National Bank of Ethiopia Warns Diaspora Against Using Unlicensed Money Transfer Operators

National Bank of Ethiopia Warns Diaspora Against Using Unlicensed Money Transfer Operators Addis Ababa, August 2, 2025 —In a stern public advisory issued today, the National Bank of Ethiopia (NBE) has warned the Ethiopian diaspora community against using unauthorized money transfer services, following the identification of several operators allegedly involved in illicit activities. The central bank emphasized that all cross-border fund transfers must be conducted through formal, licensed financial channels to ensure compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. “It is imperative that cross-border fund transfers be conducted through the formal and regulated financial system, ensuring proper oversight to mitigate risks,” the NBE stated in its press release. According to the notice, the NBE has identified four U.S.-based money transfer service providers allegedly engaged in suspicious financial activities, including money laundering and financing of illegal operations using funds collected from the Ethiopian diaspora. The named entities include: Shgey Money Transfer — Silver Spring, MD, and Falls Church, VA Adulis Money Transfer — Falls Church, VA, and Silver Spring, MD Ramada Pay (Kaah) — Falls Church, VA TAAJ Money Transfer — Minneapolis, MN “These providers are operating with the clear intention of undermining the integrity of the Ethiopian financial system,” the NBE warned, noting that relevant authorities in the United States have been requested to investigate their operations. The central bank strongly advised members of the Ethiopian diaspora to refrain from using these unlicensed services to avoid potential loss of funds. “There is no guarantee that funds sent will be delivered to intended beneficiaries,” the statement cautioned. The NBE has made available the full list of licensed and authorized money transfer providers through its dedicated online portal at https://nbe.gov.et/mta/, urging citizens to verify service legitimacy before transferring money. This move comes amid Ethiopia’s broader efforts to curb illicit financial flows, boost foreign exchange reserves through formal remittance channels, and protect consumers from fraud and regulatory non-compliance. The bank affirmed it will continue to monitor and take further enforcement action against any entity found violating national and international financial regulations. For more updates and access to the list of licensed providers, visit: https://nbe.gov.et/mta/Source: National Bank of Ethiopia

Financial Institutions Meet Only 2pct of Agriculture Credit Demand

Disbursements from microfinance institutions in alarming decline Ethiopia’s financial institutions meet only two percent of an estimated 2.5 trillion Birr in annual demand for credit in the country’s agriculture sector, according to a government document published this week. Banks and microfinance institutions (MFIs) disbursed just 52 billion Birr in loans to the sector in 2024, far less than total demand. Even counting the 73 billion Birr in credit allocated by the state-owned Commercial Bank of Ethiopia (CBE) for fertilizer purchases, the proportion of disbursements to demand sits at a measly five percent. The startling figures are included in the national Agri-Finance Implementation Roadmap (NAFIR) jointly launched this week by officials at the Ministry of Agriculture and regulators at the National Bank of Ethiopia (NBE). The roadmap charts Ethiopia’s agricultural aspirations for the coming five years. “This total annual potential demand [2.5 trillion Birr] represents a scenario of fully modernized agriculture and comprises the key agri-finance use cases for which producers across Ethiopia’s agricultural value chains would access credit for crop and livestock inputs, irrigation, equipment and mechanization services, and use output finance to support enhanced aggregation and marketing,” reads the document. It forecasts that demand for agri-finance will grow to 2.93 trillion Birr in 2030, and represents a huge increase on forecasts included in the Ten-Year Perspective Plan, primarily owing to the decision to float the currency in July 2024. Officials want to see credit to the agriculture sector rise to a minimum of 881 billion Birr annually by 2030, while the roadmap also includes ambitious targets for modernization through a coordinated, data-driven financial framework that promotes rural inclusion and private capital engagement. Although banks have more than doubled their disbursements to agriculture to 2.54 billion Birr in the four years since 2020, officials argue progress has been too slow. They also caution about an alarming decline in financing from MFIs. “There has been a declining trend in the microfinance sector over the last four years which has seen their proportion of credit provided to agriculture fall from 30 percent to 18 percent. The drop was even more pronounced for those MFIs which converted to become banks between 2021-22. Between them, Tsedey, Siinqee, Omo and Shabelle Banks experienced a fall in the proportion of lending to agriculture from 57 percent to 32 percent in just one year,” states the document. Despite contributing 32 percent to the Gross Domestic Product (GDP), 64 percent to employment, and nearly 80 percent of export earnings, the agricultural sector remains severely underfinanced. In 2023/24, only 52 billion Birr was disbursed in actual agricultural credit—excluding Commercial Bank of Ethiopia’s fertilizer financing—representing two percent of the estimated 2.58 trillion Birr in annual potential demand, NAFIR states. Including fertilizer financing, the figure rises to 125 billion Birr, but this form of credit does not directly reach farmers. Officials warn the sector is not receiving enough financial support to achieve its national development priorities. NAFIR sets out to bridge this gap with a compound annual growth rate of 38.5 percent, boosting agricultural lending from 34.2 billion Birr in 2019/20 to 881 billion Birr by the end of the plan period. For 2023/24, the policy benchmark was 126 billion Birr, but actual disbursement covered only 41 percent of that, or 99 percent if CBE fertilizer credit is included — highlighting the scale of the challenge. The roadmap introduces three key mechanisms to mobilize and channel financing: the National Agri-Finance Accelerator (NAFA), Farmer Access to Streamlined Financial Services (FAST), and an Agri-Finance Centre of Excellence (CoE). NAFA will act as a refinancing and risk-sharing facility pooling resources from government, development partners, commercial banks, and microfinance institutions. It will provide incentives to financial institutions to lend to underserved groups, including smallholders, pastoralists, and women, by reducing the cost and risk of lending, according to the roadmap. FAST will provide farmers with a digital ID linked to their land, production data, and mobile wallets. Through this system, farmers will receive personalized seasonal credit allowances calculated by automated credit-scoring algorithms. The loans will be bundled with crop or livestock insurance and accessed without the paperwork typically required in rural lending, according to the document. Officials hope to see the planned digital transformation drastically simplify compliance and cut down disbursement times. On the other hand, the CoE will serve as a hub for building institutional capacity, financial literacy, and risk management systems. It will work with banks to develop specialized agri-finance products, promote insurance uptake, and drive digital innovation in the sector, according to the roadmap. This platform will also coordinate with stakeholders to establish a comprehensive risk management framework, addressing the limited availability of crop and livestock insurance and the absence of price risk hedging instruments. The roadmap seeks to make credit accessible through multiple channels. Farmers may access funds directly from banks or through cooperatives acting as intermediaries. Other distribution models include digital platforms like Lersha, Kifiya, and Farm Pass, agro-dealers and off-takers, and warehouse receipt systems, where loans are secured against stored produce, according to the roadmap. “These channels aim to improve outreach and transparency, especially in remote areas with limited banking presence,” it reads. As of now, lending to agriculture remains minimal across the financial sector. Private banks established before 2021 have consistently allocated only one to three percent of their loan portfolios to agriculture. Speaking at the Ethiopian Finance Forum on July 22, 2025, Girma Amente (PhD), minister of Agriculture emphasized the urgency of modernizing the sector. “To support mechanization, more than 500 pieces of irrigation and mechanization equipment have been imported, with new policy support for local assembly,” he said, calling on banks and microfinance institutions to significantly increase their agricultural financing commitments. The roadmap does not downplay the challenges. Financing agriculture remains costlier and riskier than other sectors, due to seasonality, weak collateral systems, and limited borrower capacity. Furthermore, farmers often lack the financial and digital literacy needed to access and manage loans effectively. The scarcity of suitable insurance products also continues to limit bankability. Yet opportunities are emerging. Ethiopia’s banking sector is opening up to foreign and private investment, potentially unlocking new sources of capital, as the roadmap puts it. Officials also envision building a National Agri-Finance Database to track loan performance and farmer credit histories, enhancing accountability and long-term planning.

National Bank of Ethiopia Urges Local Banks to Brace for Foreign Competition

National Bank of Ethiopia Urges Local Banks to Brace for Foreign Competition “Many Foreign Banks Are Applying for Licenses,” Says Governor Mamo Mihret The Governor of the National Bank of Ethiopia (NBE), Mamo Mihret, has called on domestic banks to step up their preparedness as Ethiopia’s banking sector inches closer to opening its doors to foreign competitors. His remarks come at a time when a growing number of international financial institutions are applying for entry into the Ethiopian market—marking a significant shift in the country’s financial landscape. Speaking during the launch event of Bank of Abyssinia’s paperless banking initiative, Governor Mamo warned that the banking sector will soon face unprecedented levels of competition. “The industry will no longer be the same. We are entering a new era of competitive banking,” he stated. “Many foreign banks have already applied and are actively submitting license applications. Their entry into the market is no longer a question of ‘if,’ but ‘when.’” A Call for Modernization and Reform Governor Mamo emphasized the urgency for domestic banks to modernize their operations and raise service standards across the board. He cited two primary reasons for this imperative shift: Rising Customer Expectations: Ethiopian consumers are demanding more efficient, technology-driven, and user-friendly financial services. As digital transformation accelerates globally, expectations around speed, accessibility, and personalization are reshaping the banking experience. Imminent Market Liberalization: With foreign banks set to enter the Ethiopian financial market under the revised banking directive (SBB/94/2025), the competition will intensify, forcing local banks to innovate or risk being left behind. “Whether we like it or not, the market is opening up. This will not just be competition—it will be fierce competition,” Mamo stressed. “Domestic banks must anticipate this and act accordingly.” Sector Reform Gathers Momentum The liberalization of the banking sector is part of Ethiopia’s broader economic reform agenda aimed at increasing efficiency, attracting foreign investment, and modernizing financial services. The policy shift has already led to widespread restructuring, with banks investing in digital infrastructure, customer experience enhancements, and strategic partnerships. Bank of Abyssinia’s paperless banking launch—which eliminates physical documents in favor of digital workflows—was held up as an example of the kind of forward-thinking innovation the NBE hopes to see across the sector. The Road Ahead With Kenya’s KCB Group, South Africa’s Standard Bank, and institutions from the Gulf and Asia reportedly expressing interest, Ethiopia is on track to become one of the last major African economies to open its banking industry to foreign players. While this creates immense opportunity for capital inflow and knowledge transfer, it also places pressure on legacy institutions to evolve rapidly. As the regulator tightens licensing processes and emphasizes capital adequacy, cybersecurity, and compliance, banks that fail to modernize could find themselves unable to compete in the liberalized landscape. Governor Mamo’s message was clear: the countdown to competition has begun, and only those banks willing to adapt will thrive in the new Ethiopian banking era.

Addis Ababa’s Arat Kilo Plaza Emerges as a Modern Urban Landmark

Addis Ababa’s Arat Kilo Plaza Emerges as a Modern Urban Landmark Innovative and People-Centered Projects Take Shape in Addis Ababa Addis Ababa Mayor Adanech Abebe has reaffirmed the city administration’s commitment to advancing inclusive and participatory development. She emphasized that the capital is rapidly implementing innovative, people-centered projects designed to meet the needs of its residents. In a recent ceremony, Mayor Adanech inaugurated 73 new shopping centers, a 100-vehicle parking facility, and a modern taxi terminal at Arat Kilo Plaza—all now open to the public. She noted that these projects are part of a broader effort to transform Addis Ababa into a more competitive, tourist-friendly city, with many more initiatives planned for the near future. Deputy Mayor and Head of the Industrial Development Bureau, Jantrar Abay, highlighted that these infrastructure developments are designed to directly benefit the city’s residents. He also extended his gratitude to the local community for their active involvement and support in the ongoing urban projects.

Ethiopian Airlines Unveils World-Class Passenger Terminal in Kombolcha

Ethiopian Airlines Unveils World-Class Passenger Terminal in Kombolcha Ethiopian Airlines has officially inaugurated a brand-new, state-of-the-art passenger terminal and associated support facilities at Kombolcha Airport in the Wollo region. The inauguration ceremony took place in the presence of His Excellency Arega Kebede, President of the Amhara Regional State, alongside other high-ranking government officials and Ethiopian Airlines Group CEO, Mr. Mesfin Tasew. The multimillion-euro project—valued at over 12 million Euros—includes the construction of a modern passenger terminal, a dedicated VIP terminal, and a wide range of supporting infrastructure. These developments are designed to bring the Kombolcha airport up to global aviation standards, significantly improving the travel experience for passengers flying to and from the region. “This project is a testament to our continued commitment to expanding domestic and regional air connectivity, while enhancing customer satisfaction through modernized facilities,” said Mr. Mesfin Tasew during the launch event. “The Kombolcha terminal is more than a building—it is a gateway that connects the people of Wollo to economic and social opportunities across Ethiopia and beyond.” The new terminal is expected to serve as a strategic hub for the growing industrial and economic corridor in Kombolcha, a city with increasing importance in Ethiopia’s manufacturing and logistics sectors. With the upgraded facilities, the airport is now better equipped to handle higher passenger volumes, facilitate smoother operations, and attract more tourism and investment to the Amhara region. The inauguration underscores Ethiopian Airlines’ broader vision to modernize airport infrastructure across the country, in alignment with Ethiopia’s national development agenda and the airline’s ambition to remain Africa’s leading aviation group.

Telebirr Lent 13.2 Billion Birr in One Year—but Borrowers Say They’re Paying the Price

Telebirr Lent 13.2 Billion Birr in One Year—but Borrowers Say They’re Paying the Price Telebirr recently announced it has disbursed more than 25.8 billion ETB in digital microloans to over 11.9 million customers since its 2021 launch. Developed by Ethio Telecom in partnership with Dashen Bank, the Commercial Bank of Ethiopia, and Sinqe Bank, the platform has also mobilized 24.6 billion ETB in digital savings from 3.9 million users over the same period. In the just-concluded fiscal year alone, 6.88 million customers took out loans totaling 13.2 billion ETB, while 1.77 million deposited a combined 11.2 billion ETB in savings. The platform aims to bridge the gap in access to traditional banking services, enabling users to easily access digital finance and mobile money through self-service tools, nearby agents, and service centers across the country—advancing Ethiopia’s shift toward a cashless society. Despite these impressive numbers, user concerns are growing. Many borrowers say what initially offered quick financial relief has become an overwhelming burden. Rising interest rates and facilitation fees are making repayments increasingly difficult. At the same time, savers complain that their returns are disproportionately low compared to the high loan costs. What began as a promising financial tool is now raising questions about fairness and affordability in Ethiopia’s digital finance ecosystem. Fikadu Girma, once an enthusiastic user of Telebirr’s microfinance services, recalled how simple and fast the process was—no paperwork, just a few clicks. But that changed. He borrowed 15,000 birr, only to see the amount balloon to 56,000 birr—an increase of nearly 273%. “I’m struggling to keep up,” Fikadu said, explaining how a tool meant to support him now feels like a crushing weight. Hussein Addis shared a similar experience. “I just had a shocking experience with a digital loan on Telebirr,” he said. After borrowing 1,200 birr, his total debt climbed to 6,000 birr—even after he had already repaid 1,000 birr. Frustrated and confused, Hussein said he is considering throwing away his SIM card just to escape the growing debt. This wave of discontent is spreading on TikTok, where users are sharing stories of ballooning loans and financial distress. A growing number of borrowers say they feel trapped, with some seriously contemplating discarding their SIM cards to avoid repayment. Telebirr offers loan products for both individuals and businesses. The Telebirr Mela loan allows individuals to borrow up to 10,000 birr, while businesses can access loans up to 100,000 birr. Another offering, Telebirr Endekise, helps customers cover payment shortfalls for purchases, with repayment expected within a month. Ethio Telecom also runs Tele Sanduq, a savings product that combines both interest-free and interest-bearing options, starting with as little as 26 birr. These services come at a cost. Facilitation fees range from 1.5% to 6.5% on day one, with daily charges reaching up to 1.2%. Monthly interest rates vary between 9% and 36%, depending on the borrower’s credit history. Late payment penalties can go as high as 2% per day. After 90 days, debts may be recovered through deductions from savings or bank accounts. For example, a 10,000 birr loan with typical fees, interest, and a 10-day late payment could end up costing about 14,000 birr—roughly 40% more than the original loan. Over a year, consistently borrowing 10,000 birr monthly under such conditions could cost approximately 46,200 birr in fees and interest alone—meaning borrowers may repay 166% of the original loan annually. Early repayment can reduce interest but may trigger a 3% fee on the remaining principal. Experts argue that the problem is not limited to Telebirr itself but lies with the commercial banks that fund these loans. While Telebirr acts as a facilitator, the banks—motivated by profit—set the terms. In Ethiopia’s current financial environment, the rapid growth of unsecured digital lending is risky. Without proper safeguards, the risk of default is high, pushing banks and microfinance institutions to impose steep interest rates. Non-performing loans (NPLs) can carry regulatory penalties, and in the absence of effective risk management systems, defaults lead to direct losses that shareholders and auditors scrutinize closely. Still, some analysts caution against abandoning the platform’s core mission. They argue that Telebirr was designed to serve underserved communities and that this original purpose should be protected. For borrowers with limited access to formal credit, the service was a rare bridge to financial inclusion. Critics suggest the way forward is not dismantling the system, but reforming it to ensure greater affordability and fairness. “They justify the high interest rates by pointing to the lack of collateral and increased default risk,” said Tilahun Girma, a seasoned financial expert. “But the costs are excessive and ultimately unsustainable.” An anonymous economist added that growing frustration with digital microloans reflects deeper structural weaknesses in Ethiopia’s financial system. While digital loans have opened doors for many excluded from traditional banking, rising costs and unclear repayment terms are triggering serious concerns about accessibility and transparency. He pointed to several underlying issues. First is the pricing model, based largely on perceived credit risk. Most borrowers lack formal credit histories, so lenders rely on mobile usage data and behavioral patterns—metrics that are often unreliable. To hedge against risk, lenders raise fees, a practice that disproportionately harms low-income users when proper consumer protections are lacking. The second challenge is Ethiopia’s broader economic environment. High inflation, a weakening birr, and tight liquidity mean lenders face rising capital costs. These pressures are ultimately passed on to borrowers, making loan repayment increasingly difficult. Regulation hasn’t kept pace. While the National Bank of Ethiopia has begun developing digital finance frameworks, specific consumer protection measures for microloans are still lacking. This regulatory gap allows for opaque pricing and poor communication around terms and conditions. “Ethio Telecom’s evolution from a telecom company to a major digital finance player brings both innovation and new risks,” the economist noted. “The push to monetize lending can create tensions between public service goals and commercial pressures.” Experts further point out that Ethiopia lacks a dedicated legal framework for digital lending, leading to inconsistent borrower protections and weak enforcement of fair lending standards. As Ethiopia prepares to roll out its first credit card, the urgency to educate the public about responsible borrowing and digital financial literacy is greater than ever. Many borrowers face vague terms, unpredictable limits, and insufficient guidance. Regulators and digital lenders must urgently collaborate to ensure borrowing is transparent, fair, and accessible to all. Tilahun recommends mapping assets such as homes and vehicles on a secure digital platform linked to the lending system. This would allow borrowers to use personal guarantors, increasing accountability. In the event of a default, the guarantor would be held liable—potentially lowering the risk for lenders and reducing the need for punitive interest rates. He also advocates for expanding credit to small and micro-enterprises based on their credit history. “Microloans should do more than cover short-term emergencies,” Tilahun said. “They should help build livelihoods. That won’t happen unless lending criteria are revised to reward reliability with better access to capital.” LEAVE A REPLY Cancel reply Save my name, email, and website in this browser for the next time I comment. Δ

Ethiopia’s Central Bank Celebrates One Year of Sweeping Reforms as Economy Enters New Era

Ethiopia’s Central Bank Celebrates One Year of Sweeping Reforms as Economy Enters New Era By Addis Insight Staff | July 29, 2025 – Addis Ababa Ethiopia’s central bank marked the one-year anniversary of its historic macroeconomic reform program on Monday, touting significant progress on inflation control, foreign exchange inflows, and banking sector modernization—milestones the government hopes will anchor long-term stability in Africa’s second-most populous nation. The reform package, introduced by the National Bank of Ethiopia (NBE) on July 29, 2024, represents one of the most ambitious overhauls of Ethiopia’s financial and monetary system in decades. With support from the government’s Home-Grown Economic Reform Agenda, the initiative was designed to stabilize the macroeconomic environment, ease chronic foreign currency shortages, and prepare the banking sector for greater competition—including the entry of foreign players. “This first year has laid the foundation for a more resilient and inclusive economy,” the NBE said in its official statement. “While we acknowledge challenges ahead, the momentum is clearly in motion.” Monetary Policy Anchored on Inflation Control and Market Tools Central to the reform effort has been the modernization of monetary policy. In a departure from past practices, the NBE set inflation control as its primary institutional mandate, introducing a suite of tools to manage liquidity and guide expectations. Key measures include: The introduction of a central bank policy rate (NBR) to provide a transparent benchmark for interest rates across the financial system. Launch of open market operations (OMO) as a new mechanism for adjusting liquidity in the banking sector. Establishment of a Monetary Policy Committee (MPC), which now issues quarterly macroeconomic outlooks and recommendations. Creation of a standing deposit/lending facility and emergency liquidity assistance window. Elimination of the long-standing requirement for banks to purchase Treasury bonds. These shifts enabled the central bank to withdraw from direct credit to government, ending a 12-year cycle of monetized fiscal deficits. The monetary tightening appears to be yielding results: year-on-year inflation declined to 13.9% in June 2025, down from 20% a year earlier, according to official data. “The central bank has transitioned from administrative controls to indirect market-based tools, aligning more closely with global best practices,” said a macroeconomist at a major development bank in Addis Ababa. Foreign Exchange Market Sees Structural Transformation Ethiopia’s chronic foreign currency shortage—long a drag on business operations and investor confidence—was another core focus of the reforms. The country’s exchange rate regime was fundamentally liberalized: The birr’s value is now determined by market forces, replacing a decades-old managed float. Banks were freed from most surrender requirements and current account restrictions. A formal interbank FX market and regulated FX bureaus were established. Exporters gained flexibility to retain a larger share of their foreign exchange earnings for longer periods. Foreign portfolio investors were allowed to enter Ethiopia’s nascent domestic capital markets. As a result, the NBE reported a 33% increase in total FX inflows, reaching an estimated $32 billion. That figure includes: $8.3B in goods exports $8.5B in service exports $7.1B in diaspora remittances $3.9B in foreign direct investment (FDI) $2.7B in new non-IMF loans $1.9B in official grants This influx financed approximately $19 billion in goods imports, $6.7 billion in services, and $1.4 billion in debt service payments—while also helping the central bank triple its FX reserves and double commercial banks’ FX assets. “The FX market has matured faster than expected,” said a private sector bank executive. “Average daily forex sales to businesses have more than doubled, easing severe backlogs in trade finance.” Banks are now selling an average of $25 million in forex daily, up from $11 million before the reforms. For monthly FX access, firms are averaging $500 million, compared to $258 million a year ago. The private sector also secured over $445 million in foreign supplier credit, significantly above the previous year’s $204 million, thanks to greater FX certainty. Financial Sector Sees Growth, Digital Shift, and Foreign Entry Ethiopia’s banking sector—long characterized by high concentration and limited competition—has seen major structural reforms aimed at promoting financial inclusion, digitization, and competitiveness. Key developments include: A new Banking Sector Proclamation and revised NBE regulatory framework, enhancing central bank autonomy, governance, and supervisory capacity. Directives improving credit appraisal, governance, and single borrower exposure limits. Recapitalization of the largest systemic bank to strengthen sector resilience. Official green light for the entry of foreign banks—a long-awaited move that is expected to reshape the competitive landscape. Significant investment in digital finance infrastructure, including SME lending, mobile banking, and digital identity verification systems. By mid-2025: Deposits in the banking system increased by 41%, totaling Birr 3.5 trillion. Domestic credit expanded by 22% to Birr 3.7 trillion. Key indicators remained stable: NPL ratio at 3.9%, capital adequacy at 17.3%, and liquidity at 24.9%. Millions of new digital wallets, credit accounts, and merchant payment platforms were registered. “Digital finance is becoming a mainstream driver of inclusion,” said an NBE official. “We are seeing transformative impacts, especially in underserved areas.” Risks Ahead: Policy Credibility and Institutional Strength While the early outcomes have been largely positive, economists caution that Ethiopia’s reform program still faces significant risks: Sustained disinflation may be challenged by supply shocks, currency volatility, and fiscal pressures. Market-based FX regimes require deep liquidity and strong supervision to avoid instability. The entry of foreign banks will test the regulatory capacity of the NBE. Ethiopia’s debt sustainability remains fragile despite improvements in current account dynamics. “The reforms are bold and promising, but the real challenge is durability,” said a senior analyst at a regional investment firm. “This hinges on institutional depth, political buy-in, and continued IMF alignment.” Investor Outlook: cautiously optimistic For investors, Ethiopia’s new macro landscape presents a mixed but improving picture: The FX market is more transparent, with growing liquidity. Monetary policy is increasingly rule-based and market-sensitive. The financial sector is opening, digitizing, and showing signs of deepening. Real interest rates are positive, and inflation expectations are moderating. Still, concerns around legal enforcement, capital repatriation, and policy consistency persist. The Bottom Line: Ethiopia’s first year of macro reforms has delivered tangible progress—but staying the course will require steady leadership, institutional resilience, and continued reform momentum. For now, the country is signaling its serious intent to align with global norms, attract capital, and build a modern economic system.

Introducing the Eight: Ethiopia’s First Licensed Capital Market Players

Introducing the Eight: Ethiopia’s First Licensed Capital Market Players By Addis Insight | July 2025 In a significant move towards building a vibrant and regulated capital market, Ethiopia’s nascent financial sector witnessed a historic milestone as the Ethiopian Capital Market Authority (ECMA) officially authorized a set of capital market service providers. The announcement marks a crucial step in operationalizing the Ethiopia Securities Exchange (ESX), expected to become a key platform for equity and debt trading in the country. Eight Entities Granted Licenses: A Snapshot of Ethiopia’s New Capital Market Players The ECMA, under its mandate to regulate and supervise Ethiopia’s capital markets, issued licenses to eight firms offering a range of services including securities investment advisory, transaction advisory, brokerage, underwriting, and investment banking. These institutions are now authorized to serve as intermediaries in Ethiopia’s upcoming securities market. Licensed Investment Advisors and Banks: These players will be instrumental in providing expertise, ensuring compliance, and facilitating transactions once the ESX goes live. Implications: From Financial Repression to Capital Market Liberalization Ethiopia’s financial sector has historically been dominated by traditional banking services, with limited access to long-term financing and constrained investment opportunities. The licensing of these capital market entities marks a shift toward financial liberalization, encouraging equity investment, private capital mobilization, and institutional transparency. Key Impacts: Capital Formation: With investment advisors and brokers in place, firms can now consider raising funds through equity or debt, reducing their reliance on bank loans. Investor Confidence: ECMA’s regulatory oversight ensures transparency, reducing investment risk for domestic and foreign investors. Public Participation: Retail and institutional investors will gain access to a broader range of financial instruments once the ESX opens. Diaspora Involvement: Licensed investment advisors like I-Capital and D&T, with regional offices and diaspora engagement, are expected to facilitate foreign portfolio investments from Ethiopians abroad. The Rise of Investment Banks in Ethiopia CBE Capital and Wegagen Capital are now the first licensed investment banks in Ethiopia. Their mandates include underwriting, brokerage, securities dealing, and facilitating mergers and acquisitions. This vertical integration positions them to play a dominant role in early market activity. While both institutions are affiliates of large commercial banks (Commercial Bank of Ethiopia and Wegagen Bank, respectively), their investment banking arms are now poised to offer specialized financial services long absent in the Ethiopian market. Remaining Hurdles: Infrastructure, Literacy, and Liquidity Despite this progress, the road to a fully functioning capital market remains steep. Key challenges include: Digital and Legal Infrastructure: Ethiopia must implement robust trading platforms, clearing houses, and legal protections for investors. Financial Literacy: The general public and many businesses are unfamiliar with securities trading and portfolio management. Market Liquidity: With only a few licensed actors and no publicly listed firms yet, initial trading volumes may be thin. ECMA and the ESX leadership have acknowledged these gaps and have prioritized awareness campaigns, institutional capacity building, and investor protection mechanisms as part of their 2025 roadmap. Conclusion: Ethiopia Steps into a New Financial Era The licensing of investment service providers is not just a bureaucratic milestone—it is a foundational step in reshaping Ethiopia’s financial architecture. For a country grappling with forex shortages, inflation, and constrained investment options, a functioning capital market could unlock billions in private and public capital. As Ethiopia prepares for its first IPOs and bond issuances, these eight licensed firms will serve as the gatekeepers, architects, and guardians of a new financial future. The Ethiopian capital market has now officially opened its gates. The question is: who will walk through them—and how fast? 1 COMMENT Hussen Ali Seid July 31, 2025 At 8:41 pm ONE Person investors gets BTC coin but love me world digital assets Crypto currency and Airdrop company or Alibaba company my best friend school learning Appeal electronic marketing systems all would look my coin cap marketing look BTC coin ETH coin BNB coin solve 3coin Doge coin my Ton of them Learn so more Tanks second Reply ONE Person investors gets BTC coin but love me world digital assets Crypto currency and Airdrop company or Alibaba company my best friend school learning Appeal electronic marketing systems all would look my coin cap marketing look BTC coin ETH coin BNB coin solve 3coin Doge coin my Ton of them Learn so more Tanks second LEAVE A REPLY Cancel reply Save my name, email, and website in this browser for the next time I comment. Δdocument.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() );

Ethiopia’s Macro Reforms at One: NBE Highlights Progress and Path Ahead

Ethiopia’s Macro Reforms at One: NBE Highlights Progress and Path Ahead A year after launching a sweeping package of macroeconomic reforms, the National Bank of Ethiopia (NBE) is touting major strides in modernizing Ethiopia’s monetary, exchange rate, and financial systems. The reforms, which began on July 29, 2024, under the Home-Grown Economic Reform agenda, mark a decisive shift toward market-oriented policy frameworks aimed at stabilizing the economy, controlling inflation, and restoring external balance. In a press release issued on Monday, the central bank outlined the major gains and continuing challenges of the reform agenda, describing the past year as a “bold commitment” to a stable and inclusive economic foundation. Key milestones include tighter inflation targeting, liberalized exchange rate regimes, a revamped financial sector, and the opening of the banking sector to foreign competition. Monetary Policy: From Reactive to Proactive At the heart of the reform is the modernization of Ethiopia’s monetary policy framework. The NBE has prioritized inflation control as its principal mandate, and for the first time, a Monetary Policy Committee (MPC) has been established to forecast macroeconomic conditions, advise on policy responses, and issue quarterly statements. A new benchmark interest rate—the National Bank Rate (NBR)—was introduced to guide liquidity management, supported by a suite of new instruments including open market operations, standing lending facilities, and an emergency liquidity assistance mechanism for stressed banks. The central bank also lifted the requirement for banks to purchase Treasury bonds, freeing up private lending. Importantly, NBE created an interbank money market, allowing banks to borrow and lend to each other without central bank intervention, reflecting a shift toward indirect policy tools. Exchange Rate Liberalization: FX Market Opens Up The reforms have also drastically altered Ethiopia’s foreign exchange landscape. The exchange rate is now largely market-determined, replacing the tightly controlled regime of the past. FX surrender rules were relaxed or abolished, and exporters were granted greater flexibility to retain their foreign currency earnings. The private sector has benefited from increased foreign currency availability, with daily average FX sales to businesses doubling to $25 million. As a result, foreign exchange inflows surged by 33% in one year to $32 billion. This includes $8.3 billion from goods exports, $8.5 billion in services, $7.1 billion from remittances, and nearly $6 billion from grants and new loans. This increased inflow enabled a three-fold rise in FX reserves at NBE and strengthened the balance of payments. Thanks to the FX liberalization, new foreign credit worth $445 million was secured by the private sector—more than twice the amount from a year prior. Nearly ten new foreign exchange bureaus have also been established to meet demand. Financial Sector Transformation: Opening the Gates The NBE highlighted several transformative steps in financial sector regulation and supervision: A new Banking Sector Proclamation established NBE’s autonomy and introduced new norms for transparency and governance. Direct credit to government was eliminated for the first time in 12 years. The banking sector was opened to foreign banks—a long-awaited reform. The largest state-owned banks were recapitalized and modernized. New directives improved credit assessment, risk management, and borrower exposure limits. Digital finance initiatives expanded rapidly, including credit scoring, transaction accounts, and SME credit platforms. These changes helped financial sector deposits grow by 41% to 3.5 trillion birr, while private sector credit expanded by 22% to 3.74 trillion birr. Despite rapid growth, key risk indicators like the non-performing loan (NPL) ratio (3.9%) and liquidity ratio (24.9%) remain within safe thresholds. Inflation Tamed—But Not Conquered One of the most tangible outcomes has been a visible decline in inflation. The headline rate has dropped to 13.9% in June 2025 from 20% a year earlier. The NBE attributes this to tighter monetary policy, positive real interest rates, and its withdrawal from direct credit to government. Despite these gains, NBE acknowledged that challenges remain, noting that the reform process is ongoing. Experts warn that external shocks, domestic supply disruptions, and political instability could still undermine progress. What Lies Ahead NBE Governor and senior officials emphasized that the reforms are not an endpoint but a foundation. In the coming year, the bank plans to strengthen enforcement of prudential regulations, expand FX market access, deepen capital markets, and continue the push for digitization and financial inclusion. “The journey is far from over,” the NBE noted. “But the foundation laid over the past 12 months offers a clear path forward for a more resilient, inclusive, and competitive economy.” As Ethiopia positions itself for growth, investors and citizens alike will be watching closely to see whether these hard-won gains can be sustained.