in November officially, it will operate slightly differently. This platform will feature various courses available in two categories: one for the general public and another tailored for enterprise/startup/company dashboards. The latter will provide specific courses designed to help third-party sellers better understand their products and services, ultimately increasing efficiency and profitability. The platform emphasizes practical skills, enabling participants to acquire actionable insights that can be directly applied to drive business growth. Additionally, it will incorporate interactive learning, allowing users to stay engaged and track their progress with quizzes and tests. Future course offerings from the Venture Meda Learning Bot include essential topics such as Internet Safety in Ethiopia, How to Export guide and so much more. Each course is designed to equip participants with the skills needed to thrive in a rapidly changing business environment. “With the Venture Meda Learning Bot, the Venture Meda program aims to break down barriers to learning and provide a comprehensive platform where entrepreneurs can flourish. We believe that knowledge is the key to innovation,” said the program spokesperson. Save my name, email, and website in this browser for the next time I comment. Δdocument.getElementById("ak_js_1").setAttribute("value",(new Date()).getTime())

How Ethiopia Can Achieve 4% Growth by 2026: World Bank’s Insights on Inflation, Currency, and Investment

Ethiopia, like much of Sub-Saharan Africa, is navigating a complex economic landscape shaped by inflation, fiscal challenges, and the need for human capital development. The World Bank’s latest Africa’s Pulse report provides insights that are crucial for understanding Ethiopia’s economic prospects, particularly in light of inflationary pressures, exchange rate volatility, and the need for strategic investments in education and infrastructure. Ethiopia’s economic growth is projected to continue its upward trend, though at a slower pace than before the COVID-19 pandemic. The World Bank forecasts that Sub-Saharan Africa’s economic growth will increase to 3% in 2024, with further acceleration to 4% by 2025-2026. However, for Ethiopia, growth is expected to be constrained by persistent structural challenges such as high inflation, public debt, and an underdeveloped private sector. In recent years, Ethiopia has faced significant inflationary pressures, driven by supply chain disruptions, rising fuel prices, and a depreciating currency. The World Bank report notes that inflation in Sub-Saharan Africa is expected to decline from 7.1% in 2023 to 4.8% in 2024, thanks to more stable global commodity prices and tighter monetary policies. For Ethiopia, tackling inflation is a key priority, especially given the country’s reliance on imported goods, which become more expensive as the value of the Ethiopian Birr continues to decline. One of the critical challenges Ethiopia faces is the continuous depreciation of its currency, the Ethiopian Birr (ETB). Over the past few years, the Birr has weakened significantly against major currencies such as the U.S. dollar. This depreciation has been partly driven by the widening trade deficit, high inflation, and the limited availability of foreign exchange reserves. As the World Bank report highlights, many Sub-Saharan African countries are dealing with the effects of weaker currencies. In Ethiopia’s case, the depreciation of the Birr has a direct impact on the cost of imports, particularly essential goods like fuel, food, and industrial inputs. This, in turn, drives inflation and erodes the purchasing power of Ethiopian households. Moreover, the depreciation of the Birr affects Ethiopia’s external debt repayments, most of which are denominated in foreign currencies. As the value of the Birr declines, Ethiopia’s debt service costs rise, further straining public finances. The report emphasizes the need for sound macroeconomic management, including prudent fiscal and monetary policies, to address these challenges and stabilize the currency. The Ethiopian government has taken steps to mitigate the depreciation of the Birr and its negative effects on the economy. These include tighter monetary policies, aimed at reducing inflation, and measures to increase foreign exchange reserves through export promotion and foreign investment. In addition to macroeconomic stabilization, Ethiopia must focus on long-term drivers of economic growth, particularly human capital development. The World Bank’s report places significant emphasis on the role of education in driving inclusive economic growth across Sub-Saharan Africa, and this is particularly relevant for Ethiopia. With a population exceeding 120 million and a rapidly growing youth demographic, Ethiopia stands at a crossroads where strategic investments in education can yield significant economic dividends. The report highlights that foundational skills, such as literacy, numeracy, and critical thinking, are essential to unlocking the potential of the workforce. Yet, nearly 90% of children in Sub-Saharan Africa, including Ethiopia, are unable to read or comprehend a simple text by age 10. This learning poverty is a major obstacle to realizing the country’s full economic potential. Ethiopia’s education system has made strides in increasing enrollment rates, but significant gaps remain in learning outcomes. To meet the demands of a rapidly evolving global economy, Ethiopia must equip its youth with relevant skills for industries such as digital technology, green energy, and manufacturing. Reforms are needed to improve the quality of education, with a focus on teacher training, curriculum development, and access to vocational education. Targeting sectors with high growth potential, such as IT, renewable energy, and agribusiness, can help align education with labor market needs. The World Bank report emphasizes the importance of infrastructure investments in supporting economic growth across Sub-Saharan Africa. For Ethiopia, investing in critical infrastructure such as energy, transportation, and telecommunications is essential to enhancing productivity, reducing business costs, and increasing competitiveness. Ethiopia’s ambitious infrastructure projects, such as the Grand Ethiopian Renaissance Dam (GERD) and the expansion of road networks, are aimed at addressing long-standing bottlenecks in the economy. However, the success of these projects depends on Ethiopia’s ability to mobilize the necessary resources while managing its public debt levels, which have been rising due to external borrowing. Investments in energy infrastructure are particularly crucial as Ethiopia aims to expand its electricity generation capacity to meet the growing demand from industry and households. Reliable and affordable energy is key to attracting foreign investment and boosting manufacturing, which is a core component of Ethiopia’s industrialization strategy. The telecommunications sector also holds significant potential, especially following the liberal the impact of conflict and climate change on the economic outlook of Sub-Saharan Africa, with particular relevance to Ethiopia. Both conflict and environmental challenges are significant factors that could impede Ethiopia’s growth trajectory if not properly addressed. Ethiopia, like many other countries in the region, faces internal and external conflicts that continue to affect its political and economic stability. The recent conflicts in the northern part of the country have severely impacted infrastructure, displaced populations, and disrupted economic activities, particularly in agriculture, which is a key sector for the country’s economy. The World Bank’s report stresses that conflict leads to a significant loss of physical and human capital, as well as state capacity. For Ethiopia, the direct effects of conflict include destroyed infrastructure, reduced agricultural output, and weakened investor confidence. Moreover, conflict exacerbates food insecurity and displacement, leading to long-term economic stagnation. The report notes that countries facing prolonged conflict, such as Sudan, have seen significant contractions in their economies. While Ethiopia is not at the same level of economic collapse, addressing internal conflicts is critical to maintaining the country’s economic recovery efforts. The Ethiopian government has been working to restore peace and stability, but the long-term recovery from conflict will require substantial investment in rebuilding infrastructure, supporting displaced populations, and restoring key economic sectors such as agriculture, industry, and services. Climate change poses an existential threat to many African economies, and Ethiopia is no exception. The report highlights the increasing frequency of extreme weather events such as droughts, floods, and cyclones, which have devastating effects on agricultural productivity, food security, and economic growth across the continent. For Ethiopia, agriculture employs nearly 70% of the population and accounts for a large portion of its exports, making the country highly vulnerable to climate shocks. Ethiopia has experienced severe droughts and unpredictable rainfall patterns, which have reduced crop yields, increased food prices, and worsened poverty levels in rural areas. The World Bank’s report emphasizes the need for Sub-Saharan African countries, including Ethiopia, to invest in climate-resilient agricultural practices. These include irrigation systems, drought-resistant crops, and improved water management. Strengthening agricultural resilience not only helps reduce the risk of food insecurity but also ensures that agriculture continues to contribute to economic growth. In addition to agriculture, the broader impact of climate change on Ethiopia’s economy is evident in its infrastructure and health sectors. Extreme weather events disrupt transport networks, damage public infrastructure, and strain health systems. The report underscores the importance of developing adaptive strategies and policies that can mitigate the effects of climate change on these critical sectors. Based on the World Bank report’s findings and Ethiopia’s unique challenges, several key policy recommendations can be made to foster sustained and inclusive growth: Ethiopia’s economic future is closely tied to its ability to manage inflation, stabilize the Birr, and make strategic investments in education and infrastructure. The depreciation of the Ethiopian Birr, while challenging, can be mitigated through sound monetary policy and efforts to increase foreign exchange reserves. At the same time, addressing the root causes of conflict and building resilience to climate change are critical for ensuring long-term growth. The World Bank’s Africa’s Pulse report offers Ethiopia important insights into how to navigate these challenges and take advantage of opportunities for inclusive growth. By focusing on human capital development, improving its investment climate, and enhancing climate resilience, Ethiopia can position itself as a regional leader in sustainable development and lift millions out of poverty. The road ahead may be difficult, but with the right policies and investments, Ethiopia can unlock its full economic potential. Save my name, email, and website in this browser for the next time I comment. Δdocument.getElementById("ak_js_1").setAttribute("value",(new Date()).getTime())