Abyssinia Bank Reports Over 5 Billion Birr Gross Profit for 2023/24 Fiscal Year

Abyssinia Bank Reports Over 5 Billion Birr Gross Profit for 2023/24 Fiscal Year Abyssinia Bank has reported a gross profit of 5.28 billion birr for the 2023/24 fiscal year, representing a growth of 0.92% compared to the previous year. The announcement was made during the bank’s 28th Annual General Meeting of Shareholders, where key financial highlights were presented. Key Financial Performance: Deposits: Total deposits increased to 192.51 billion birr, a growth of 33.97 billion birr from the prior fiscal year. The bank’s deposit market share was reported to exceed 66%, according to its financial report. Loans and Prepayments: The bank’s loan and prepayment portfolio reached 167.7 billion birr, an increase of 21.2 billion birr compared to the previous year. Total Assets: The total assets of the bank grew to more than 222 billion birr, reflecting its expanding financial base. Capital Base: Abyssinia Bank’s total capital was reported at 23.19 billion birr for the fiscal year. The meeting provided an overview of the bank’s operational and financial achievements over the year, highlighting its performance in a competitive banking sector. The bank’s leadership noted the growth in deposits, loans, and total assets as indicators of its continued stability and development. The financial report underscores Abyssinia Bank’s position as one of Ethiopia’s prominent banking institutions, with a focus on consolidating its market presence and capitalizing on opportunities for growth.

Ethiopian Government Raises Customs Duty on Imported Electric Vehicles

Ethiopian Government Raises Customs Duty on Imported Electric Vehicles In a notable policy shift, the Ethiopian government has increased customs duty on imported electric domestic vehicles, raising the rate from 15 percent to 20 percent. The decision to implement a 5 percent increase follows the International Monetary Fund’s (IMF) call for Ethiopia to expand its tax base. However, it may impact vehicle affordability in a country where vehicle ownership rates are already among the lowest in the world, with just one vehicle per 100 people. This move also comes at a critical time for Ethiopia’s economy, as rapid technological developments and policy changes are creating new opportunities, particularly for U.S. businesses interested in Ethiopia’s electric vehicle (EV) market. In January 2024, as part of its bold commitment to a green economy, Ethiopia became the first country to ban the importation of internal combustion engine vehicles. This pioneering legislation has opened doors for international electric vehicle manufacturers, especially U.S. firms, to invest in Ethiopia’s emerging EV market. With over 120 million people, Ethiopia’s tax structure has historically limited vehicle ownership due to high taxes on combustion-engine vehicles, which include up to 100% excise tax, 15% VAT, a 10% surtax, and a 3% withholding tax. In contrast, EVs benefit from considerable tax incentives, such as the elimination of VAT, excise taxes, and a reduced customs duty rate of 15% (or even 5% for partially assembled EVs). This favorable environment, coupled with an anticipated rise in electricity supply from the Grand Ethiopian Renaissance Dam, positions Ethiopia for an upsurge in EV ownership. The number of EVs in Ethiopia has grown to over 30,000, including both passenger and commercial vehicles. The Ethiopian government projects that, by 2032, there will be 148,000 passenger EVs and nearly 5,000 commercial EVs. Addis Ababa, the capital city, is leading the way, having invested in 110 electric buses at a cost of $15 million in 2022. To facilitate this transition, the government is making efforts to simplify the import process for EVs and EV parts. Nine Ethiopian companies currently assemble EVs from semi knock-down kits, with brands like Kia, Hyundai, Isuzu, and Peugeot now assembled locally. The government is also exploring additional privileges for EV owners, such as constructing public charging stations and offering special license plates. However, this recent increase in customs duty for fully assembled imported EVs may impact Ethiopia’s EV adoption. Vehicle importers expressed concern that this additional cost will make electric vehicles less accessible, potentially slowing the momentum in EV sales. “The price of vehicles is likely to go up significantly, which could affect demand in the market,” one importer noted. The increase may thus challenge Ethiopia’s green energy ambitions by placing added financial burdens on consumers interested in EVs. The growth of Ethiopia’s EV sector is still nascent, and there is room for U.S. EV manufacturers to enter this promising market, particularly in the high-end segment where premium quality is a strong market driver. With the country’s commitment to an electric future, U.S. businesses have a unique first-mover opportunity to showcase advanced EV technologies and infrastructure solutions. As Ethiopia balances its ambitions for a sustainable tax base with its environmental goals, the increase in customs duties may lead the government to consider additional incentives to support EV adoption. The policy change, while adding to tax revenue, will also test Ethiopia’s commitment to accessible green transportation options for its people.

Ethiopian Capital Market Authority’s First Investment Directive Approved at the 2024 Capital Markets Summit

Ethiopian Capital Market Authority’s First Investment Directive Approved at the 2024 Capital Markets Summit The Ministry of Justice has recently approved groundbreaking guidelines from the Ethiopian Capital Markets Authority (ECMA) focused on public offerings and trading of documented investments. Announced at the 2024 Capital Markets Summit in Addis Ababa, this directive represents the first formal document guiding investment provisions in Ethiopia, setting the stage for a structured, secure, and transparent investment landscape. Hana Tehlku, Director General of the Ethiopian Capital Market, shared that this directive is foundational in creating a well-regulated capital market system. The guidelines establish a series of measures designed to promote transparency, standardize processes, and protect investor interests, all while aligning with Ethiopia’s broader economic goals. Key Provisions and Structure of the Directive Registration and Eligibility Requirements for Document HoldersOne of the directive’s core elements is the registration process for document holders, who are individuals or entities issuing investment securities. To be eligible, document holders must undergo rigorous verification to confirm legal standing, financial health, and compliance with Ethiopian commercial law. This process is intended to build a dependable market infrastructure by ensuring that all players are verified and accountable. By standardizing these eligibility requirements, the ECMA aims to create an environment where only credible and financially sound entities participate in the capital market. Transparency and Investor NotificationIn an effort to enhance transparency, the directive introduces mandatory disclosure standards. Companies offering investments are required to provide annual audited financial statements and are expected to maintain regular communication with investors through customer interest disclosures. This includes detailed statements regarding investors’ rights, risks associated with their investments, and any material changes that could impact their interests. The disclosure requirements ensure that investors receive timely, accurate information, helping them make informed decisions and fostering a culture of accountability. Preemptive Rights for Existing ShareholdersThe directive includes protections for existing shareholders through a clause on preemptive rights. Under this provision, existing shareholders are given priority in purchasing additional shares, particularly when a company issues new stock. This priority helps to prevent dilution of their ownership stake and guards their investment against changes that might reduce its value. The preemptive rights provision is intended to build trust among shareholders, offering reassurance that their initial investments will be respected and protected even as new capital is introduced. Capital Adequacy and Risk Assessment StandardsEnsuring financial soundness is a critical focus of the directive. Companies issuing investment documents must meet rigorous capital adequacy standards, demonstrating that they have the necessary financial backing and risk management processes to honor their obligations. For example, companies that issue loan securities must establish a clear repayment schedule and provide detailed financial forecasts. Risk assessments are also required, with companies needing to disclose any potential risks associated with their offerings. This requirement is designed to prevent defaults and protect investors, particularly those new to the Ethiopian capital market. Independent Oversight and Compliance EnforcementThe directive establishes an independent oversight framework to enforce compliance and maintain market integrity. External auditors approved by the ECMA must review the financials of companies participating in the market, ensuring they meet the required standards. To maintain market discipline, the ECMA has the authority to impose penalties on companies that fail to comply with these transparency requirements, including suspensions or cancellations of trading rights. This independent oversight is a critical step in building a stable and trustworthy investment environment, where both local and foreign investors can participate confidently. Disclosure Obligations and Continuous ReportingUnder the directive, companies are obligated to meet continuous reporting standards. This includes timely updates on any changes in their financial position, management decisions, or risks that may impact investors. The directive also mandates that all disclosures be made available to the public, fostering an information-driven market environment where stakeholders have access to real-time updates. Continuous reporting requirements are expected to create a standardized investment environment, moving Ethiopia closer to international capital market standards. Path Forward for Ethiopia’s Capital MarketThe ECMA’s directive signals Ethiopia’s commitment to establishing a robust, fair, and investor-friendly capital market. By promoting transparency, enforcing compliance, and setting clear standards, these guidelines are a foundational step in building investor confidence and attracting both domestic and international capital. With increased regulation and structured guidelines, Ethiopia’s capital market is poised to become a key player in Africa, supporting sustainable economic growth and opening up new financial opportunities for businesses and individuals alike. 3 COMMENTS Alemu November 15, 2024 At 5:19 pm The. Implementation/Operation of the capital market is going to be late that of the speed of the economic structure demands. Formal and informal economic structures are lagging the progress of the capital market and exposed for mischievous activities since the lack of knowledge and enforcement. Therefore, the capital market authority needs to implement soon in addition the introduction of regulations and directives. The. Implementation/Operation of the capital market is going to be late that of the speed of the economic structure demands. Formal and informal economic structures are lagging the progress of the capital market and exposed for mischievous activities since the lack of knowledge and enforcement. Therefore, the capital market authority needs to implement soon in addition the introduction of regulations and directives. Yisehak November 15, 2024 At 7:59 pm Many of to the existing share companies are led b by individuals with no adequate experience and expertise of business leadership. The role of board of directors ( external and Internal) are not clearly separated. In general how ECMA plan to safeguard the existing shareholders’ interest in number of share companies that lazy individuals who do not understanding corporate governance? Many of to the existing share companies are led b by individuals with no adequate experience and expertise of business leadership. The role of board of directors ( external and Internal) are not clearly separated. In general how ECMA plan to safeguard the existing shareholders’ interest in number of share companies that lazy individuals who do not understanding corporate governance? ? ? ? ? ? ? ? ?  ? ? ? ? ? ? ?  November 16, 2024 At 4:55 pm It is remarkable step and highly demanding directive. The positive externalities over others economic activities are tremendous. It is remarkable step and highly demanding directive. The positive externalities over others economic activities are tremendous. Comments are closed.

Most Buildings in Addis Ababa Lack Insurance Coverage as Earthquake Risks Grow

Most Buildings in Addis Ababa Lack Insurance Coverage as Earthquake Risks Grow Ethiopia has recently experienced a heightened seismic activity, with an earthquake originating from the Awash region making its way to Addis Ababa, leaving many buildings and structures in a vulnerable state. The tremor raised alarm bells about the lack of adequate insurance coverage for buildings, particularly in Ethiopia’s rapidly developing urban centers like Addis Ababa. While high-rise buildings in the city center might be targeted by insurance products, a significant number of properties across the country remain uninsured, leaving them exposed to natural disasters such as earthquakes, fires, and other potential hazards. During a press conference marking the 30th anniversary of Hibret Insurance, CEO Meseret Bezabih expressed concern over this coverage gap. “Although there are various products targeting the giant buildings in the heart of the city, most buildings in Ethiopia, specifically in Addis Ababa, lack insurance coverage, even in the wake of recent earthquakes from Awash that were also felt in the city,” she said. Adding to the urgency of the matter, Deputy CEO Tesfaye Desta shed light on the city’s insurance concerns. “In the past, conflicts in the city led to the demolition of many buildings, with the government stepping in to cover the costs for investors. However, the government has now made it clear that it will not bear the responsibility next time,” Tesfaye stated. This shift in responsibility means that property owners are left to shoulder the financial burden in the event of a disaster. In response to these challenges, Hibret Insurance has introduced a series of products designed to address the gap in coverage, focusing specifically on earthquake, fire, and other potential risks that Ethiopian buildings face. However, despite these innovative products, the Deputy CEO expressed frustration over their low uptake. “Earthquake insurance is one segment of a broader offering that includes fire insurance and other critical coverage. Despite the growing risks, many of these products are not being sold as expected,” Tesfaye said. Hibret Insurance Company SC is set to celebrate 30 years of success in Ethiopia’s insurance industry on November 14, 2024. Since its founding in 1994, the company has grown from a single office in Addis Ababa into a national leader, offering innovative products and maintaining a commitment to customer satisfaction, gender equality, and financial stability. Known for pioneering initiatives such as Life Insurance in 1997 and the family funeral insurance scheme in 2014, Hibret has continuously adapted to the evolving needs of the Ethiopian market. The appointment of the first female CEO in 2011 and the recent launch of Takaful Insurance reflect its focus on inclusivity and innovation. With impressive financial results and a strong focus on digital transformation and corporate social responsibility, Hibret Insurance is poised for continued leadership in Ethiopia’s insurance sector as it marks this significant milestone.

Ethiopia Ships Fresh Produce to Europe for the First Time, Opening New Markets

Ethiopia Ships Fresh Produce to Europe for the First Time, Opening New Markets Ethiopia has marked a new chapter in its agricultural sector by sending its first refrigerated shipment of fruits and vegetables to Europe, as announced by the Ministry of Agriculture. Ethio Vegfru, a private export-import company, has initiated shipments of Sugar Snap and Mangetout vegetables to the Netherlands. The launch event was attended by Agriculture State Minister Sofia Kasa. With a climate well-suited for year-round cultivation, Ethiopia has the potential to produce a wide variety of fruits and vegetables, including mangoes, grapes, and oranges. During the launch, Tsegaye Abebe, Managing Director and Founder of Ethio Vegfru, highlighted that 12 tons of Sugar Snap and Mangetout will be transported to Djibouti in a refrigerated container with advanced technology. This fresh produce, packed at Koka, is set to reach the Netherlands within 23 days via the Ethio-Djibouti transport corridor. This shipment represents a significant step in establishing a reliable cold chain for exporting perishable items like fruits and vegetables via the Port of Djibouti, facilitating sea freight options. Tsegaye noted that Ethiopia has yet to fully harness its potential in fruit and vegetable production. He emphasized the importance of large-scale production and expanding export markets, along with further investment in the sector. According to Tsegaye, using sea transport for exporting vegetables marks a crucial development in Ethiopia’s bid to penetrate international markets. He urged for continued efforts to expand product availability and market reach. Acknowledging the reduced availability of certain European market destinations due to environmental concerns, Tsegaye commended Ethiopia’s step forward in shipping vegetables using modern refrigerated containers, which helps maintain product quality and supports sustainable exports.

Ethiopian Airlines Set to Welcome Second Airbus A350-1000 in December

Ethiopian Airlines Set to Welcome Second Airbus A350-1000 in December Ethiopian Airlines’ New Airbus A350-1000 Soars Across Continents: A Landmark in African Aviation On November 5, 2024, Ethiopian Airlines marked a historic milestone by welcoming its first Airbus A350-1000 into its fleet, making it the first African carrier to operate this advanced aircraft. This new addition is not just an achievement for the airline but also a significant step in Ethiopian’s ambitious Vision 2035 strategy, aimed at expanding its fleet, destinations, passenger numbers, and revenue. The A350-1000, named “Ethiopia Land of Origins” and registered as ET-BAW, has already begun making its mark with flights across Africa, Europe, and the Middle East. The A350-1000’s Journey Begins The inaugural flight for ET-BAW took place on November 7, 2024, from Addis Ababa to Lagos, Nigeria. After receiving a grand water cannon salute upon arrival at Lagos’ Murtala Mohammed International Airport, the aircraft’s onboard experience received high praise from passengers. Following its return to Addis Ababa, ET-BAW continued its travels, heading to Dubai, Accra, and Paris, demonstrating its versatility across key routes. On November 10, it added Tanzania’s Kilimanjaro and Zanzibar to its destinations, marking Dubai as its first intercontinental stop. Looking Ahead: Expansion to Washington-Dulles and Beyond Ethiopian Airlines has big plans for its new A350-1000 fleet. According to CEO Ato Mesfin Tasew, ET-BAW is currently dedicated to promotional flights, with plans to deploy it on long-haul routes once the second A350-1000 arrives in December. High-profile routes, such as Washington-Dulles, are next in line to benefit from this new fleet, signaling the airline’s commitment to enhancing passenger comfort and expanding intercontinental connections. A Milestone for African Aviation Ethiopian Airlines has consistently set the pace for African aviation. As Africa’s largest airline by fleet size and destinations, Ethiopian has pioneered significant achievements, including being the first African airline to operate the Boeing 787 and now the A350-1000. In July 2022, the airline ordered four A350-1000s, with the remaining three expected to arrive by early 2025. Tasew emphasized the airline’s pride in adopting the A350-1000, highlighting its state-of-the-art technology, superior fuel efficiency, and minimal environmental impact. “We are thrilled to welcome the Airbus A350-1000 to our fleet, solidifying our position as leaders in aviation technology. This aircraft embodies cutting-edge advancements, offering superior passenger comfort, enhanced fuel efficiency, and reduced environmental impact. Together, we are pioneering a sustainable future for aviation in Africa,” said Tasew. Passenger Comfort and Advanced Technology The A350-1000 is designed with passenger experience at its core. Equipped with 46 business class seats with direct aisle access and 349 economy seats, the aircraft provides comfort across all classes. Its Rolls-Royce Trent XWB-97 engines enhance fuel efficiency, and passengers can enjoy the Thales AVANT Up inflight entertainment system, ensuring a premium journey experience. Ethiopian Airlines’ Expanding A350 Fleet Since receiving its first A350-900 in 2016, Ethiopian Airlines has steadily grown its A350 fleet, which now includes 21 aircraft with 14 more on the way. The smaller A350-900 variant, seating 30 business and 313 economy passengers, serves a range of destinations, from London and Frankfurt to Johannesburg and Toronto, underscoring the airline’s extensive international reach. A Bright Future for Ethiopian Airlines With its A350-1000 fleet, Ethiopian Airlines is well-positioned to lead Africa into a new era of aviation. As the airline connects more cities across continents, it continues to elevate the continent’s global presence in aviation. The arrival of the A350-1000 is more than a fleet expansion; it’s a testament to Ethiopian Airlines’ dedication to innovation, sustainability, and exceptional service.

Crisis in Merkato: Fear of Government Crackdown Drives Merchants to Close Shop

Crisis in Merkato: Fear of Government Crackdown Drives Merchants to Close Shop Mercato Merchants in Crisis: Fear of Property Seizures Drives Shop Closures In Addis Ababa’s bustling Mercato, a wave of confusion and fear has swept through merchants as rumors of government property confiscation circulate widely. Concerns are mounting about sudden and ambiguous government actions enforcing receipt-based trading requirements, sparking a wave of shop closures and a climate of uncertainty in Ethiopia’s largest marketplace. One anonymous merchant attributed the turmoil to new demands for receipts on all goods. “Previously, our capital was estimated by the authorities, and taxes were levied based on a specified scale. If it fell below a certain threshold, we weren’t required to pay,” the merchant explained. “Now, authorities have declared that all retailers must register within the system and will be taxed without a specified scale.” The merchant highlighted that importers frequently do not provide receipts, leaving retailers vulnerable to penalties and enforcement actions. “We are worried that our goods will be confiscated,” the merchant added, noting the lack of clear guidance from officials about whether their assets could indeed be seized due to receipt shortages. This ambiguity has driven some merchants to close their shops and hide their goods, intensifying the crisis in Mercato. The merchant claimed that traders had already lost up to 14 million birr worth of goods due to these unclear regulatory measures. The Addis Ababa Revenue Office recently responded, clarifying their position on these enforcement actions. “We said don’t sell without a receipt, but we have no intention to confiscate goods,” they stated, emphasizing that their goal is to bring order to the market by curbing illegal trading practices and encouraging compliance among businesses. Tesfaye Negash, Director of Tax Intelligence and Investigation at the Addis Ababa Revenue Bureau, explained that a citywide campaign had been in effect since mid-September to address compliance issues systematically. This campaign aims to: Register businesses that have not yet entered the VAT system. Issue licenses to previously unlicensed businesses. Enable eligible businesses to print invoices, addressing widespread evasion of official invoicing practices. Special attention, the Bureau stated, is being given to major shopping malls in Mercato. Amid this campaign, some merchants have closed their shops and relocated their goods, fearing what they see as an aggressive approach that could lead to property seizures. The Bureau’s response, delivered through Fana Broadcasting Corporation, stressed that recent efforts to engage with traders have included extensive discussions to promote receipt-based trading. “A consensus was reached with many merchants, but some individuals unwilling to comply have spread misinformation,” the Director of Communications said, adding that the bureau’s aim is to build a lawful business system that benefits the entire community. Tesfaye Negash further explained that the Bureau’s enforcement efforts focus not on confiscation but on fostering compliance. “Conducting business without receipts is punishable by law, and traders must register any goods purchased without receipts to avoid penalties. However, we do not intend to arbitrarily seize property without legal grounds.” Negash urged the business community to support these reforms, discouraging misinformation and encouraging cooperation. He also invited the public to report any cases of non-compliance or corruption through the Bureau’s hotline. Merchants, however, voiced deep-rooted concerns about issues in the regulatory system. A local retailer pointed out that importers often provide no receipts or issue undervalued receipts, which places retailers at risk when authorities demand proof of purchase. “The government needs to address invoicing at the source rather than punishing retailers for issues beyond their control,” he stated. Some traders also alleged that certain revenue officials exploit these regulations for personal gain, asking for bribes under the guise of enforcement. A member of the community, suggested that the regulatory campaign should prioritize importers and manufacturers, who often evade compliance. “If the government controls the importers, the whole system will follow suit. Retailers are simply forced to close their shops because they cannot obtain receipts,” he explained. Negash acknowledged recent temporary shop closures, including an incident at the Yerga Hayle shopping mall, where customs officials seized unlicensed goods. “The mall has since reopened, except for stores awaiting commercial permits,” he said, stressing that the Bureau’s focus remains on compliance, not confiscation. The Bureau clarified that official notifications have been sent to traders to reaffirm that compliance with receipt requirements will not result in asset seizures. “Our aim is to create order, not fear,” Negash emphasized, urging businesses to follow legal practices and contribute to a fair and structured marketplace in Addis Ababa.

Ethio Telecom and MwareTV Launch IGADO+: A New Affordable, Localized Streaming Service in Ethiopia

Ethio Telecom and MwareTV Launch IGADO+: A New Affordable, Localized Streaming Service in Ethiopia MwareTV, a Dutch provider of cloud-based TV platforms, has introduced IGADO+, a new video streaming service specifically developed for the Ethiopian market. In collaboration with Ethio Telecom, the country’s primary telecommunications provider, IGADO+ aims to make diverse streaming options widely accessible. The service, available over both broadband and mobile networks, provides Ethiopian audiences with a range of content tailored to local interests and languages. Key Features of IGADO+ IGADO+ launched with an extensive selection of 125 live channels and thousands of hours of video-on-demand (VoD). The platform includes a wide variety of programming, such as entertainment, children’s shows, educational content, religious broadcasts, and sports coverage, including international match days featuring teams like Arsenal and Real Madrid, as well as local sports channels. In line with its aim to cater to the Ethiopian population, much of the content on IGADO+ is dubbed in Amharic and Afaan Oromoo, Ethiopia’s most widely spoken languages. The service offers subscription rates starting at 199 Birr per month (approximately USD $1.65), aiming to meet local expectations for affordable access. Partnership with Ethio Telecom Ethio Telecom has partnered with IGADO+ to offer the service across portable devices, with plans to expand availability to smart TVs in the near future. The collaboration enables users to access IGADO+ through Ethio Telecom’s mobile and broadband networks and allows customers to subscribe conveniently via Ethio Telecom’s USSD portal. Ethio Telecom is actively promoting IGADO+ as a value-added service for its subscribers. MwareTV’s Cloud-Based Technology IGADO+ operates on MwareTV’s TV Management System (TVMS), a cloud-based platform that automates streaming operations. The system includes tools for scheduling and managing content with a drag-and-drop interface, making it easier for operators to manage the service. The TVMS is also integrated with Ethio Telecom’s subscription management system, streamlining the process for subscribers. To enhance the user experience, MwareTV has developed a set of customizable, white-label user interfaces that can be branded for different devices without the need for additional coding. This allows IGADO+ to provide a consistent and intuitive experience across smartphones and tablets, with support for common devices and accessibility features for Ethiopian audiences. Statements from IGADO+ and MwareTV In a statement, Ibrahim Gado, General Manager of IGADO+, highlighted the service’s goals of accessibility and affordability. “Our goal is to make information and entertainment accessible to everyone in Ethiopia,” Gado said. He noted that the infrastructure provided by MwareTV allows IGADO+ to deliver a high-quality streaming service at a price point aligned with the local market. Sander Kerstens, CEO of MwareTV, described the advantages of the cloud-based approach, which reduces technical challenges and allows operators like IGADO+ to focus on content delivery. “What makes the MwareTV proposition so compelling is that it takes away all the technical concerns, hosting them in the cloud, so the operator can focus on delivering a great service,” Kerstens said. He added that the platform’s integration with Ethio Telecom’s systems supports an efficient subscription process and aims to build audience loyalty through accessible and localized content. With IGADO+ now available in Ethiopia, the platform aims to meet local demand for accessible and affordable streaming options. Its emphasis on Ethiopian languages, diverse programming, and competitive pricing positions it as a new entrant in the country’s digital media landscape. The collaboration between MwareTV and Ethio Telecom highlights the role of cloud technology in delivering localized content, and IGADO+ is expected to expand its reach further as additional devices are supported.

Fitch Upgrades Ethiopia’s Domestic Credit Rating Amid Economic Reforms

Fitch Upgrades Ethiopia’s Domestic Credit Rating Amid Economic Reforms In a significant development for Ethiopia’s financial landscape, Fitch Ratings announced an upgrade of the country’s Long-Term Local-Currency Issuer Default Rating (LTLC IDR) to ‘CCC+’ from ‘CCC-‘ on October 25, 2024, signaling a cautious optimism toward Ethiopia’s economic restructuring. While the Long-Term Foreign-Currency IDR remains at ‘Restricted Default’ (RD), Fitch’s upgrade of the local currency rating highlights Ethiopia’s gradual easing of financial pressures and ongoing macroeconomic reforms. Economic Policy Reforms Boost Confidence The move reflects Ethiopia’s renewed efforts to address long-standing economic imbalances, starting with the National Bank of Ethiopia’s (NBE) recent market-based determination of the national exchange rate. This policy, introduced in July 2024, led to over 50% depreciation of the official exchange rate, aligning it with the parallel market and alleviating distortions that had hampered trade. The NBE also introduced an interest-rate-based monetary policy, setting a 15% policy rate to stabilize inflation and enhance the effectiveness of monetary policy. The changes follow Ethiopia’s new four-year agreement with the International Monetary Fund (IMF) under the Extended Credit Facility, which immediately disbursed $1 billion as part of a $3.4 billion package to support Ethiopia’s economic adjustments. The arrangement, alongside anticipated funding from the World Bank totaling $3.75 billion, is expected to reduce Ethiopia’s reliance on domestic financing and enable a shift toward market-based auctions for treasury bills. Local Debt Management and Fiscal Balancing Fitch also noted Ethiopia’s intention to phase out non-market-based local financing, which had contributed to financial repression and inflation. In a related move, the NBE converted ETB242 billion in direct advances to long-term government securities, easing rollover risks. The NBE’s initiative to conduct regular open-market operations is a key step in creating a sustainable fiscal framework. The government’s shift toward managing its debt more sustainably is evidenced by a narrowing of its fiscal deficit from 2.5% of GDP in FY23 to 2% in FY24. Fitch projects a slight increase to 2.7% in FY25 due to government spending on essential social programs and public sector wage increases. Foreign Debt Restructuring Remains Key Challenge Despite the positive trajectory in local currency management, Ethiopia’s external debt challenges persist, with the foreign-currency IDR at RD. Ethiopia is restructuring $15.1 billion of external debt through the Common Framework, which began in 2021 and includes both bilateral and commercial debt. A standstill agreement with major Chinese creditors and the Official Creditor Committee (OCC) granted Ethiopia relief on debt service for 2023 and 2024. Progress toward an agreement with the OCC is expected by the end of 2024, a crucial step before Ethiopia begins negotiations with private creditors. Future Outlook and Potential for Improvement Fitch has outlined conditions for further positive rating action, indicating that a resolution of Ethiopia’s foreign-currency debt restructuring and successful implementation of economic reforms could lead to further upgrades. The alignment of official and parallel exchange rates has boosted gold exports, contributing to an expected rise in international reserves from $1 billion in FY24 to an anticipated $4.5 billion by FY26. However, challenges remain, particularly in political stability and institutional transparency, which impact Ethiopia’s credit profile. Fitch’s ESG scores highlight governance concerns, particularly in terms of rule of law and corruption control, underscoring the need for continued progress in these areas to solidify Ethiopia’s path to economic stability. In conclusion, while the upgrade to ‘CCC+’ marks a positive step for Ethiopia’s local-currency obligations, the nation faces a delicate balancing act as it seeks to achieve sustainable growth and meet the conditions of international creditors. The journey is ongoing, but Fitch’s assessment reflects growing confidence in Ethiopia’s reform agenda and economic potential.