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 After this period, all permissions for Franco valuta-based imports will be rescinded.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.

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.

Inside AliExpress’ Expansion in Ethiopia: Unlocking New Opportunities for Local Businesses

Inside AliExpress’ Expansion in Ethiopia: Unlocking New Opportunities for Local Businesses Ethiopia’s rapidly growing demand for digital services and e-commerce solutions is surfacing the way for global tech giants to make a mark on the country’s economy, with Alibaba leading the charge. As a nation of over 120 million people, Ethiopia’s expanding consumer base and increasing internet penetration highlight an immense potential for online marketplaces and digital innovation. In response, Alibaba’s recent entry signals not only an opportunity to meet this demand but also a strategic move that could redefine local business operations and digital access. With promises of enhanced infrastructure, streamlined logistics, and new growth opportunities for Ethiopian businesses, Alibaba’s presence may prove transformative in Ethiopia’s journey toward a modernized economy and Digital Ethiopia. August 25 marked a historic day as MKTY Ethiopia (a seasoned information technology service company with 30 years of experience based in Addis Ababa), launched its partnership in Ethiopia, establishing the first AliExpress showroom on the African continent in Addis Ababa. This pioneering initiative allows Ethiopians to shop on the AliExpress online platform while providing exporters an avenue to expand into the global market. Wholesalers can now view product samples in Addis and distribute to parts of the country, eliminating the need to travel to China “We have partnered with Gebeya Express to collaborate with AliExpress as a digital marketplace, enabling direct transactions for selected goods in local currency and offering a platform for exporters,” shared Markos Tilahun, CEO of MKTY, in an interview with Arts TV. He added that the website, gebeyaexpress.com, is currently in the trial phase and is set to launch in a month. “Exporters shouldn’t worry about the volume of their products, as we sell directly to end customers worldwide,” he added. Through its B2B and B2B2C models, AliExpress aims to benefit both end consumers and business owners, particularly importers and wholesalers. However, businesses looking to sell their products on AliExpress must meet certain criteria. “Businesses should have a technology solution. For instance, they need an SRS capability,” said Jeffrey Jiang, AliExpress’s Business Director for the African market, in an interview with Arts TV. Following Prime Minister Abiy Ahmed’s meeting with Jack Ma at the World Economic Forum in Davos, Switzerland, Ethiopia signed a Memorandum of Understanding (MoU) to establish an eWTP (electronic World Trade Platform) Hub in the country. “Through the eWTP agreement, our team had the opportunity to participate in training programs initiated by Alibaba. Our collaboration and inspiration have deep roots,” said Markos. Beyond the marketplace, Alibaba Global Initiatives (AGI), in partnership with the Digital Transformation Ethiopia Association (DTEA), has announced plans to open a training center in Addis Ababa in the first half of 2025. This center, AGI’s first in Africa, will offer programs aimed at cultivating local digital talent equipped to deliver specialized training within their communities. Additionally, AliExpress will provide an alternative marketplace with affordable, quality goods, benefiting the public and supporting SMEs with both direct and indirect impacts from the platform’s presence. International trade presents several logistical challenges for businesses, including high costs and bureaucratic hurdles. “Since most Ethiopian exporters deal in limited products, our plan is to partner with small and medium-sized businesses to help them scale on the global stage through Gebeya,” said Markos Tilahun. “To achieve this, Ethiopian Airlines’ role is significant in offering affordable freight services, which will help us provide goods at reasonable prices for the community.” Markos highlighted a major challenge: the prevalence of informal e-commerce platforms that often supply inappropriate or counterfeit goods to customers. He suggested that these platforms should be brought into the formal sector to ensure the provision of authentic, reliable products. With Ethiopia’s online marketplace culture still in its early stages, Markos emphasized the need for regulation to prevent these informal platforms from having a significant negative impact on the economy. He also expressed concern that high tariff costs and lengthy processing times could discourage AliExpress from maintaining operations in Ethiopia, recommending that the process be streamlined to support sustainable growth.

Inside Ethiopia’s First IMF Review: Progress, Challenges, and Strategic Adjustments

Inside Ethiopia’s First IMF Review: Progress, Challenges, and Strategic Adjustments In a significant step to address longstanding economic challenges, the IMF recently completed its first review under the 48-month Extended Credit Facility (ECF) for Ethiopia. This arrangement, part of a comprehensive $10.7 billion support package from global partners, provides Ethiopia with about $3.4 billion in support to stabilize the economy, restore debt sustainability, and catalyze private sector-led growth. As Ethiopia navigates through transformative changes under its Homegrown Economic Reform Agenda (HGER), this program aims to manage macroeconomic imbalances, focusing on currency stability, fiscal reform, and structural adjustments across key sectors. Below is an in-depth analysis of Ethiopia’s economic trajectory, the reforms undertaken, and the outlook for the near future. Exchange Rate Reform: A Fundamental Shift One of the most impactful steps taken under the ECF has been Ethiopia’s shift to a market-determined exchange rate system, a change that addresses the long-standing overvaluation of the birr. Previously, Ethiopia operated with a fixed exchange rate, causing distortions and creating substantial demand for foreign exchange in parallel markets. This shift has brought the official exchange rate close to the parallel market rate, effectively reducing the premium and encouraging greater transparency in currency transactions. However, liquidity remains constrained, with banks cautious in their dealings and the interbank market seeing limited activity. This adjustment has led to an increase in the supply of foreign currency, although some unmet demand continues to impact businesses adjusting to the new rate. The transition to a floating exchange rate, however, is progressing smoothly. This development aligns with broader measures, including lifting import restrictions on 38 items and allowing commercial banks to handle foreign exchange previously held by the National Bank of Ethiopia (NBE). Notably, the FX market’s bid-offer spread has narrowed considerably, reflecting improved market alignment. While more liquidity and continued adjustment are needed, the initial response from both formal and informal sectors signals confidence in the new currency regime. Fiscal Consolidation and Revenue Mobilization The Ethiopian government has made strides in fiscal consolidation by cutting public spending, particularly in non-priority areas, and enhancing revenue mobilization through tax reforms. These steps align with Ethiopia’s new National Medium-Term Revenue Strategy, which focuses on expanding the VAT base, streamlining exemptions, and modernizing the tax administration framework. Such reforms have been facilitated by legislative changes to VAT laws, the introduction of excise stamps on specific goods, and a mandate to collect customs duties in line with the NBE’s daily exchange rates. On the expenditure side, a supplementary budget introduced measures to cushion vulnerable populations from the immediate impact of the reforms, including a transitional fuel subsidy to stabilize consumer prices. Ethiopia’s Productive Safety Net Program (PSNP) has also been scaled to extend more robust social protections, aiming to protect lower-income households from inflationary pressures. The government’s commitment to expanding social safety nets reflects a balanced approach to economic reform, recognizing the importance of safeguarding the population from the potential socio-economic strain of adjustment policies. Debt Management and SOE Reforms Restoring debt sustainability is a critical component of Ethiopia’s reform agenda, with the government actively negotiating debt restructuring agreements. Ethiopia has shown a strong commitment to managing its public sector debt, which includes planned restructurings under the Common Framework process with official creditors. The authorities aim to reach an agreement with official creditors in the coming months, followed by negotiations with commercial creditors. Additionally, the debt burden from major infrastructure projects, such as the Koysha dam, is under consideration for restructuring, with the government exploring concessional borrowing options. Significant structural reforms are also underway within Ethiopia’s State-Owned Enterprises (SOEs), which have traditionally been a major source of fiscal stress. The government implemented the first phase of a multi-year electricity tariff adjustment, targeting financial sustainability for Ethiopian Electric Power (EEP). These changes aim to stabilize the energy sector’s finances, setting the stage for improved service delivery and greater investment in infrastructure. SOE reforms are essential for macro-financial stability and represent a shift toward operational efficiency and financial accountability. Monetary Policy and Inflation Control Ethiopia’s transition toward a restrictive monetary policy is intended to counter inflationary pressures and stabilize the economy. The IMF and Ethiopian authorities have advocated for a gradual shift from quantitative controls to interest rate-based policy tools. This change is reflected in Ethiopia’s Treasury bill market, where rates are being adjusted to align with the monetary policy stance. Open market operations (OMOs) by the NBE have already absorbed substantial liquidity, helping curb inflationary pressures. The government’s policy of ending monetary financing of fiscal deficits further reinforces the commitment to price stability. With inflation still high, Ethiopia’s authorities plan to introduce more substantial rate hikes in 2025. This cautious approach to monetary policy aims to moderate inflation without destabilizing economic activity. The anticipated reduction in inflation, partly driven by these measures, is expected to create a more predictable environment for businesses and consumers alike. Outlook and Risks Looking forward, Ethiopia’s economy is projected to stabilize and grow at a rate of 7.5–8% annually over the medium term, bolstered by private sector-led growth and increased foreign direct investment. However, the path to recovery is fraught with challenges. Key risks include potential delays in external financing, social unrest related to rising prices, and the regional security landscape. With Ethiopia’s program hinging on sustained reform momentum and external support, any deviation from planned fiscal and monetary targets could amplify economic vulnerabilities. Additionally, exchange rate fluctuations and commodity price volatility pose risks to Ethiopia’s economic stability. The government must maintain a delicate balance, ensuring continued progress in reforms while remaining flexible to adapt to unforeseen economic shifts. Success will largely depend on Ethiopia’s ability to attract investment and continue its structural reforms, fostering a robust private sector and improving economic resilience. Ethiopia’s reform journey under the ECF reflects a comprehensive and ambitious effort to recalibrate its economy. By committing to currency liberalization, fiscal discipline, and SOE reforms, Ethiopia is addressing longstanding challenges that have constrained growth and limited economic opportunities. The IMF-backed program is a promising step toward economic stability and growth, setting a strong foundation for Ethiopia’s private sector and signaling to the international community its determination to overcome economic obstacles.

Ethiopian Airlines Welcomes Africa’s First Airbus A350-1000 to Its Fleet!

Ethiopian Airlines Welcomes Africa’s First Airbus A350-1000 to Its Fleet! In a landmark achievement for African aviation, Ethiopian Airlines has officially received Africa’s very first Airbus A350-1000 aircraft. The handover ceremony was held at Airbus headquarters in Toulouse, France, marking a milestone moment for both Ethiopian Airlines and the African aviation industry. This brand-new aircraft is scheduled to arrive at Addis Ababa Bole International Airport today, bringing with it a new standard of advanced air travel to the continent. This state-of-the-art aircraft, known as “Ethiopia, Land of Origins,” not only pays homage to Ethiopia’s rich cultural heritage but also symbolizes the airline’s commitment to connecting Africa with the world through modern, efficient travel. As the largest variant in the Airbus A350 family, the A350-1000 boasts a seating capacity of 400 passengers and includes luxurious features such as wider seats, high ceilings, and customizable ambient lighting for an unparalleled passenger experience. The quiet cabin and advanced in-flight entertainment systems ensure travelers a relaxing, engaging journey, particularly on long-haul flights. CEO Mesfin Tasew expressed his excitement about the addition, saying, “This latest addition to our fleet represents our commitment to providing our customers with the highest levels of comfort and innovation.” Ethiopian Airlines, already renowned for its award-winning service, now becomes the first African airline to operate this flagship aircraft, reinforcing its position as a global leader in aviation. The Airbus A350-1000 is celebrated not only for its comfort but also for its technological advancements and fuel efficiency. With Rolls-Royce Trent XWB engines, it reduces fuel consumption and CO₂ emissions by up to 25% compared to previous-generation models, supporting Ethiopian Airlines’ commitment to sustainable operations. With a range of 8,700 nautical miles, the aircraft is ideally suited to Ethiopian Airlines’ extensive network, enabling it to connect distant destinations non-stop. The acquisition of the A350-1000 aligns with Ethiopian Airlines’ Vision 2035 strategy, which aims to transport 67 million passengers annually and generate $25 billion in revenue. Ethiopian Airlines now joins an elite group of global carriers that operate the A350-1000, underscoring its dedication to delivering world-class service and elevating African aviation on the global stage. Stay tuned as Ethiopian Airlines embarks on this new chapter, combining innovation with luxury and expanding its role as a key player in connecting Ethiopia—and Africa—to the world with style and sophistication. 1 COMMENT Rodney Marinkovic November 6, 2024 At 1:41 am Ethiopian Airlines are prime examples in commercial aviation. In Africa and widely. Ethiopian Airlines are prime examples in commercial aviation. In Africa and widely. Comments are closed.

Ethiopia Opens Doors to Global Banking: Kenya, Morocco, and UAE Lead the Charge

Ethiopia Opens Doors to Global Banking: Kenya, Morocco, and UAE Lead the Charge Ethiopia is ushering in a new era of economic transformation by liberalizing its banking sector, allowing foreign banks to enter one of Africa’s fastest-growing markets. With the recent approval of a bill permitting foreign bank ownership, partnerships, and branch openings, Ethiopia is attracting interest from lenders across Kenya, Morocco, and the UAE. As one of Africa’s largest and most untapped banking markets, Ethiopia’s decision promises to reshape the landscape of its financial sector, infusing capital, innovation, and competition into the economy. Why Kenya, Morocco, and the UAE are Key Players in Ethiopia’s Banking Liberalization Each country has unique motivations for establishing a presence in Ethiopia’s emerging banking sector: Kenya: Known for its advanced banking and mobile money systems, Kenya brings a wealth of experience in financial technology and digital banking. Kenyan banks are expected to leverage their expertise to tap into Ethiopia’s vast unbanked population. Safaricom’s successful launch of M-Pesa in Ethiopia earlier this year demonstrates the high demand for digital financial solutions in the country. By expanding banking services, Kenya aims to strengthen regional economic integration and promote cross-border financial services between the two nations. Morocco: As one of North Africa’s leading financial hubs, Morocco has been steadily expanding its banking footprint across sub-Saharan Africa. Moroccan banks, such as Attijariwafa Bank and Banque Centrale Populaire, have extensive experience in entering new markets and adapting to local needs. By establishing a presence in Ethiopia, Moroccan lenders can deepen their influence in East Africa, contributing to greater financial inclusion and regional economic cooperation. For Morocco, Ethiopia presents both a market opportunity and a strategic gateway to broader East African expansion. United Arab Emirates (UAE): As a major global financial center, the UAE’s interest in Ethiopia reflects its ambition to strengthen trade and investment ties in Africa. UAE-based banks and financial institutions are well-capitalized, bringing global experience and financial innovation to Ethiopia. The UAE sees Ethiopia as a critical partner in its Africa strategy, aiming to invest in sectors like banking, logistics, and infrastructure. The UAE’s entrance into Ethiopia’s banking sector signals a broader investment strategy, fostering economic cooperation between the Middle East and Africa. Ethiopia’s Path to Economic Stability and Growth: IMF Support and Key Reforms The liberalization of Ethiopia’s banking sector aligns with broader economic reforms supported by a $3.4 billion International Monetary Fund (IMF) bailout, approved in July. This financial support came on the heels of Ethiopia’s efforts to float its currency, the Ethiopian birr, which has since lost about a third of its value against the dollar. By adopting a more flexible exchange rate system, Ethiopia aims to address chronic foreign exchange shortages and attract foreign investment. Despite concerns about inflation, the impact of the currency devaluation has been more manageable than anticipated. The shift from a quantity-based to an interest rate-based monetary policy has allowed Ethiopia’s National Bank (NBE) to control inflation effectively. Currently set at 15 percent, interest rates are expected to stabilize inflation and provide a steady foundation for Ethiopia’s economic transformation. NBE Governor Mamo Mihretu has emphasized the importance of maintaining a tight monetary policy to protect the birr’s value and contain inflation, which has gradually dropped from 33.9 percent in 2023 to 17.5 percent as of September 2024. Foreign Exchange Reforms: Boosting Ethiopia’s Financial Resilience As part of its broader financial reforms, Ethiopia recently repealed a surrender provision that required banks to deposit 70 percent of foreign currency inflows with the central bank (later revised to 50 percent). This change has unlocked greater flexibility for banks, enhancing their ability to support trade and investment. The NBE’s foreign exchange reserves have surged by 152 percent, and remittances through the Commercial Bank of Ethiopia have increased by 60 percent year-on-year. These developments point to a healthier financial system that is better equipped to support Ethiopia’s ambitious economic goals. Ethiopia’s Debt Landscape: A Focus on Sustainable Restructuring Ethiopia’s economic reforms have also extended to managing its significant debt obligations. The IMF-backed financial package has been instrumental in unlocking additional funds from the World Bank and other partners, amounting to commitments of over $16 billion. Nevertheless, Ethiopia is in active negotiations with bondholders and creditors to restructure its debt, with the government proposing an 18 percent reduction on its $1 billion bond. The proposal has met resistance from bondholders, who argue that the suggested terms do not align with Ethiopia’s economic fundamentals. Despite these challenges, Mihretu has expressed optimism, noting that negotiations are proceeding in “good faith.” Resolving these debt issues is critical for Ethiopia to achieve long-term financial stability and maintain investor confidence. Digital Finance: The M-Pesa Revolution and Ethiopia’s Mobile Money Boom A key feature of Ethiopia’s financial reforms has been the adoption of mobile money, led by Kenyan operator Safaricom’s launch of M-Pesa in May. Within months, M-Pesa gained over one million Ethiopian users, illustrating the high demand for digital financial services. Last month, Safaricom expanded its offerings by launching M-Pesa Global, enabling cross-border transfers between Kenya and Ethiopia. The rise of mobile money services is transforming Ethiopia’s financial landscape. According to Mihretu, digital transactions through M-Pesa and Ethio Telecom’s telebirr have outpaced physical transactions, highlighting the rapid shift towards a cashless economy. While NBE is not actively seeking additional mobile money providers, Mihretu noted that the bank would consider expressions of interest from other operators, emphasizing Ethiopia’s commitment to expanding financial access. Opportunities and Challenges Ahead As Ethiopia opens its banking sector to global players, it offers substantial opportunities for foreign investors. The country’s young and rapidly growing population presents a significant market for retail banking, digital services, and mobile money. The liberalization of banking is expected to drive competition, improve customer service, and foster innovation within Ethiopia’s financial ecosystem. However, challenges remain. The economic toll of recent conflicts, combined with structural issues such as inflation and foreign exchange scarcity, underscores the importance of careful management and ongoing reform. Ethiopia’s success in stabilizing its economy and attracting sustainable investment will depend on its ability to balance economic growth with financial stability. Ethiopia’s Economic Future: A Vision of Growth and Integration With Kenya, Morocco, and the UAE leading the charge, Ethiopia’s liberalization is a milestone in African banking. The entry of foreign banks promises to elevate Ethiopia’s financial sector, integrate it more deeply into the global economy, and lay the foundation for sustained growth. By focusing on digital finance, financial inclusivity, and economic reforms, Ethiopia is positioning itself as a competitive and dynamic economy in the African landscape. As the country opens its doors to the world, it is clear that Ethiopia’s journey is one of resilience and transformation, driven by bold reforms, strategic partnerships, and a commitment to building a robust financial future. This new era in Ethiopian banking will not only reshape the country’s financial system but could also serve as a model for other emerging economies seeking sustainable growth through financial liberalization. 5 COMMENTS Belete Haileyesus November 5, 2024 At 5:32 pm the news look interesting with regards to Ethiopian economic reform program and progress. the news look interesting with regards to Ethiopian economic reform program and progress. Moe November 5, 2024 At 11:37 pm Freedom and peace should go side by side with the financial growth too. Currently, Ethiopia is hell. There are serious wars every corner. The current leader is one of the worst dictator in African history . Freedom and peace should go side by side with the financial growth too. Currently, Ethiopia is hell. There are serious wars every corner. The current leader is one of the worst dictator in African history . Alemu November 6, 2024 At 3:37 pm Finance is outside the domain of knowledge, but I guess it needs peace, stability, freedom of movement and institutional efficiency and credibility. All these are missing in Ethiopia and unlike the writer I cannot see a bright future. Finance is outside the domain of knowledge, but I guess it needs peace, stability, freedom of movement and institutional efficiency and credibility. All these are missing in Ethiopia and unlike the writer I cannot see a bright future. Alemu November 6, 2024 At 3:38 pm Finance is outside the domain of my knowledge, but I guess it needs peace, stability, freedom of movement and institutional efficiency and credibility. All these are missing in Ethiopia and unlike the writer I cannot see a bright future. Finance is outside the domain of my knowledge, but I guess it needs peace, stability, freedom of movement and institutional efficiency and credibility. All these are missing in Ethiopia and unlike the writer I cannot see a bright future. Henry November 6, 2024 At 5:03 pm Ethiopians leaders are doing some good work on the national and international front creating great opportunities for our people. We the people need to do our part in unity with our government and leaders to make this country work for all Ethiopians in peace and harmony. Government along cannot make peace we the people must look at ourselves and realize Ethiopian is for Ethiopians and work to make it better for our children and the next generation Ethiopians leaders are doing some good work on the national and international front creating great opportunities for our people. We the people need to do our part in unity with our government and leaders to make this country work for all Ethiopians in peace and harmony. Government along cannot make peace we the people must look at ourselves and realize Ethiopian is for Ethiopians and work to make it better for our children and the next generation Comments are closed.