Dodai Donates 40 E-Motorcycles in Partnership with Addis Ababa Transport Bureau

Dodai Donates 40 E-Motorcycles in Partnership with Addis Ababa Transport Bureau Addis Ababa, Ethiopia – May 29, 2025 — Dodai Manufacturing PLC, a leading local manufacturer and operator of electric mobility solutions, today announced a major partnership initiative with the Addis Ababa Transport Bureau and key affiliated city institutions. As part of its commitment to advancing e-mobility and supporting the city’s transformation agenda, Dodai is donating 40 electric motorcycles (without batteries) and proposing an exclusive pilot program for its innovative battery-swapping network. This strategic collaboration aims to enhance urban transportation, promote environmental sustainability, and create new livelihood opportunities for residents of Addis Ababa. The donated motorcycles are fully compatible with Dodai’s smart battery-swapping network. This innovative system allows riders to visit a Dodai swap station, pay a fee via smartphone, and instantly receive a fully charged battery—eliminating the need for traditional charging, minimizing downtime, and removing battery maintenance concerns. “We are incredibly proud to partner with the Addis Ababa Transport Bureau and key city institutions in this groundbreaking initiative,” said Yuma Sasaki, CEO of Dodai Manufacturing PLC. “This donation and proposed pilot program underscore our dedication to modernizing urban transport, fostering sustainability, and empowering young people through e-mobility. We believe this is a crucial step toward a more sustainable and inclusive transport system for Addis Ababa.” A formal partnership ceremony is scheduled for 4:00 PM on Thursday, May 29, at the Dodai Manufacturing Facility in Haile Garment. The event will bring together leaders from the Addis Ababa Transport Bureau, Japanese institutional investors, and members of the Addis Ababa E-Mobility Association to celebrate this important milestone. Dodai Manufacturing PLC has gained international recognition, having been featured in prominent media outlets such as BBC, CNBC, and Nikkei. The company was also recently selected by Bloomberg as one of Africa’s Top 25 Startups at the Qatar Economic Forum, showcasing Ethiopia’s innovation on the global stage. About Dodai Dodai is Ethiopia’s premier electric mobility company, dedicated to providing innovative and sustainable transportation solutions. With a focus on data-driven optimization and customer-centric services, Dodai is committed to reducing carbon emissions and revolutionizing urban mobility in Ethiopia. For further information or media inquiries, please contact:Eden TeshomePR Manager, 251 Communications📞 +251-913-244666📧 [email protected]

Ethiopia’s Digital Creator Economy Gets a Boost as JAMI and Arifpay Launch Country’s First Multi-Currency Tipping Platform

Ethiopia’s Digital Creator Economy Gets a Boost as JAMI and Arifpay Launch Country’s First Multi-Currency Tipping Platform Addis Ababa, Ethiopia — May 29, 2025 Ethiopia’s fast-growing digital economy just got a major shot in the arm. JAMI, a newly launched content monetization platform founded by local tech entrepreneur Nathan Damtew, has officially partnered with leading fintech company Arifpay to debut the country’s first multi-currency digital tipping service for creators. The platform, unveiled at a packed event at Hyatt Regency Addis Ababa, promises to reshape how Ethiopian creators earn from their craft — both at home and across the diaspora. Built for the Digital Hustler At its core, JAMI is a simple yet powerful tool: a personalized microsite where creators — from streamers and educators to comedians, musicians, and meme pages — can showcase their content and receive tips directly from fans in multiple currencies. Think of it as an Ethiopian answer to Patreon or Buy Me a Coffee, but tailored for local realities and global ambitions. “We built JAMI because creators in Ethiopia didn’t really have a way to get paid directly by their fans,” said Nathan Damtew, CEO and Founder of JAMI. “Platforms like YouTube or TikTok Live are great, but they don’t really work for most Ethiopian creators. You need to go viral, meet a bunch of requirements, and even then, payouts are in dollars and hard to access. We wanted to change that. So JAMI makes it easy for creators to earn tips, share their work, and build a digital presence — and everything works in birr.” A Creator Economy Gap, Now Closing Damtew points to a significant void in Ethiopia’s digital ecosystem — one where local influencers often struggle to convert their growing audiences into revenue. And even when opportunities arise, getting paid from abroad has typically been a headache thanks to currency restrictions and a patchy digital payments landscape. “A lot of talented people in Ethiopia aren’t really ‘content creators’ in the traditional sense — they’re poets, podcasters, painters, educators, designers, you name it,” said Damtew. “They have something valuable to offer, but they’re not necessarily going viral on TikTok or YouTube. JAMI gives them a way to still earn. Through tips, link sharing, and soon even selling their products. And again, since we’ve integrated with ArifPay, everything’s local, no payout issues. We’re trying to make it so even a creator with 100 loyal fans can earn something meaningful.” JAMI integrates with ArifGateway, Arifpay’s online payment infrastructure, which supports payments from local mobile wallets, debit cards, and international channels like Visa and Mastercard. Fans abroad can tip their favorite Ethiopian creators in USD, EUR, or GBP, while payouts to creators are settled in line with Ethiopia’s financial regulations. The Early Adopters: Creators Beyond the Algorithm Since soft-launching in beta, JAMI has attracted a vibrant mix of creators. “Honestly, the response has been exciting,” Damtew said. “We’re seeing podcasters, digital artists, freelance illustrators, even musicians and educators jump in. A lot of them already had communities, they just didn’t have a way to turn that love into income. Now they’re getting tipped directly, some are closing freelance gigs from their profile pages, it’s been amazing to watch. It’s not just about money either, it’s about finally having a local tool that actually gets them.” Fintech Meets the Creative Class For Arifpay, the partnership is a strategic move as much as a social one. “Arifpay saw a strong opportunity to support Ethiopia’s growing community of young entrepreneurs and digital innovators, and also recognizes the growing influence of digital creators in Ethiopia and particularly those in the creative economy. Partnering with JAMI, a platform focused on helping creators monetize their content, aligns with Arifpay’s vision to empower the digital economy. This collaboration allows Arifpay to extend its reach into the creative sector, providing seamless payment solutions that enable content creators to earn from their work — both locally and globally,” said Girum Getachew, Partnership and Business Director at Arifpay. He added, “Arifpay currently offers online payment gateway POS, QR, SoftPOS, and international remittance solutions. By integrating our online payment gateway, ArifGateway, with JAMI’s digital platform, users can send money from within Ethiopia or from abroad using multiple payment instruments. These include local mobile wallets, debit cards, bank account options, as well as international payment options like Visa and Mastercard.” “This means that anyone from abroad who wishes to send tips can do so using our international payment options, with settlements to the content creator processed in accordance with the National Bank of Ethiopia’s (NBE) directives,” he explained. More Than a Platform, It’s a Movement While JAMI’s technology is impressive, its real ambition is cultural. The platform isn’t just offering a payment tool — it’s planting a flag for Ethiopia’s creative class. “We’re not chasing celebrity creators,” Damtew insists. “This is about the street poet in Addis, the history podcaster in Bahir Dar, the diaspora photographer in DC — anyone with a voice and a community.” What’s Next? Following the launch, creators can register at jami.bio, set up their profiles, and start receiving tips instantly. The platform plans to roll out features like subscription payments and digital merchandise sales in the coming months. “We believe this will spark a new era for Ethiopia’s digital economy,” said Damtew. Judging by the buzz at the launch and early sign-ups, it’s a bet worth watching.

Oromia Bank Joins Digital Lending Race with Launch of Miliki App

Oromia Bank Joins Digital Lending Race with Launch of Miliki App Oromia Bank has entered Ethiopia’s rapidly evolving digital lending space with the launch of Miliki, a new mobile application that offers collateral-free loans through an AI-driven credit assessment system. Developed in partnership with local fintech firm Quantum Technology, the app is part of the bank’s broader strategy to expand financial access and align with national digital transformation goals under Digital Ethiopia 2025. With Miliki, Oromia Bank joins a growing list of financial institutions and tech companies racing to offer mobile-based microcredit solutions aimed at underserved populations. The platform enables eligible users to apply for loans up to ETB 300,000 without requiring traditional asset-based guarantees. According to Oromia Bank CEO Teferi Mekonnen, the product is designed to address long-standing barriers to credit, particularly for groups often excluded from the formal financial sector, such as women, youth, and informal workers. “Miliki leverages technology to extend credit access to those who have the capacity to repay but lack conventional collateral. It’s about inclusion, efficiency, and accessibility,” Mekonnen said during the launch event. The app uses an AI-powered algorithm that evaluates borrower behavior, transaction history, and other alternative data sources to determine loan eligibility. Since its pilot and soft launch period began three months ago, over 7,000 users have successfully received loans via the platform—a figure the bank considers a strong indicator of unmet demand. A Competitive Landscape of Digital Credit Solutions Miliki’s debut comes amid increasing competition in Ethiopia’s mobile lending market, as banks and fintechs seek to capitalize on the country’s young population, expanding smartphone usage, and persistent credit gap. Commercial Bank of Ethiopia (CBE) has introduced limited-scope loans through its CBE Birr mobile wallet, mostly catering to salaried individuals with a stable transaction record. Dashen Bank, via its digital payment platform Amole (in collaboration with Moneta Technologies), offers microloans primarily to merchants, using transaction data to assess creditworthiness. Awash Bank is testing digital loan offerings for SMEs, although these products still involve more conventional screening processes and collateral for larger amounts. While the regulatory environment for digital credit in Ethiopia is still maturing, the momentum suggests a shift toward more consumer-centric and mobile-first financial products. Analysts say the success of these tools will depend not only on their technological strength but also on repayment performance, financial literacy, and ongoing regulatory support. Outlook By rolling out Miliki, Oromia Bank signals its intent to be a key player in the country’s digital financial future. As Ethiopia’s credit ecosystem diversifies, the competition to build user trust and scale responsibly will intensify. Whether Miliki can maintain early traction and expand sustainably remains to be seen, but its launch marks a clear step in the growing race to redefine access to credit in Ethiopia.

Ethiopian Airlines to Launch Daily Flights Between Moscow and Addis Ababa by December 2025

Ethiopian Airlines to Launch Daily Flights Between Moscow and Addis Ababa by December 2025 Addis Ababa, May 28, 2025 — Ethiopian Airlines has announced plans to significantly expand its air service between Moscow and Addis Ababa, with daily flights scheduled to commence in December 2025. This marks a major step in strengthening air connectivity between Ethiopia and Russia. Michael Endale Taffesse, Head of Ethiopian Airlines’ Representative Office in Russia and the Commonwealth of Independent States (CIS), confirmed the development in a statement to African Initiative. “At present, we are planning to increase the frequency of flights between Ethiopia and Russia,” he said. “Then, from December, we plan to make the flights daily — that is, aircraft will fly between Moscow and Addis Ababa seven days a week.” Currently, the airline operates four flights per week between the two capitals. Beginning in July, this frequency is set to increase to five flights per week, as Ethiopian Airlines gradually ramps up service to meet growing demand. The move reflects the airline’s broader strategy to expand its global footprint and strengthen Ethiopia’s role as a key aviation hub connecting Africa with Europe, Asia, and beyond. The additional flights are expected to boost trade, tourism, and diplomatic ties between Ethiopia and Russia, at a time when both countries are deepening their economic and political cooperation. Ethiopian Airlines, Africa’s largest and most profitable carrier, has been steadily expanding its international routes, even amid global aviation challenges. The new daily service to Moscow is expected to enhance its already extensive global network, which spans over 130 international destinations. Further details regarding flight schedules, ticket availability, and aircraft types to be deployed on the route will be announced closer to the launch date.

National Bank of Ethiopia Raises Daily Transaction Limit to 300,000 Birr

National Bank of Ethiopia Raises Daily Transaction Limit to 300,000 Birr Addis Ababa, May 27, 2025 — The National Bank of Ethiopia (NBE) has introduced a sweeping amendment to its Licensing and Authorization of Payment Instrument Issuer Directive, issued as Directive No. ONPS/10/2025, aimed at modernizing the country’s digital payment landscape. The directive introduces new compliance mandates, operational standards, and interoperability requirements, signaling a bold step toward financial inclusion, consumer protection, and a robust digital economy. Key Changes Introduced by the Directive Higher Capital ThresholdIn a move to strengthen the financial capacity of payment instrument issuers, the minimum paid-up capital has been increased to 100 million Birr, to be deposited in cash with a commercial bank in Ethiopia. Existing license holders with capital below this threshold must comply by June 2027, while new applicants have a two-year compliance window post-licensing. Mandatory InteroperabilityThe directive mandates all mobile money operators to ensure wallet-to-wallet interoperability through the National Switch. This allows seamless fund transfers across different platforms, improving user convenience and enhancing competition among service providers. Instant Payment System ParticipationAll financial institutions offering digital payments are now required to integrate into the Ethiopian Instant Payment System (EIPS), allowing for real-time fund transfers and improved transaction efficiency across the sector. Transaction and Balance Limits UpdatedFor Level 2 electronic money accounts, the daily transaction limit has been raised to 300,000 Birr, with a maximum electronic balance of 150,000 Birr. Additionally, individual person-to-person transfer limits are capped at 75,000 Birr, and merchant payments via QR codes cannot exceed 250,000 Birr per day. Stronger Consumer Protection and Security MeasuresTransactions exceeding 5,000 Birr must now use two-factor authentication, including PIN, OTP, or biometric verification. Furthermore, institutions must implement real-time KYC processes and risk-based transaction monitoring to prevent fraud. New Definitions and Governance RequirementsThe directive clarifies legal definitions such as “direct” and “indirect shareholding” and introduces governance conditions, such as requiring 7 years of executive experience (with 3 years in managerial roles) for CEOs and senior executives in payment institutions. Audit RequirementsIssuers are required to conduct security audits every six months and report results to the NBE, ensuring continuous oversight and risk mitigation. Equity Limits and ShareholdingA single person is limited to owning no more than 60% of a licensed payment instrument issuer’s capital, promoting diversity in ownership. No entity, except government, telecoms, or banks, may hold more than 40% of subscribed shares. Implications for the Financial Sector The NBE’s directive reflects a broader national push toward digital financial inclusion and infrastructure modernization. It addresses longstanding concerns about fragmentation in the mobile money sector and introduces safeguards to protect users while encouraging innovation. By enforcing higher capital standards and mandating interoperability, the regulation is expected to attract more reliable market entrants and boost public trust in digital transactions. Effective DateThe directive will come into force on May 12, 2025. ConclusionThis directive represents a transformative milestone for Ethiopia’s payment industry. As digital payment usage continues to rise, the reforms provide a necessary framework to ensure secure, inclusive, and efficient financial services for all Ethiopians. —For more details, access the full directive on the National Bank of Ethiopia’s website.

Ethiopian Airlines Earns $5.6 Billion in Revenue in Nine Months, Sets New Records in Passenger Growth and Expansion

Ethiopian Airlines Earns $5.6 Billion in Revenue in Nine Months, Sets New Records in Passenger Growth and Expansion Addis Ababa – May 2025 Ethiopian Airlines Group has reported a remarkable $5.6 billion in revenue over the past nine months, reflecting an 8% increase compared to the same period last year. The airline’s Chief Executive Officer, Mr. Mesfin Tasew, shared the performance update in an interview with the Ethiopian Broadcasting Corporation (EBC), highlighting the Group’s continued momentum and expansion as it charts a course toward its long-term strategic goals. According to Mr. Tasew, Ethiopian Airlines transported 14.5 million passengers during the reporting period, marking a 13% year-on-year increase. This growth comes amid sustained efforts to widen the airline’s global footprint, enhance operational capacity, and respond to the surging demand for international and domestic travel. Strategic Expansion Under Vision 2035 As part of its broader Vision 2035 growth plan, Ethiopian Airlines has aggressively pursued network and fleet expansion. Within just the first nine months of the Ethiopian fiscal year 2017 (EC), the carrier inaugurated four new international destinations, bolstering its already vast global route network. Fleet modernization and expansion were also central to this growth. The airline acquired 10 new aircraft, integrating them into active service. Notably, it became the first airline in Africa to introduce the state-of-the-art Airbus A350-1000 to its fleet—a milestone that underscores Ethiopian Airlines’ commitment to operating one of the youngest and most modern fleets on the continent. Infrastructure Development to Match Growth The surge in passenger traffic at Bole International Airport has prompted major investments in aviation infrastructure. Mr. Tasew confirmed that preparations are underway to construct additional international airports to alleviate congestion and meet future demand. The move reflects the airline’s strategy to position Addis Ababa as a premier aviation hub for Africa and beyond. Sustainable Growth and Global Recognition Ethiopian Airlines’ achievements are not just confined to numbers. The Group’s growth is underpinned by key foundational investments in training, maintenance, cargo, and logistics. These sectors have not only contributed to revenue diversification but have also solidified the airline’s reputation as a fully integrated aviation group. The carrier’s success story continues to stand out in Africa’s aviation sector, especially during a time when many global airlines are still recovering from the financial impacts of the COVID-19 pandemic. Ethiopian Airlines’ ability to adapt, innovate, and invest—while maintaining profitability—has earned it international accolades and has made it a model for other national carriers on the continent. With its Vision 2035 strategy in full swing, Ethiopian Airlines plans to continue expanding its route network, investing in sustainable aviation technology, and strengthening its position as Africa’s leading airline. The Group aims to significantly increase its fleet size, passenger volume, and cargo capacity while focusing on digital transformation and customer satisfaction. As Africa’s most profitable and fastest-growing airline, Ethiopian Airlines is not just charting the skies—it is redefining them.

IMF Executive Board to Review Ethiopia’s $3.4 Billion Program This Summer Amid Economic Reform Push

IMF Executive Board to Review Ethiopia’s $3.4 Billion Program This Summer Amid Economic Reform Push Addis Ababa, Ethiopia – The International Monetary Fund (IMF) is expected to hold a crucial Executive Board meeting this summer to review the third installment of Ethiopia’s $3.4 billion Extended Credit Facility (ECF) and Extended Fund Facility (EFF) program, according to IMF spokesperson Julie Kozack. The meeting could unlock the disbursement of around $265 million, offering the Ethiopian government a financial lifeline as it navigates complex macroeconomic reforms, restructuring efforts, and a fragile post-conflict recovery. Background: A Program Anchored in Reform In December 2019, the IMF approved the $3.4 billion blended ECF/EFF arrangement for Ethiopia to support wide-ranging structural reforms, stabilize the macroeconomic environment, and reduce debt vulnerabilities. While the initial momentum was disrupted by the COVID-19 pandemic and the outbreak of civil conflict in Tigray, Ethiopia resumed reform efforts in late 2022. These included steps to liberalize the exchange rate regime, curb inflation, improve tax administration, and begin restructuring external debt under the G20 Common Framework. The third review, anticipated since early 2024, comes at a critical juncture. Ethiopia’s economy has shown signs of resilience, with projected real GDP growth of 6.1% in 2025, according to the IMF’s latest World Economic Outlook. However, mounting debt service obligations, double-digit inflation, a persistent foreign currency shortage, and high unemployment—particularly among the youth—remain pressing challenges. Delayed Staff-Level Agreement Signals Complex Negotiations According to Julie Kozack, IMF staff concluded their assessment in mid-April. Ethiopian officials had expressed optimism for a swift staff-level agreement, but no such announcement has yet materialized. Analysts suggest that the delay may be due to ongoing technical discussions around debt sustainability, exchange rate alignment, and progress on fiscal consolidation. The IMF has historically emphasized the need for Ethiopia to adopt a more flexible exchange rate to address external imbalances, reduce the black-market premium, and rebuild foreign exchange reserves. However, liberalizing the birr risks fueling inflation and social unrest, especially in an already volatile political environment. Negotiations have also been complicated by the slow pace of Ethiopia’s engagement with private and bilateral creditors. While the government secured a debt service suspension agreement with China in 2023, talks with other official creditors under the G20 Common Framework have not yet yielded a comprehensive restructuring deal—an important precondition for unlocking IMF resources. What’s at Stake: $265 Million and Policy Credibility Should the IMF Executive Board approve the third review—expected tentatively in June—it would release about $265 million in funding. This disbursement would be crucial for easing balance-of-payments pressures and restoring investor confidence in Ethiopia’s economic reform agenda. More importantly, it would reaffirm Ethiopia’s commitment to its program targets and policy reforms. The IMF’s endorsement is widely viewed by multilateral lenders and investors as a signal of macroeconomic discipline. Without it, Ethiopia risks further delays in securing World Bank budget support and attracting much-needed concessional financing from development partners. Reform Fatigue vs. Reform Imperative For Prime Minister Abiy Ahmed’s government, the IMF program represents both an opportunity and a political gamble. On one hand, it supports long-term economic transformation—such as digitizing tax systems, improving state-owned enterprise governance, and reducing dependence on state-directed credit. On the other, it requires politically sensitive measures: reducing fuel and food subsidies, floating the currency, and cutting public sector employment growth. Ethiopian civil society groups and labor unions have voiced concern over the social costs of these reforms. With food inflation hovering above 30% for much of 2024, household purchasing power remains low. Urban unrest in Addis Ababa and regional discontent in Oromia and Amhara have raised alarms about the fragility of the social contract in a reform-intensive environment. Outlook: Balancing Reform, Recovery, and Risk Despite the hurdles, Ethiopia’s economic team—led by Finance Minister Ahmed Shide and National Bank Governor Mamo Mihretu—has remained engaged with IMF staff. The eventual approval of the third review could serve as a turning point in re-establishing macroeconomic credibility. However, the road ahead remains uncertain. The delayed staff-level agreement, unresolved debt talks, and domestic opposition to austerity-style reforms present formidable barriers. Whether Ethiopia can balance reform imperatives with political realities will determine not just the future of the IMF program, but the broader trajectory of its economic recovery. As the IMF Board convenes in the coming weeks, all eyes will be on Addis Ababa. The decision could shape Ethiopia’s fiscal breathing space, reform momentum, and access to external funding at a moment when the stakes have rarely been higher.

Abiy and Macron Forge Stronger Economic Ties as France Renews Commitment to Ethiopia’s Debt Relief and Investment Future

Abiy and Macron Forge Stronger Economic Ties as France Renews Commitment to Ethiopia’s Debt Relief and Investment Future PARIS – In a high-level diplomatic meeting held at the Élysée Palace, Ethiopian Prime Minister Dr. Abiy Ahmed and French President Emmanuel Macron reaffirmed their countries’ growing strategic partnership, with a renewed focus on deepening economic cooperation and accelerating Ethiopia’s debt relief process. The two leaders, accompanied by senior delegations, reviewed the progress of bilateral agreements signed during Macron’s landmark visit to Ethiopia in 2017. These agreements spanned sectors such as defense, cultural preservation, and education. The latest dialogue placed particular emphasis on unlocking further collaboration in trade, investment, and infrastructure. President Macron reiterated France’s role as a key supporter of Ethiopia’s debt relief efforts, positioning Paris as a long-term economic ally to Addis Ababa amid its broader reform agenda. Since 2010, Ethiopia and France have strengthened their bilateral relationship through high-level state visits, strategic partnerships, and collaborative projects in heritage restoration and capacity building. The leaders also revisited significant milestones such as: The restoration of the rock-hewn churches of Lalibela, a UNESCO World Heritage site, supported by French technical expertise; The 2011 and 2015 visits by both heads of state, which laid the groundwork for intensified cooperation in defense and culture; Macron’s 2017 return to Ethiopia, where he reaffirmed France’s backing of Ethiopia’s economic reform program and debt restructuring efforts. This latest meeting in Paris marks a pivotal moment for Ethiopia, which is seeking to stabilize its economy, attract foreign investment, and reassert its geopolitical importance in the Horn of Africa. Prime Minister Abiy and President Macron jointly emphasized the urgency of delivering swift, sustainable solutions to secure Ethiopia’s economic resilience. With France increasingly positioning itself as a reliable European partner for African nations seeking equitable growth and reform support, this meeting underscores how global south-north alliances can evolve into robust engines of economic transformation. Bottom Line:France’s renewed economic and political engagement with Ethiopia reflects a growing recognition of the country’s strategic importance. With debt relief, heritage diplomacy, and investment now on the table, Ethiopia could be on the cusp of a major economic realignment—backed by Paris.

Ethiopia’s Banking Crossroads: Risks of Foreign Bank Entry Amid Domestic Fragility

Ethiopia’s Banking Crossroads: Risks of Foreign Bank Entry Amid Domestic Fragility Why Rushing Liberalization Could Undermine Local Banks and Widen Economic Inequality By Henok Gidey (BA, MBA, ACCA, CFIP), Finance Specialist Addis Ababa — The Governor of the National Bank of Ethiopia (NBE) recently announced that foreign banks will be allowed to operate in Ethiopia starting next year. While this bold move is part of Ethiopia’s broader economic reform agenda, it raises serious questions about timing, transparency, and national readiness. Critically, this comes at a time when the country is facing a crippling liquidity crunch, under-capitalized domestic banks, and an economy still recovering from multiple shocks. What’s more, the public has not been informed whether the NBE has established any safeguards or conducted a risk impact assessment ahead of this transformational policy shift. This article unpacks the likely downsides of foreign bank entry, the implications for Ethiopia’s banking system, and lessons from other countries that liberalized too fast—only to regret it later. A Market in Crisis, Not in Need of Shock Ethiopia’s financial sector is under pressure. Inflation is high, access to credit is restricted, and most domestic banks are struggling to meet growing demand for loans. The liquidity crisis is especially affecting SMEs and informal enterprises, which are the backbone of the Ethiopian economy. Contrary to the assumption that foreign banks will bring liquidity and stability, international experience shows otherwise. Foreign banks rarely bring new lending capital. Instead, they compete with local banks for deposits, target only top-tier clients, and leave underserved groups behind. If anything, their entry could deepen the liquidity crisis in the short term, not solve it. Who Will Foreign Banks Serve? Historically, foreign banks that enter emerging markets focus on: Large corporations High-net-worth individuals Sectors with strong FX flows (e.g., trade, telecom) They do not generally finance SMEs, farmers, or rural populations. These segments are seen as too risky or too costly. In Kenya, for instance, foreign banks like Standard Chartered and Barclays accounted for nearly 50% of top corporate loans but contributed less than 10% of SME financing. Ethiopia risks seeing the same pattern. Foreign banks will serve the top 5% of the market—not the 80% of Ethiopians excluded from formal credit. Local Banks Could Lose Up to 50% of Corporate Clients Foreign banks bring stronger brands, better technology, and lower-cost international capital. This gives them a competitive edge over domestic institutions, especially when it comes to corporate clients. These clients are vital to local banks. They provide: Large deposits Steady FX inflows Low-risk lending opportunities In Ghana and Nigeria, liberalization led local banks to lose 30–60% of their corporate customers within a few years. Ethiopia, with a less mature banking sector, could see a 30–50% erosion in its corporate client base within 3–5 years of foreign entry. That would be a serious blow to local banks’ balance sheets, profitability, and their ability to serve SMEs or expand branch networks. Liquidity Crunch Will Likely Worsen Some argue that foreign banks could ease Ethiopia’s liquidity problems. However, this is unlikely in the short term. Most foreign banks entering restricted markets do not bring external capital, especially when FX regulations are tight. Instead, they: Mobilize local deposits Reallocate them to elite clients Avoid long-term or SME loans The result? A redistribution—not expansion—of financial resources. By offering higher deposit interest rates, foreign banks could attract depositors from domestic banks. This would reduce local banks’ loanable funds, worsening the credit shortage for SMEs and rural borrowers. Creating a Two-Tier Banking System If poorly managed, liberalization could create a dual banking system: Foreign banks serving elite clients Local banks serving risky, underserved segments without adequate support This would widen the existing financial access gap. SMEs and rural entrepreneurs would be further marginalized. Urban-rural inequality could grow, and local banks might be forced to take on more credit risk to survive. Such patterns were observed in Uganda, Zambia, and Ghana—countries that opened their banking sectors without first strengthening local institutions. No Public Risk Mitigation Plan The NBE’s announcement came with no public release of: A licensing roadmap Foreign bank entry models (branch, subsidiary, JV) Minimum capital or local content requirements Impact assessments or transition plans The public, private sector, and civil society remain uninformed about how the NBE will monitor systemic risks, enforce inclusion mandates, or protect local banks from collapse. This lack of communication undermines confidence in the reform process and invites policy uncertainty. It also ignores global best practices, which emphasize gradual, transparent, and consultative reform pathways. Regulatory Framework Still Underdeveloped Ethiopia’s financial regulatory environment is not yet equipped for complex cross-border banking supervision. Key gaps include: No deposit insurance system Weak consumer protection Lack of an active capital market Limited credit reporting and data sharing infrastructure Without these tools, foreign bank oversight becomes challenging. In fragile environments, foreign banks may even avoid lending altogether, keeping capital parked in government securities or overseas transactions. This would defeat the very purpose of liberalization. Ethiopia Must Learn from Others Countries that successfully liberalized their banking sectors—such as Morocco, India, and Indonesia—did so in phases, with: Strong regulatory frameworks Mandatory financial inclusion targets Capacity building for local banks Public-private dialogue mechanisms They also ensured that foreign entrants contributed to national development priorities, not just profit. Ethiopia must do the same. Otherwise, it risks financial destabilization, loss of sovereignty over credit allocation, and increased inequality. Recommendations for a Safer Transition To mitigate risks and ensure shared benefits, Ethiopia should: Delay full liberalization until domestic banks are more competitive. Introduce foreign banks in phases, with clear eligibility criteria. Mandate lending quotas to SMEs or underserved sectors. Require joint ventures between foreign and local banks in the initial phase. Strengthen local banks through recapitalization, technical support, and technology upgrades. Improve regulatory capacity, including oversight of digital finance and capital flows. Publish a foreign entry white paper outlining the NBE’s goals, timeline, and risk strategy. Create a monitoring body to assess economic and social impacts over time. Conclusion: Reform, But Don’t Rush Ethiopia’s ambition to modernize its financial sector is commendable. But rushing to allow foreign banks without local readiness is a recipe for economic exclusion, institutional collapse, and capital concentration. The NBE must proceed with caution, transparency, and accountability. Banking liberalization must be part of a larger national development strategy, not a stand-alone decision. If done right, foreign bank entry can be a catalyst. If done poorly, it could become a crisis. The stakes are high—and so is the responsibility to get it right. For further analysis or commentary, contact the author at [email protected]