Ethiopian Airlines Partners with South Sudan to Launch National Carrier

Ethiopian Airlines Partners with South Sudan to Launch National Carrier Ethiopian Airlines Takes Bold Step in Regional Aviation by Partnering with South Sudan to Establish National Carrier In a historic move for regional connectivity and economic growth, Ethiopian Airlines has secured a management deal with the government of South Sudan to establish and operate a national carrier. This collaboration, formalized during a meeting between South Sudan’s Transport Minister, Madut Biar, and Ethiopian Ambassador Nabil Mahdi in Juba, builds upon a 2023 Memorandum of Understanding (MoU) and aims to bring new vitality to South Sudan’s aviation landscape. Since gaining independence from Sudan in 2011, South Sudan has struggled to set up a national airline, largely due to political instability and civil conflict. Efforts to establish a national carrier were repeatedly hindered as a result. This new agreement marks a transformative opportunity for South Sudan, as Ethiopian Airlines steps in with its extensive experience and leadership in African aviation. The partnership is also rooted in the Yamoussoukro Decision, a pivotal treaty among African Union members designed to liberalize air transport services and foster fair competition. Ambassador Mahdi affirmed that Ethiopian Airlines is ready to apply its operational expertise, contributing not only to South Sudan’s economy but also enhancing regional air connectivity, which is crucial for both business and tourism. South Sudan’s government has long seen the potential benefits of establishing a state-owned airline. In 2019, the South Sudanese parliament greenlit the concept of South Sudan Airways, yet challenges persisted. Ethiopian Airlines’ involvement will now bring essential technical and managerial resources to South Sudan’s airspace operations, which are currently transitioning from Sudanese control. Transport Minister Biar expressed optimism about the partnership, emphasizing the “significant benefits” South Sudan stands to gain from Ethiopia’s aviation experience. Ethiopian Airlines, known for its successful management of other national carriers in Africa, is expected to provide training for South Sudanese personnel, ensuring a sustainable path forward for the new airline. The Ethiopian national carrier’s role in South Sudan underscores its strategic ambition to lead regional partnerships and broaden African air networks. With recent successes in acquiring stakes in other African national airlines, Ethiopian Airlines has become an influential player in African skies, now offering South Sudan a pathway to enter the aviation arena under stable and skilled leadership. As this partnership unfolds, South Sudan is poised to see increased economic integration, job creation, and improved infrastructure—key pillars for post-conflict development. For Ethiopian Airlines, this is another step toward solidifying its position as Africa’s aviation powerhouse, driving connectivity and economic growth across the continent.

Wegagen Bank Celebrates Landmark Birr 9.8 Billion Profit, Outpacing Last Year’s Growth by 40%

Wegagen Bank Celebrates Landmark Birr 9.8 Billion Profit, Outpacing Last Year’s Growth by 40% Wegagen Bank has achieved record-breaking financial performance for the 2023/24 fiscal year, reporting a net income of Birr 9.8 billion and a gross profit of Birr 2.2 billion, marking a historic milestone. This impressive financial achievement was presented during the bank’s 31st Ordinary and 15th Extra Ordinary Shareholders’ General Assembly, held at the Hilton Addis Ababa. In his address, the Board Chairperson, Ato Abdishu Hussein, highlighted that the bank’s income increased by a notable 40% compared to the previous fiscal year. The bank also achieved an impressive 86% increase in gross profit year-over-year, a testament to its resilience and strategic agility amidst domestic and global economic challenges. Additionally, earnings per share (EPS) reached an extraordinary 36.9%, up significantly from the 22.7% recorded last year. Growth Across Key Financial Metrics and Strategic Investments in Capital Wegagen Bank’s financial performance reflects robust growth in several key performance metrics. The paid-up capital increased by 27%, reaching Birr 5.1 billion by the end of the fiscal year, exceeding the National Bank of Ethiopia’s regulatory requirement. The bank’s total capital rose to Birr 9.2 billion, a 33% increase from the previous year, providing a strong foundation for future expansion and development. Total deposits reached Birr 52.1 billion, representing a 22% increase over the previous year, thanks to focused resource mobilization efforts. The bank’s outstanding loans and advances reached Birr 45.1 billion, a 13% increase, supporting various sectors of the Ethiopian economy. Wegagen Bank’s assets have also grown substantially, totaling Birr 65.7 billion, a 22.9% increase compared to the prior year. Expanding Shareholder Base and Community Contributions Wegagen Bank’s shareholding structure continued to diversify, with the number of shareholders growing to nearly 12,000 as of June 30, 2024. Ato Abdishu underscored the importance of this growth as a reflection of increased public trust in the bank’s performance and strategic direction. Furthermore, the bank created over 5,400 jobs nationwide, demonstrating its commitment to social and economic development in Ethiopia. As part of its corporate social responsibility, Wegagen Bank contributed Birr 75 million in donations to socioeconomic development initiatives, including support for philanthropic organizations focused on uplifting low-income communities. The bank has integrated an Environmental, Social, and Governance (ESG) framework into its operations, establishing a dedicated ESG function to strengthen its commitment to sustainable practices, including green financing initiatives. Advancing Technology and Enhancing Service Accessibility Wegagen Bank’s Chief Executive Officer, Dr. Aklilu Wubet, emphasized that the bank has actively invested in digital transformation to enhance customer experience and accessibility. As of June 30, 2024, the bank operates 436 branches across Ethiopia, providing both conventional and interest-free banking services. The bank has deployed 360 ATMs, 436 Point of Sale (POS) terminals, and a network of 4,784 agents to broaden service accessibility through internet, mobile, and card banking platforms. Strategic Focus on Future Growth and Resilience As Wegagen Bank looks toward the future, Ato Abdishu outlined key priorities, including expanding the bank’s capital base, optimizing resource mobilization, strengthening internal controls, and enhancing risk management frameworks. Improving service quality, advancing technological capabilities, and investing in human capital are also central to the bank’s long-term growth strategy. CEO Dr. Aklilu expressed gratitude to the bank’s customers, Board of Directors, employees, and other stakeholders for their unwavering support, noting that their contributions have been essential to the bank’s success. He affirmed that Wegagen Bank will continue to monitor regulatory developments and adapt its strategies to ensure sustainable growth and resilience in the face of an evolving financial landscape.

Ahadu Bank has announced a pre-tax profit of more than 119 million birr.

Ahadu Bank has announced a pre-tax profit of more than 119 million birr. At its 3rd Ordinary General Meeting of Shareholders held on October 30, 2017, the chairman of the bank’s board of directors, Mr. Anteneh Sebsbe, shared that Ahadu Bank reported a pre-tax profit of 119.96 million birr for the fiscal year. Mr. Sebsbe highlighted that the bank achieved this strong financial performance within a relatively short period and successfully concluded the fiscal year. He also noted that the bank raised 80 million US dollars through foreign currency acquisitions. Additionally, Ahadu Bank issued loans amounting to 1.7 billion birr over the financial year, leading to an overall improvement in the bank’s financial standing, with total assets reaching 6.26 billion birr. The bank has expanded its branch network to 104 locations, while its customer base has grown to 704,000, and total deposits now stand at 4.6 billion birr. Mr. Sebsbe further stated that the bank’s subscribed capital is 1.4 billion birr, with a total paid-up capital of 10.3 billion birr. He acknowledged the challenges faced by the banking sector due to unfavorable global economic conditions, coupled with security issues and economic instability in certain regions within the country. The National Bank of Ethiopia, aiming to control inflation, imposed a loan cap on commercial banks in August 2016. This policy has restricted lending capacity for commercial banks, particularly impacting newer banks’ ability to provide high-income loans, thus affecting their performance, resource mobilization, and overall economic activity. 2 COMMENTS Lemese Debele November 13, 2024 At 12:26 am cable pepper child catalog spirit expect interest amazing usage able large announce myth assist subject era taxi rural mind clip essay bullet trip hub cable pepper child catalog spirit expect interest amazing usage able large announce myth assist subject era taxi rural mind clip essay bullet trip hub Lemese Debele November 13, 2024 At 12:27 am Very nice service Very nice service Comments are closed.

Ethiopia’s Ministry of Finance Ends Franco Valuta Import System for Commercial Goods

Ethiopia’s Ministry of Finance Ends Franco Valuta Import System for Commercial Goods The Ministry of Finance of the Federal Democratic Republic of Ethiopia has issued a directive announcing the end of the Franco valuta import system for specific commercial goods. This decision affects imports of goods like oil and other food products previously allowed under this system, which was introduced to mitigate potential inflation during the implementation of macroeconomic reforms. According to the Ministry’s letter addressed to the National Bank of Ethiopia and the Customs Commission, the Franco valuta system had a positive impact on stabilizing prices by enabling manufacturers to import essential production resources during a transitional economic phase. The Ministry noted that this approach was designed to prevent inflationary pressures on key commodities. The directive specifies that commercial transactions involving Franco valuta imports must be finalized within two working weeks of the letter’s issue date. Businesses are required to submit all necessary legal documentation to the Customs Commission to complete the customs formalities for these imports. After this period, all permissions for Franco valuta-based imports will be rescinded. This marks a shift toward a more sustainable system for importing commercial goods, replacing the Franco valuta system, which was initially implemented as a temporary measure.

Ethiopia Aims for Cashless Economy with Interoperable QR Code Payment System

Ethiopia Aims for Cashless Economy with Interoperable QR Code Payment System Ethiopia’s New Interoperable QR Code Standard Sets the Stage for a Digital Payment Revolution Ethiopia is taking a significant step in digital finance with the rollout of an interoperable QR code payment standard, promising to unify the country’s fragmented payment ecosystem and deliver seamless, accessible, and secure transactions. Spearheaded by EthSwitch, Ethiopia’s national payment switch, the initiative aligns with the EMVCo standard, a global framework for secure payment transactions, enabling both domestic and international payment schemes to work within one streamlined system. This could not only redefine digital transactions in Ethiopia but also set a precedent for other emerging markets looking to bridge the gap between cash-based and digital economies. A Game-Changer for Ethiopia’s Digital Payment Landscape The interoperable QR code standard aims to revolutionize how Ethiopians pay for everything—from groceries and utility bills to e-commerce purchases—by simplifying the payment process and eliminating the need for multiple, non-compatible QR systems. With a focus on peer-to-merchant (P2M) payments, the standard’s core objectives are clear: increase digital payment adoption, reduce transaction costs, and create a unified experience across different payment providers and merchant types. Currently, Ethiopia’s QR code payment ecosystem suffers from a lack of interoperability, limiting merchants and consumers to specific, closed-loop systems like TeleBirr’s QR code, which can only be used within its own app. This limitation not only stifles consumer convenience but also hinders market growth and keeps merchants tied to singular platforms. The new interoperable standard promises to break down these barriers, paving the way for a more inclusive and scalable digital economy. Key Features and Benefits of the New QR Standard Universal Compatibility Across PlatformsAt the heart of this new standard is compatibility. By following the EMVCo standard, Ethiopian QR codes can work seamlessly with any compatible mobile banking app, bringing the flexibility of cross-platform usability. Whether a QR code is created by a small business in Addis Ababa or an international retailer, customers can expect the same frictionless experience. Dynamic and Static QR Codes for Every Transaction TypeThe standard supports both static and dynamic QR codes, each suited to specific transaction needs. Static codes, typically printed and displayed for customers to scan, are well-suited for smaller merchants. Customers can enter the payment amount themselves, making it a low-cost option. On the other hand, dynamic codes, generated in real-time at the point of sale with a pre-set amount, ensure speed and accuracy—ideal for larger, busier retail environments. Lower Transaction and Setup Costs for MerchantsBy standardizing QR code payments, Ethiopia’s small and medium businesses gain access to affordable digital payment solutions. The simplified onboarding process reduces the need for costly point-of-sale hardware and minimizes setup costs. This inclusivity encourages more merchants to join the digital payment ecosystem, amplifying reach and market share for digital payments nationwide. Enhanced Security Through EMVCo ComplianceEMVCo compliance ensures robust security protocols, adding much-needed safeguards in a country where digital payments are still gaining ground. With features like data encryption and Cyclic Redundancy Checks (CRC) built into the system, Ethiopian consumers and merchants alike can transact with greater peace of mind, knowing their transactions are secure. Integration of Loyalty and Discounts ProgramsEthSwitch’s new standard includes provisions for merchants to offer loyalty rewards and discounts through QR codes. This innovation allows merchants to not only retain existing customers but also attract new ones by offering incentives directly at the point of payment. It’s an added layer of value that benefits both merchants and consumers, driving further engagement with digital transactions. Streamlined Process for Faster Payments The document outlines a user-friendly transaction flow: consumers scan the QR code, enter the payment amount (for static QR codes), and send a transaction request through their bank’s mobile app. The network verifies the merchant’s information and facilitates a secure transfer of funds. For dynamic QR codes, the process is even more streamlined, with all transaction details pre-filled at the point of sale. How Interoperability Is Set to Transform Ethiopian Commerce One of the standout features of the standard is its multi-scheme template, allowing QR codes to support multiple payment schemes simultaneously. This development means that a merchant can accept payments from any compatible domestic or international payment network—creating a more open and expansive market. Merchants who may have previously displayed multiple QR codes from different providers can now rely on a single code that does it all, reducing clutter and simplifying the consumer experience. Acquirers, responsible for onboarding merchants, will be required to replace existing QR codes with these interoperable ones, and issuers will update their mobile apps to scan and process the new format. EthSwitch, as the scheme’s operator, will enforce compliance and provide technical guidance to ensure smooth transitions. Breaking Free from the Constraints of Closed-Loop Systems In Ethiopia’s current landscape, closed-loop systems like TeleBirr’s QR codes present significant challenges, from limited acceptance to interoperability issues. With the new interoperable standard, QR codes in Ethiopia are set to become open-loop, enabling transactions across various platforms and financial institutions. This shift not only expands merchant access to a broader customer base but also alleviates consumers from needing multiple payment apps for different services. By adopting an open-loop standard, the Ethiopian digital payment market can foster healthier competition and make digital transactions universally accessible. The Road Ahead: EthSwitch’s Role in Implementation and Regulation EthSwitch will play a critical role in regulating and monitoring this QR code standard. By assigning unique Merchant Account Information (MAI) identifiers, EthSwitch will ensure each merchant and payment provider operates securely within the interoperable framework. Additionally, the organization will provide ongoing support and resources for compliance, fraud prevention, and dispute resolution. Ethiopia’s National Bank will also support this initiative by issuing Bank Identification Codes (BICs) for institutions adopting the standard. This coordinated regulatory approach will ensure that both domestic and international transactions are secure, transparent, and resilient to fraud. A Vision for the Future: Toward a Cashless Economy With digital payment adoption on the rise, this interoperable QR code standard is a decisive move toward a cashless Ethiopian economy. By bringing smaller businesses into the digital payments fold, the initiative supports financial inclusion and aligns with Ethiopia’s broader goals for economic modernization. As QR code payment systems gain traction globally, Ethiopia’s model could serve as a blueprint for other developing economies. The interoperable QR standard represents not just a technological upgrade, but a vision for an interconnected, cashless society—one where all Ethiopians can benefit from the convenience, security, and inclusivity of digital finance.

Ethiopia Earns $55 Million from Bitcoin Mining: A Growing Global Player

Ethiopia Earns $55 Million from Bitcoin Mining: A Growing Global Player Ethiopia’s role in the Bitcoin mining industry is on the rise, bringing in a remarkable $55 million over the last ten months. This boost in revenue follows Ethiopian Electric Power’s (EEP) strategic contract with 25 organizations engaged in Bitcoin trading, with plans to capitalize on Ethiopia’s abundant and affordable energy resources. Ethiopia’s Bitcoin Mining Surge According to international media, these Bitcoin mining companies—many from China—are drawn to Ethiopia due to its inexpensive electricity, a key factor for profitable mining. In response, Ethiopian Electric Power has allocated a massive 600 megawatts of power to support Bitcoin mining, establishing the nation as a major player in the industry. This initiative has positioned Ethiopia with a 2.25% share in global Bitcoin mining activity, ranking it just behind the United States, Hong Kong, and other major mining hubs in Asia. A Post-Ban Haven for Chinese Miners Three years ago, China’s government imposed a ban on Bitcoin mining, prompting many companies to relocate. For several, Ethiopia’s low-cost electricity and evolving infrastructure have become an ideal solution. These companies not only benefit from cheaper energy costs but also play a role in Ethiopia’s economic development as the country leverages its renewable energy potential to meet global tech demands. Major Investment for Infrastructure and Skill Building Ethiopian Investment Holdings (EIH) has recently signed a $250 million memorandum of understanding with West Data Group, a major investor based in Hong Kong. This agreement aims to advance Ethiopia’s Bitcoin mining infrastructure, with a commitment to fund the construction of advanced mining facilities. Additionally, the deal includes provisions for training programs, helping to build local expertise in this emerging sector and supporting Ethiopia’s vision to expand its digital economy. With Ethiopia’s strategic entry into the Bitcoin mining industry, the country is tapping into a lucrative sector that could potentially redefine its energy utilization and economic growth. As Ethiopia strengthens its infrastructure and establishes itself as a global mining hub, its role in the world’s digital economy is poised for significant expansion.

Ethiopian Airlines’ Airbus A350-1000 Makes First Flight to Lagos

Ethiopian Airlines’ Airbus A350-1000 Makes First Flight to Lagos Ethiopian Airlines has announced that its first Airbus A350-1000 aircraft in Africa will make its inaugural flight to Lagos, Nigeria. The airline’s latest addition to its fleet, the Airbus A350-1000, arrived in Addis Ababa from Toulouse, France, on November 5, 2024. In partnership with Airbus and Aviation Sans Frontières, Ethiopian Airlines transported over €100,000 worth of medical supplies for the Ethiopian Airlines Foundation on this historic flight. The A350-1000 is scheduled to make its first official commercial flight from Addis Ababa to Lagos, marking a new chapter in Ethiopian Airlines’ operations across Africa. This state-of-the-art aircraft will also serve key international destinations, including Washington, D.C., London, Paris, and Frankfurt, enhancing the airline’s capacity to deliver top-tier service on high-demand routes. Currently, Ethiopian Airlines owns 21 aircraft from the Airbus A350 family, with plans to add 14 more in the coming years, including 11 A350-900s and three additional A350-1000s. The Airbus A350-1000 is capable of accommodating 395 passengers, with 46 business class seats and 349 economy class seats, allowing Ethiopian Airlines to expand its passenger capacity. Named “Midland Ethiopia,” the aircraft brings modern, efficient wide-body capabilities with advanced technologies and improved aerodynamics. Compared to earlier models, the A350-1000 generates 50% less noise during flights, ensuring a quieter, more comfortable journey for passengers. With this new addition, Ethiopian Airlines continues to strengthen its position as a leading carrier in Africa, setting new standards in aviation excellence and passenger comfort. 2 COMMENTS Abdulaziz Abafaji (Fahad Abdulaziz) November 8, 2024 At 5:30 am Wow! That is great civilization. Wonderful! Really My Country Ethiopia is under fast and sustainable development. Currently the government of Ethiopia is doing it in Modern sense and mind. I thank you Wow! That is great civilization. Wonderful! Really My Country Ethiopia is under fast and sustainable development. Currently the government of Ethiopia is doing it in Modern sense and mind. I thank you Brian Wilfred. November 9, 2024 At 2:04 pm Lagos, Nigeria e kwa! 7 kpozas to Ethiopian Airlines for this African Love. I really want to appreciate Ethiopian Airlines for making it possible for Africans to always enjoy the beauty and comfort of brand new airplanes. I know that a lot of foreign airlines are bringing some of these airplanes also though after some months or even years but Ethiopian Airlines makes us the first users. Now this is Africa putting an African first. Long live Ethiopian Airlines!!! Love, Brian. Lagos, Nigeria e kwa! 7 kpozas to Ethiopian Airlines for this African Love. I really want to appreciate Ethiopian Airlines for making it possible for Africans to always enjoy the beauty and comfort of brand new airplanes. I know that a lot of foreign airlines are bringing some of these airplanes also though after some months or even years but Ethiopian Airlines makes us the first users. Now this is Africa putting an African first. Long live Ethiopian Airlines!!! Love, Brian. Comments are closed.

Ethiopian Airlines Launches Air Congo: A New Chapter in African Aviation

Ethiopian Airlines Launches Air Congo: A New Chapter in African Aviation Ethiopian Airlines, Africa’s largest and most ambitious airline, is preparing for its newest venture, Air Congo, set to take flight in the Democratic Republic of Congo. This new airline, based in Kinshasa and co-owned with the Congolese government, is part of Ethiopian Airlines’ strategy to grow its footprint across the African continent, capturing the booming demand for air travel. Ethiopian Airlines will hold a 49% stake in Air Congo, with the Congolese government holding the majority. Starting in early December, Air Congo will open with two Boeing 737-800s leased directly from Ethiopian Airlines’ fleet. These aircraft are currently being prepared for their debut, including a fresh paint job with Air Congo’s new logo. Mesfin Tasew, Ethiopian Airlines’ Group CEO, shared his excitement in a recent interview with African Aerospace, noting that establishing a startup airline comes with its challenges, especially in securing aircraft. “Since it is a startup, it is difficult to get aircraft, so we took out two airplanes from our operation,” he said. “The first one will go for painting with the airline’s new logo this week.” Initially, Air Congo will serve domestic routes within the DRC, with plans to expand to regional destinations as operations grow. The airline aims to expand its fleet to six Boeing 737-800s within its first year, setting a strong foundation for regional connectivity and reliable air service in an underserved market. This move highlights Ethiopian Airlines’ strategy of creating and supporting regional carriers across Africa. Air Congo follows the success of Ethiopian’s joint ventures with ASKY in Togo, Zambia Airways, and Malawi Airlines. Although Ethiopian had aimed to establish a similar venture in Nigeria earlier this year, those plans were put on hold. By investing in African aviation, Ethiopian Airlines aims to increase access to safe, reliable air travel across the continent, empowering local economies and meeting the rising demand. The launch of Air Congo could be a game-changer for the Democratic Republic of Congo, a country where airlines have often struggled to stay afloat. As Ethiopian Airlines backs yet another regional airline, Air Congo promises to be a significant step forward for African aviation, strengthening connections within the continent and building a foundation for sustained growth. 3 COMMENTS Rodney Marinkovic November 7, 2024 At 11:28 pm Impressive efforts of Ethiopian Airlines! Africa’s leading Aviation Group. Let hope advances in expansion… Impressive efforts of Ethiopian Airlines! Africa’s leading Aviation Group. Let hope advances in expansion… Danthuri Sudheer November 7, 2024 At 11:34 pm Really very glad to know this information, Ethiopian collaboration with DRCONGO in airways Air Congo could be a real Game – Changer for the DRCongo. Thanks for innovative thoughts and very soon will get a safe and better Service from you ? Really very glad to know this information, Ethiopian collaboration with DRCONGO in airways Air Congo could be a real Game – Changer for the DRCongo. Thanks for innovative thoughts and very soon will get a safe and better Service from you ? Griffin Mukiz November 8, 2024 At 4:52 pm I wish Africans could look back on Gadafi’s strategies of developing Africa and owning one currency, and boarders being free for easy economic growth. This Ethiopia–CongDr Airlines will boom for a new development for Africa travelers. Let’s stick Together. God bless. I wish Africans could look back on Gadafi’s strategies of developing Africa and owning one currency, and boarders being free for easy economic growth. This Ethiopia–CongDr Airlines will boom for a new development for Africa travelers. Let’s stick Together. God bless. Comments are closed.

Ethiopia’s 900 Billion Birr Bond Plan: EEP, Sugar Corporation, and Railway Corporation Lead in Major Debt Overhaul for Commercial Bank

Ethiopia’s 900 Billion Birr Bond Plan: EEP, Sugar Corporation, and Railway Corporation Lead in Major Debt Overhaul for Commercial Bank The Ethiopian government has unveiled a major financial proposal to issue 900 billion birr in government bonds. This move aims to address significant debt obligations held by government development organizations and to strengthen the capital reserves of the Commercial Bank of Ethiopia (CBE), the country’s largest state-owned bank. Below are the key details and implications of the bond issuance, segmented by the primary objectives outlined in the government’s draft decree. The Ministry of Finance has drafted a decree submitted to Parliament for approval, authorizing the issuance of government bonds worth 900 billion birr. The purpose of this substantial bond issuance is twofold: Debt Repayment: The funds will be used to clear substantial unpaid debts of government development organizations held by CBE. Capital Augmentation: The remaining portion of the funds will be allocated toward increasing CBE’s capital base, ensuring the bank can sustain and grow its market position. The draft decree, titled “Government Debt Document,” emphasizes that the high debt level held by CBE due to these unpaid loans has significantly impacted the bank’s financial health. Background on Debt Accumulation The Commercial Bank of Ethiopia has long provided extensive lending to government-owned enterprises for the purpose of executing large-scale infrastructure projects. However, many of these projects have encountered complex challenges and have not generated the expected revenue to repay the borrowed amounts, leading to cumulative debt levels that now exceed 845.3 billion birr. Key Government Debtors Ethiopian Electric Power Corporation (EEP): The largest debtor, EEP owes 191.79 billion birr, including interest. These loans were largely intended for infrastructure projects aimed at improving the national power grid. Ethiopian Sugar Corporation (ESC): ESC follows as the second-largest borrower, with two rounds of loans totaling 110.68 billion birr. The funds were allocated for projects to expand Ethiopia’s sugar production capacity. Ethiopian Railway Corporation (ERC): With two rounds of borrowing amounting to 80.17 billion birr, ERC ranks third among government debtors to CBE. The loans were primarily used for the construction and expansion of the country’s railway network. Other government entities, including the Ethiopian Electric Utility, Ethio-Engineering Group, and Ethiopian Construction Works Corporation, have also borrowed substantial sums from CBE for various development projects. The Role of the Debt and Wealth Management Corporation In response to the unsustainable debt levels of government enterprises, the Ethiopian government established the Debt and Wealth Management Corporation in 2013. The purpose of this entity is to manage and alleviate the debt burdens of public enterprises, specifically those debts held by CBE. The corporation’s main functions include: Debt Assumption: Taking over the debts of public enterprises from CBE to enable these entities to operate more sustainably. Debt Servicing: Using allocated funds to gradually repay these debts to CBE. However, this has been hindered by funding shortages, resulting in accumulating interest and further strain on CBE’s financial position. While the corporation was set up with funds from the industrial development fund and income from its own business activities, its resources have been insufficient to cover the growing debt burden. Structure of the Bond Issuance The bond issuance decree stipulates that the government debt securities will have a three-year grace period, with a repayment schedule spanning 10 years. This structure is designed to provide a manageable repayment timeline for government entities while stabilizing CBE’s financial base. Allocation of Bond Proceeds Debt Repayment: Of the 900 billion birr, approximately 846 billion birr will be directed toward settling the unpaid debts held by CBE. This action is expected to alleviate the immediate financial pressures facing CBE and improve its overall liquidity. Capital Increase for CBE: The remaining 54.6 billion birr will be allocated toward enhancing CBE’s capital base. Although CBE is the dominant player in Ethiopia’s commercial banking sector, its current authorized capital is limited to four billion birr, an amount deemed insufficient given the size and scope of its operations. Increasing its capital base will position CBE to maintain and potentially expand its market share. Financial Implications for CBE and the Ethiopian Banking Sector The government’s proposed bond issuance highlights a significant strategy to stabilize CBE and support the country’s largest bank in maintaining its market leadership. By increasing the bank’s capital reserves through bonds rather than direct cash infusion, the government aims to balance fiscal constraints with the need to bolster CBE’s financial resilience. While the bond issuance will provide necessary liquidity, the capital increase comes at a time when CBE is already managing substantial debt exposure. The decree acknowledges the urgency of reinforcing CBE’s capital to ensure it remains competitive within Ethiopia’s growing banking sector. Though the issuance of the bond addresses immediate debt obligations, it does not eliminate the underlying challenges faced by government development projects that have struggled to generate expected returns. The decree calls for ongoing management and monitoring to prevent further debt accumulation and to ensure that new infrastructure investments are both financially and operationally viable. The bond issuance represents a critical financial intervention by the government. It serves as a mechanism not only to alleviate CBE’s current financial strain but also to enhance the bank’s capacity to serve as a reliable funding source for the country’s development agenda. 3 COMMENTS Al November 7, 2024 At 4:28 am Ethiopia will do well to seek the legitimate guidance from The State of Israel that will boom and strengthen the banking system of Ehiopia, at the same time Ethiopia can strengthen its defense against Muslim terrorists in the Aden Sea area providing safe protection for all cargo ships. Abel Tesfaye November 8, 2024 At 11:53 pm The State of Israhel is already collapsing because of their hatred policy, and never hatred could match with progress and boom. I think you should go and check your mental health, because hatred is full in your blood. Ethiopia will do well to seek the legitimate guidance from The State of Israel that will boom and strengthen the banking system of Ehiopia, at the same time Ethiopia can strengthen its defense against Muslim terrorists in the Aden Sea area providing safe protection for all cargo ships. Abel Tesfaye November 8, 2024 At 11:53 pm The State of Israhel is already collapsing because of their hatred policy, and never hatred could match with progress and boom. I think you should go and check your mental health, because hatred is full in your blood. The State of Israhel is already collapsing because of their hatred policy, and never hatred could match with progress and boom. I think you should go and check your mental health, because hatred is full in your blood. Ida Tesfaye November 8, 2024 At 1:01 am Ethiopia needs to get rid of corruption, ethnic based governance and favoritism, genocide of Amhara’s people, buying drones and such to kill its own people. In addition, demolition a functional businesses and homes in the name of progress, which intact is a demographic change. Establish a fair government to all Ethiopians, then only then Ethiopian economy will flourish?? Ethiopia needs to get rid of corruption, ethnic based governance and favoritism, genocide of Amhara’s people, buying drones and such to kill its own people. In addition, demolition a functional businesses and homes in the name of progress, which intact is a demographic change. Establish a fair government to all Ethiopians, then only then Ethiopian economy will flourish?? Comments are closed.