News: Ethiopian Bondholders and Debt Distribution Unveiled by Debt Justice

News: Ethiopian Bondholders and Debt Distribution Unveiled by Debt Justice Debt Justice has recently identified Capital Group, BlackRock, and Franklin Advisors as the three largest known holders of Ethiopian bonds. These institutions represent a significant portion of Ethiopia’s international debt landscape, underscoring the critical role of private creditors in the country’s economic stability. According to the latest report from Debt Justice, ten major bondholders collectively own USD 304 million of Ethiopia’s total bond issuance, which amounts to USD 1 billion. The bondholders include a diverse mix of financial institutions: Franklin Advisors, BlackRock, Capital Group, Eaton Vance, Wellington Management Company, ABN, UBS, Vontobel, Newton Investment Management, and Azimut Capital Management. This group is predominantly made up of US-based companies, with five of the ten hailing from the United States. The remaining institutions include two from the United Kingdom, two from Switzerland, and one from Italy, reflecting the global nature of Ethiopia’s debt exposure. The report sheds light on the critical influence these financial entities have over Ethiopia’s debt servicing and economic future. Their decisions regarding bond repayment schedules, interest rates, and potential debt restructuring are pivotal as Ethiopia navigates its economic challenges. In addition to the bondholders, a recent study by Christian Aid has brought attention to the broader landscape of Ethiopia’s external debt. The research reveals that other non-Chinese private lenders are owed a staggering USD 3.1 billion. The breakdown of this debt highlights the international nature of Ethiopia’s financial obligations: USD 1.2 billion is owed to US financial institutions, USD 470 million to Swiss lenders, USD 360 million to Italian creditors, USD 310 million to Japanese financiers, and USD 260 million to UK-based institutions. This data underscores the complex web of international finance that Ethiopia is entangled in, with significant implications for the country’s ability to achieve long-term financial stability. The presence of such a diverse group of creditors also suggests that Ethiopia’s economic health is closely tied to the global financial market’s sentiments and policies. As Ethiopia seeks to manage its debt, the involvement of these influential bondholders and private lenders will be crucial in determining the country’s path forward. Debt Justice and Christian Aid’s findings highlight the pressing need for transparent and equitable debt restructuring processes. As the international community increasingly calls for debt relief for developing nations, the role of private creditors, like those holding Ethiopian bonds, will be central to these discussions. The outcomes of such negotiations will significantly impact Ethiopia’s development trajectory, its social programs, and its broader economic recovery efforts.

Wegagen Bank Launches International Prepaid Visa Card Service at Diaspora Day Event

Wegagen Bank Launches International Prepaid Visa Card Service at Diaspora Day Event Mekelle, August 15, 2016During the Diaspora Day celebration held at Planet Hotel in Mekele City, Wegagen Bank announced the launch of its new international prepaid Visa card service. This service, developed in collaboration with Visa Incorporated, enables customers of the bank, as well as embassies and international organizations, to make global payments without the need to carry cash. The event, attended by prominent officials, including Dr. Atsbha Ge/Egzehabiher, Head of the Culture and Tourism Bureau of the Tigray Region Interim Administration, highlighted the importance of such financial innovations. Dr. Atsbha encouraged the Ethiopian Diaspora to explore tourism and investment opportunities within the region. Solomon Tesfaye, Deputy Executive Officer of Wegagen Bank’s Technology Department, noted that the new service allows customers to use the international Visa card for transactions at ATMs and payment terminals (POS) worldwide, eliminating the need to carry foreign currency. Wegagen Bank, established on June 4, 1989, with an initial paid-in capital of 30 million ETB from 16 investors, has grown substantially over the years. The bank now boasts a paid-up capital exceeding 5 billion ETB and a total capital of more than 10 billion ETB. Operating 438 branches nationwide, Wegagen Bank provides a range of regular and interest-free banking services, along with digital offerings through 385 ATMs, 430 payment processing machines, 4,800 agents, as well as internet and mobile banking. The bank recently introduced the ‘Efoita’ digital loan service application, designed to support micro, small, and medium enterprises seeking credit services.

Ethiopian Airlines and AliExpress to Launch Cutting-Edge E-Commerce Facility on August 22, 2024

Ethiopian Airlines and AliExpress to Launch Cutting-Edge E-Commerce Facility on August 22, 2024 Ethiopian Airlines Group, the largest airline conglomerate in Africa and one of the fastest-growing airline brands globally, has launched a new e-commerce logistics facility in Addis Ababa. This facility is part of a broader strategy to position Addis Ababa as a key cross-border e-commerce logistics hub for Africa. The facility is located within the Ethiopian Cargo & Logistics premises and spans 15,000 square meters, with the capacity to handle 150,000 tons of goods annually. This development comes in conjunction with Ethiopian Airlines’ partnership with AliExpress, the Chinese online retail giant under Alibaba Group. AliExpress is set to officially launch its services in Ethiopia on August 22, 2024, at the Skylight Hotel on Airport Road, an event that will be attended by senior executives from both companies. The newly inaugurated facility is designed to cater to the growing demands of e-commerce, mail, and courier logistics services. It is equipped with advanced technology for processes such as consolidation, deconsolidation, sortation, repacking, and labeling. Ethiopian Airlines has highlighted the facility’s potential to streamline logistics and enhance the efficiency of goods transportation and delivery within Africa’s e-commerce industry. Ethiopian Airlines Group CEO, Mr. Mesfin Tasew, commented on the launch, stating that the facility represents a significant step forward for both the airline and the broader African economy. The $55 million investment aims to bridge logistical gaps and support the development of e-commerce services in Ethiopia and across the continent. AliExpress, which was launched in 2010, is part of Alibaba Group’s broader commerce portfolio and allows small businesses from China and other regions, including Singapore, to sell products to international online shoppers. The partnership with Ethiopian Airlines is expected to enhance the ability of businesses to reach global markets and is viewed as a significant development for Ethiopia’s emerging e-commerce sector. In parallel with these developments, the Ministry of Innovation & Technology (MINT) is preparing to launch Ethiopia’s first national e-commerce strategy. This five-year plan is intended to address existing regulatory gaps and expand the e-commerce landscape, making it more accessible to both local and international markets. The strategy will outline a regulatory framework for various e-commerce models, including business-to-business (B2B), business-to-consumer (B2C), and consumer-to-consumer (C2C) transactions, and aims to increase foreign exchange earnings and support technological advancements within the sector. Ethiopian Cargo and Logistics Services, which operates under Ethiopian Airlines Group, has received several awards for its services, including “Best Cargo Airline-Africa” at the Maiden Arabian Cargo Awards and “Sustainable Cargo Airline of the Year-Africa” at the 2023 Freight Week Sustainability Awards. These accolades highlight the airline’s role in the logistics sector, particularly in supporting the growth of e-commerce in Africa. Ethiopian Airlines operates a fleet that includes Boeing 737s, 777s, 787s, Airbus A350-900, and Bombardier Dash 8-400 double cabin aircraft. The airline serves over 150 domestic and international destinations across five continents. As part of its Vision 2035 strategic plan, Ethiopian Airlines aims to position itself as one of the top 20 most competitive and leading aviation groups in the world by continuing to innovate and expand its services.

Ethiopian Ministry of Foreign Affairs Imposes New Restrictions on Vehicle Imports for Diplomatic Missions

Ethiopian Ministry of Foreign Affairs Imposes New Restrictions on Vehicle Imports for Diplomatic Missions Addis Ababa, Ethiopia – August 19, 2024: The Ministry of Foreign Affairs of the Federal Democratic Republic of Ethiopia has introduced new regulations affecting the importation of vehicles by Diplomatic and Consular Missions, as well as Regional and International Organizations operating within Addis Ababa. The Ministry has officially informed these entities that, effective immediately, the importation of vehicles powered by internal combustion engines—namely petrol and diesel engines—is prohibited. This move is part of Ethiopia’s ongoing efforts to address the pressing challenges posed by climate change and to align with the country’s broader environmental objectives. The directive aims to contribute to the reduction of carbon emissions by encouraging the use of electric vehicles (EVs) among the diplomatic community. According to the Ministry, this regulation is intended to ensure that Ethiopia’s international partners actively participate in the nation’s commitment to environmental sustainability. Entities with diplomatic privileges are now required to comply with this directive if they wish to continue benefiting from duty-free importation of vehicles. The Ministry’s communication reiterates Ethiopia’s commitment to its climate goals, highlighting the importance of transitioning to renewable energy sources. By enforcing this regulation, the Ethiopian government is signaling its intention to lead by example in the global effort to combat climate change. The new regulation has been met with a range of responses from the diplomatic community. Some missions have already begun transitioning to electric vehicles, while others are assessing the implications of the policy on their operations. The Ministry has assured that it will continue to engage with the affected entities to facilitate a smooth transition and to address any concerns that may arise during the implementation process. This policy shift is part of a broader initiative by the Ethiopian government to reduce its carbon footprint and to promote the use of sustainable technologies. The directive also aligns with global trends, as many countries and international organizations are increasingly adopting policies that favor electric vehicles over traditional fossil fuel-powered vehicles. The Ministry of Foreign Affairs has taken this opportunity to renew its assurances to all Diplomatic and Consular Missions, as well as Regional and International Organizations, affirming its commitment to maintaining strong and cooperative relationships while advancing Ethiopia’s environmental goals. For further inquiries and clarifications, the Ministry can be contacted at: Ministry of Foreign Affairs of EthiopiaMenelik II Avenue, Addis Ababa, EthiopiaTel: +251 11 551 73 45Fax: +251 11 551 43 00Email: [email protected]Web: www.mfa.gov.et

Amhara Bank Reports 377.2 Million Birr Profit, Showcasing Growth in Deposits and Digital Services

Amhara Bank Reports 377.2 Million Birr Profit, Showcasing Growth in Deposits and Digital Services Amhara Bank has announced its financial results for the previous fiscal year, reporting a pre-tax profit of 377.2 million birr. The results reflect the bank’s ongoing efforts to strengthen its financial position and expand its presence in Ethiopia’s banking sector. According to a press release issued by the bank, the total deposits at Amhara Bank have reached 25.1 billion birr, a figure that underscores the growing confidence customers place in the institution. The bank has also reported a significant extension of credit, with loans amounting to 20.3 billion birr disbursed across various economic sectors. This lending activity is indicative of the bank’s role in promoting financial access and inclusion, particularly in sectors that are key to the country’s economic growth. In addition to the financial results, Amhara Bank has reported considerable growth in its customer base. The bank now serves over 1.8 million customers, a notable increase that highlights the bank’s efforts to broaden its market share. Digital banking services have also seen substantial uptake, with more than 571,000 customers engaging in mobile banking and over 50,000 customers utilizing bank cards. This trend towards digitalization is in line with the bank’s strategy to enhance the customer experience and expand its service offerings. The bank’s caretaker general manager, Mr. Chanyalew Demise, commented on the results, stating that the strong financial performance is a testament to the bank’s strategic initiatives and its commitment to serving its customers. He emphasized that the bank remains focused on expanding its services and maintaining a customer-centric approach as it continues to grow in the competitive Ethiopian banking industry. Amhara Bank’s latest financial results position it as a significant player in Ethiopia’s banking sector, with its ongoing investments in digital banking and customer service expected to drive further growth in the coming years. As the bank continues to implement its strategic vision, stakeholders will be closely monitoring its performance in the context of the broader economic environment.

Addis Ababa Prepares for Corridor Development Phase II: Linking City Center with Expanding Neighborhoods

Addis Ababa Prepares for Corridor Development Phase II: Linking City Center with Expanding Neighborhoods In a significant development for Addis Ababa’s urban planning, Phase II of the city’s corridor project is set to build on the achievements of Phase I, which enhanced urbanization and infrastructure. This upcoming phase aims to refine and extend the successes of its predecessor by integrating effective practices and addressing previous challenges. The new phase is expected to link the city center with key entry points and expanding neighborhoods, promising to enhance connectivity and foster a more cohesive urban landscape for Addis Ababa’s residents. Key Features of Phase II Corridor Development Enhanced Connectivity Across Key Areas Phase II of Addis Ababa’s corridor development, spanning a total of 43 kilometers, is set to enhance connectivity across key areas of the city, including the Bole, Lemi Kura, and Akaki Kaliti sub-cities. The project encompasses several major segments: A 14.8-kilometer stretch from Anbessa Garage (Kelebet Menged) through Mebrat Hayil, Goro, and Koye Square. A 12.8-kilometer route linking Bole Cargo, Bulbula, and Koye Square. A 4.4-kilometer corridor connecting Bole Bridge to Bole Homes, Airport VIP Entrance, and Goro. A 5-kilometer stretch from Goro Square to Seba Hulet Area, Summit Soft Factory Area, and Fiyel Bet, ending at CMC Square. A 5.9-kilometer segment from Fiyel Bet to Figa, Sahelit Mhiret Square, and Jacross. Spatial Scope and Phases The spatial scope is structured into two key phases: Phase One includes routes starting from 4 Kilo to Piasa and ending at Mexico Square, and from Mexico Square connecting Sarbet,Qera,Wello Sefer, Bole,Megenagna & CMC. Phase Two features routes connecting Anbessa Garage (Ring Road) to Koye Square, Bole Cargo to Koye Square, Bole Bridge to Goro, a 5-kilometer stretch from Goro Square to CMC Square, and a 5.9-kilometer segment from Fiyel Bet to Jacross. Comprehensive Infrastructure Initiatives Airport Cargo to Bulbula Corridor Development The Airport Cargo to Bulbula corridor development plan spans a total area of 566.57 square meters and includes: Neighborhood parks Woreda-level parks Recreational facilities Sport fields A multifunctional forest River buffer zones Sub-city level parks A cultural and civic center A secondary school A telecom station A water reservoir Low-density mixed residences Surface parking Comprehensive road networking Bole Homes to Anbessa Garage and ICT Park Corridor The Bole Homes to Anbessa Garage and ICT Park corridor covers 798.15 square meters and incorporates: River buffer zones Woreda sport fields Neighborhood and city-level parks Multifunctional forests A health center A cultural and civic center High-density mixed residences A secondary school Governmental institutions An electric power station A bus depot High-tension electric lines Small markets A hospital A relocation site A fire and emergency center Woreda administration offices A sport center A freight terminal Extensive road networks Koye Feche Roundabout to Bulbula River Corridor Development The Koye Feche Roundabout to Bulbula River corridor development plan covers 3383 square meters and features: River buffers Woreda and city-level parks High-tension electric line buffers Hot springs Multifunctional forests Manufacturing and storage facilities High-density and low-density mixed residences A wastewater management and treatment station Small markets Recreational facilities Secondary schools Road and setback regulations Revised Setback Regulations and Infrastructure Enhancements A document obtained by Addis Insight shows that “central to the revised setback regulations is the establishment of a minimum 10-meter buffer on major roads to accommodate pedestrian and bicycle traffic, with flexibility for adjustments based on findings.” The infrastructure plan details essential components such as: Taxi stations Public restrooms Provisions for incorporating multi-story buildings and arcades into existing developments Insights from Phase I and Future Urban Planning Building on insights from Phase I, the study advocates for: Creating alternative routes Expanding the capacity of internal roads Converting certain roads into collector routes to ease congestion and optimize traffic management Additionally, enhancing green spaces is a key focus, with plans for: New plazas Expanded parks Riverside developments Setting Construction Standards and Aligning Major Projects The study also underscores the importance of setting construction standards that cater to both temporary commercial uses and permanent, high-density developments. It addresses the need for: Standardized fencing around critical institutions and industrial areas Aligning major national projects such as Gelan Gura Village and the Windows Of Africa Project with the city’s broader development strategy Special Attention to Gateway Projects Special attention will be given to gateway projects that bolster Addis Ababa’s connectivity with Ethiopia and Africa, reinforcing the city’s status as a major urban hub. Addressing Gaps and Ensuring Cohesive Development A document obtained by Addis Insight shows that “some developments remain uncoordinated or disconnected, particularly in areas such as between Bole Cargo and Bole Michael, as well as between Summit Soft Factory and Derartu Square.” To address these gaps, a uniform design framework is being established to ensure that the corridors bordering Sheger City develop in a cohesive manner, thereby promoting an integrated and well-coordinated urban environment. 3 COMMENTS Abyot A August 17, 2024 At 12:10 am Substandard, insensitive, unbalanced, insubstantive & callous report. Shame, shame, shame. Substandard, insensitive, unbalanced, insubstantive & callous report. Shame, shame, shame. Satenaw Abay August 17, 2024 At 12:58 am Let us be real The country is torn apart by a war sponsored by Prime minister Abiy Ahmed( a novel prize recipient for peace) in every part of the county. Instead of creating peace in the country he is busy planning trees and decorating the city. We Ethiopians are waiting for a time for this fake prime minister and his corrupted government to go. Let us be real The country is torn apart by a war sponsored by Prime minister Abiy Ahmed( a novel prize recipient for peace) in every part of the county. Instead of creating peace in the country he is busy planning trees and decorating the city. We Ethiopians are waiting for a time for this fake prime minister and his corrupted government to go. Takele Desisa August 17, 2024 At 9:31 am Great. Keep it up! Don’t give up! Great. Keep it up! Don’t give up! Comments are closed.

IMF Sets Critical Deadlines and Preconditions for Ethiopia’s Access to Extended Credit Facility Funds

IMF Sets Critical Deadlines and Preconditions for Ethiopia’s Access to Extended Credit Facility Funds The International Monetary Fund (IMF) has laid out a series of critical deadlines and stringent preconditions that Ethiopia must meet to access funds under the Extended Credit Facility (ECF). This comes at a crucial time when the Ethiopian economy is navigating complex challenges, including a liquidity crisis and the need for structural reforms. Continuous Conditionality for Fund Release One of the central aspects of the IMF’s conditions is the implementation of continuous conditionality measures. These include: Non-Imposition of Restrictions: Ethiopia must refrain from imposing or intensifying restrictions on the making of payments and transfers for current international transactions. This is crucial for maintaining the free flow of international trade and investment. Currency Practices: The introduction or modification of multiple currency practices is prohibited. This ensures the Ethiopian Birr operates under a unified and transparent currency system. Bilateral Payments Agreements: Ethiopia is prohibited from entering into bilateral payments agreements that contravene Article VIII of the IMF’s Articles of Agreement. This condition seeks to ensure Ethiopia’s compliance with international financial standards. Import Restrictions: Ethiopia must avoid imposing or intensifying import restrictions for reasons related to balance of payments. This is intended to prevent any disruptions in the import of essential goods and services. Legal Amendments and Governance Overhaul In addition to continuous conditionality, the IMF has set specific deadlines for Ethiopia to undertake significant legal and institutional reforms. By End-December 2024, the National Bank of Ethiopia (NBE) is required to submit comprehensive draft legal amendments to the NBE Proclamation to the Ethiopian Parliament. These amendments, which must be prepared in consultation with IMF staff, are aimed at: Updating and modernizing the governance of the NBE. Enhancing the decision-making structure of the NBE with internal checks and balances. Improving accountability, transparency, and autonomy within the NBE. Phasing of IMF Disbursements The disbursement of funds under the ECF is intricately linked to Ethiopia’s compliance with these preconditions. The IMF has proposed a phased approach to access, with specific amounts allocated for release upon successful completion of review checkpoints. Key dates include: September 10, 2024: USD 255.60 million is scheduled for disbursement following the observance of continuous performance criteria (PCs) and completion of the first review. December 10, 2024: Another USD 191.70 million will be released upon meeting the PCs for September 2024 and the second review. Further disbursements are scheduled through April 15, 2028, contingent on Ethiopia’s ongoing adherence to the specified performance criteria and completion of subsequent reviews. A Strategic Imperative for Economic Stability These measures underscore the IMF’s strategic imperative to drive Ethiopia towards economic stability and sustainable growth. The onus is now on the Ethiopian government to implement the necessary reforms and maintain compliance with the IMF’s stringent conditions. Failure to meet these deadlines could result in the withholding of critical financial support, which could exacerbate the country’s economic challenges. As Ethiopia moves towards these pivotal dates, the international community will be closely monitoring the country’s progress. The successful implementation of these reforms could pave the way for a more resilient and robust Ethiopian economy in the years ahead.

A Tale of Two Times: Aklilu Lemma and Heman Bekele’s Timeless Innovations in Soap

A Tale of Two Times: Aklilu Lemma and Heman Bekele’s Timeless Innovations in Soap From Ethiopia to the World: The Transformative Power of Soap in the Hands of Two Visionaries In the rich tapestry of Ethiopia’s history, two figures stand out for their innovative use of a seemingly simple substance: soap. Aklilu Lemma, a pioneering scientist, and Heman Bekele, a young prodigy, have both harnessed the power of soap to address some of the world’s most pressing health challenges. Their stories, separated by decades but united by a shared heritage and a common goal, highlight the profound impact that ingenuity, nurtured in Ethiopia, can have on the global stage. Aklilu Lemma: A Soap to Fight Disease Born in 1935 in Addis Ababa, Aklilu Lemma grew up with a deep curiosity about the natural world. This curiosity led him to study biology and medicine, eventually culminating in a discovery that would revolutionize the fight against schistosomiasis, a debilitating parasitic disease affecting millions in developing countries. Aklilu’s breakthrough came from observing a traditional Ethiopian practice. Women in rural areas used the berries of the Endod plant (Phytolacca dodecandra) as soap for washing clothes. He noticed that in the rivers where this practice was common, the freshwater snails that spread schistosomiasis were notably absent. Intrigued, Aklilu conducted research and found that the saponins in the Endod plant were effective in killing these snails, thus breaking the cycle of disease transmission. This discovery was a game-changer. It provided a simple, cost-effective, and locally available method to combat a deadly disease. Aklilu’s work earned him international recognition and numerous awards, including the prestigious Right Livelihood Award. His legacy lives on as a testament to how traditional knowledge, coupled with scientific inquiry, can lead to groundbreaking solutions. Heman Bekele: A Soap to Fight Cancer Fast forward to the present day, and another Ethiopian, Heman Bekele, is making waves with his own soap-related innovation. Born in Addis Ababa and raised in the United States, Heman has always been driven by a passion for science. This passion, combined with a deep concern for public health, led him to create a soap that could one day treat and prevent multiple forms of skin cancer. Heman’s inspiration came from observing the harsh realities of sun exposure. He recalled seeing laborers in Ethiopia working under the scorching sun without protection, a memory that stayed with him even after moving to the U.S. Determined to make a difference, Heman began researching skin cancer and the potential treatments available. He learned about imiquimod, a drug that shows promise in fighting various forms of skin cancer but is often expensive and inaccessible. Heman’s solution was both simple and ingenious: a bar of soap infused with lipid-based nanoparticles carrying the drug. This would allow the therapeutic agent to linger on the skin even after washing, making it more accessible and affordable than traditional treatments. His invention won him the 3M Young Scientist Challenge, along with $25,000 to further his research. The Road to TIME’s Kid of the Year 2024 Heman’s dedication to solving a global health issue did not go unnoticed. In October 2023, his innovative work earned him the prestigious title of 3M Young Scientist Challenge winner. But that was just the beginning. The recognition of his groundbreaking idea and his commitment to public health propelled him into the national spotlight. Heman’s story of perseverance, creativity, and a desire to make a meaningful impact on the world caught the attention of TIME magazine. Each year, TIME selects a Kid of the Year who exemplifies extraordinary achievement and promise. Heman, with his vision of creating a soap that could revolutionize skin cancer treatment, fit the bill perfectly. His ability to think beyond the conventional and address a critical health issue with such a simple yet effective solution led TIME to name him Kid of the Year for 2024. As Kid of the Year, Heman joins an elite group of young innovators who are making a difference in the world. His recognition by TIME magazine highlights not only his individual brilliance but also the broader potential of young people to contribute to global solutions. It’s a reminder that age is no barrier to innovation, and that the drive to help others can lead to remarkable achievements. Ethiopia and the Power of Soap Though separated by time and the specifics of their work, Aklilu Lemma and Heman Bekele share a common thread that ties them to their Ethiopian roots. Both saw potential in a simple bar of soap—a household item often taken for granted—and transformed it into a tool for public health. Their innovations are not just about soap; they are about harnessing local knowledge, addressing global health challenges, and improving lives. Ethiopia, with its rich history and vibrant culture, has produced countless visionaries who have made significant contributions to the world. Aklilu and Heman are part of this legacy, demonstrating how a blend of traditional practices and modern science can yield solutions that resonate far beyond their origins. In a world where health disparities are often stark, the stories of these two Ethiopians offer a powerful reminder: sometimes, the simplest ideas—rooted in everyday life—can have the most profound impact. Whether it’s using a plant-based soap to combat a parasitic disease or infusing a bar of soap with cancer-fighting agents, the ingenuity and determination of Aklilu Lemma and Heman Bekele continue to inspire, proving that great ideas can come from anywhere, and that they can change the world.

From Wallets to Wheels: How Ethiopia’s Forex Change Will Drive Up Car Costs

From Wallets to Wheels: How Ethiopia’s Forex Change Will Drive Up Car Costs For many Ethiopians looking to buy a car, the recent changes in the foreign currency exchange market will be more than just economic news; they will directly impact their wallets. As the value of the birr fluctuates against major currencies, the cost of importing vehicles is expected to surge, leading to noticeable price increases at dealerships. This situation will create a ripple effect across the automotive market, with consumers likely to feel the pinch and dealers adjusting their strategies to cope with the new reality. This article sheds light on how the recent shift to a market-based forex rate policy will reshape car prices and what it will mean for both buyers and sellers in today’s evolving landscape. For many Ethiopians, buying a car has always been a significant financial decision. But recent shifts in Ethiopia’s foreign exchange rate policy are turning this decision into a more complex and costly affair. With the introduction of a market-based forex exchange rate, the landscape of car buying in Ethiopia is evolving rapidly, leaving consumers, dealerships, and manufacturers navigating a new terrain. The shift from a fixed to a market-based exchange rate aims to enhance economic stability and attract foreign investment. Initially, vehicle pricing and import dynamics will be most affected, as freer access to foreign currency could improve vehicle and parts supply. However, birr fluctuations are likely to increase import costs, raising retail car prices. This may strain consumer budgets, change purchasing behaviors, and challenge dealers in managing costs and inventory, impacting their sales strategies and market dynamics. Getahun Sitotaw, Finance and Procurement Manager at Belayab Motors, explained that previously, they had to request foreign currency from banks. Now, however, banks approach them directly. This shift is crucial for their import-reliant country. He noted that after the transition to a market-based exchange rate, some sellers initially raised car prices due to the rise in USD. These prices later adjusted as the initial increase was found to be unwarranted. Sitotaw pointed out that they can only acquire foreign currency through official markets, where the value of 1 USD has climbed from ETB90 to roughly ETB110. Alongside this, taxes, freight costs, and the LC rate have also seen increases. The 14% credit cap has impacted financing, and the transition to a floating exchange rate has increased operational costs. Despite these difficulties and the birr’s 100% devaluation, they do not plan to raise car prices by 100%. Instead, they will adjust prices according to current market conditions and remove previously added costs. The birr’s devaluation has diminished clients’ purchasing power, which might influence their interest in purchasing vehicles. In addition to the limited loan availability in the country, smaller automotive dealers and importers, who may struggle with the higher costs and financial uncertainties associated with the market-based exchange rate, might face financial difficulties. This could lead to a consolidation trend, where larger companies acquire smaller ones to gain market share and stabilize their operations. The new exchange rate system may drive innovation within the automotive sector. As businesses adjust to the changing economic landscape and ongoing major macroeconomic reforms, there could be a rise in investment in research and development. This increased focus on innovation might lead to the creation of more cost-effective solutions and new vehicle models that align with the shifting market demands. “When assessing the implications of the recent reform, it’s important to consider various perspectives,” says Tilahun Girma, a seasoned Finance Consultant and respected commentator across multiple media outlets. He adds, “The shift to a market-based exchange rate will affect both official and parallel market importers by doubling customs duties and taxes, which will lead to higher car prices. However, this reform will allow the government to collect accurate taxes from imports, and banks will benefit from currency transactions. While the birr is expected to appreciate in the future, potentially lowering costs, predicting the timing of this is challenging. Ensuring a stable supply of foreign currency is crucial.” Girma also notes that Ethiopia may attract foreign investors, enhance the competitiveness of local investors, and open opportunities in cryptocurrency and capital markets. Domestic car assemblers will benefit from improved access to foreign currency for importing parts and lower labor costs, which will help reduce prices and make locally assembled cars a viable option alongside overseas-assembled vehicles. This development could also pave the way for additional local car assembly plants. However, individuals with fixed, minimum salaries may struggle to afford cars. Despite this, some private companies may adjust salaries to keep pace with inflation, which could help sustain demand for cars despite salary constraints. “The shift to a floating currency has led primary farmers to increase the prices of their products, which is discouraging nearly all exporters. This development should be monitored to support export activities, as they are crucial for foreign currency generation and the import business,” says Sitotaw. Ethiopia’s economic landscape is undergoing an exciting transformation, offering a glimpse into a future full of promise and potential. As the nation navigates its path through evolving market conditions, industries across the board are embracing new opportunities for growth and innovation. This period of change reflects a broader ambition to enhance competitiveness and foster resilience, not only within the automotive sector but throughout the entire economy. With increased investment in research, development, and local production, Ethiopia is positioning itself for a more dynamic and prosperous future. As the country continues to adapt and evolve, it is setting the stage for a vibrant economic environment that embraces progress and drives long-term success for all. To ensure that these benefits reach all segments of society, particularly the economically disadvantaged, targeted policies and support programs should be implemented to mitigate the impact of rising costs and enhance access to essential goods and services.