Your weekly shot of Ethiopia’s freshest business, tech, and finance news.
Before you sip your buna, catch up on the biggest shifts and smart plays shaking Ethiopia.
Tax Talk | Policy Moves Stir the Pot
Deposit Tax Hike Sparks Industry Backlash
The Ministry of Finance has doubled the tax on deposit interest from 5% to 10%, raising eyebrows across the banking sector.
At the Ethiopian Finance Forum, Zemen Bank President Dereje Zebene warned the hike could discourage savings, tighten liquidity, and stifle lending.
“The saving rate is effectively negative,” he stressed, as inflation (~13.9%) outpaces deposit interest (~7%), wiping out real returns.
Ethiopia’s savings-to-GDP ratio plunged from 33% in 2018 to just 18% in 2024, highlighting deepening macroeconomic stress (UNDP). The Reporter
Private Banks Push Back Against Forced Mergers
The National Bank of Ethiopia (NBE) is demanding private banks meet the 5 billion Birr minimum capital by June 2026—or face mandatory mergers.
NBE’s Solomon Desta stated: “We will enforce bank mergers if targets aren’t met.”
However, banks argue such moves threaten their governance models and ignore Ethiopia’s unique bank structures—often built around community, religion, or ethnicity.
Some experts suggest alternate paths like foreign investment, public listings, or strategic alliances, instead of forced unions. Read more
Reforms in Motion | Glimmers of Progress
Macroeconomic Reform One Year On: Progress & Pain Points
NBE’s mid-year review paints a mixed but promising picture:
✅ Inflation fell to 13.9% (from 20%)
✅ FX inflows jumped 33% to $32B
✅ Bank deposits soared 41% to Birr 3.5T
✅ Reserves tripled, remittances hit $7.1B
Still challenging: widening FX gaps, inflation control, and limited credit access.
Reforms include:
- Floating FX regime
- Ending central bank lending to gov’t
- Digital finance push
- Foreign bank market entry
- Capital market activation via ESX Read more
Get details of the reform progress here
Tax Revenue Still Lagging, Despite Overhauls
According to the IMF, Ethiopia’s tax-to-GDP ratio averages just 8%, one of Sub-Saharan Africa’s lowest—well below the 15% benchmark.
What’s going wrong?
- Underperforming VAT, PIT, CIT
- Informal economy dominance
- Untaxed agricultural output
- Complex federal structure
Ongoing fixes:
- Revised VAT law
- Excise tax enforcement
- National Tax Reform Taskforce
Still, unlocking the full 17%–18% tax potential remains a steep climb. Read more
Real Sector Spotlight | Exports, Agri-Finance, Horticulture
Coffee Export Hits Record $2.65B
Ethiopia’s coffee exports soared to a historic high of 469,000 tons, earning $2.65B in the 2017 EFY—far above the $2B goal.
Exports now span 66+ countries, with major growth in China, Japan, Germany, and the U.S.
Reforms boosting exports:
- Streamlined logistics
- Empowered farmers
- Value-added product push
Source: Herald
Ethiopia Launches NAFIR: A Rural Credit Revolution
The new National Agri-Finance Implementation Roadmap (NAFIR) aims to deliver ETB 881B annually in agricultural credit by 2030.
Key tools:
- NAFA: Risk-sharing + refinancing
- FAST: Farmer ID and digital access
- CoE: Capacity-building for banks
With agri’s 32% GDP share and 64% job contribution, this is a long-overdue shift to fuel rural resilience. Read more
Horticulture Exports Reach $565M in 2024/25
Ethiopia earned $564.9M from horticulture, with flowers alone contributing $392M.
Logistics upgrades and better EU market access helped the sector thrive—employing 200,000+, mostly women.
But experts warn land use reform and cold-chain improvements are critical for long-term success. Read more
Finance & Fintech | Digital Leap and Capital Market Boost
Bank of Abyssinia Goes Fully Paperless
The Bank of Abyssinia now offers fully paperless services across all branches—powered by biometrics, self-service kiosks, and support for 7 local languages.
This move is a big step in Ethiopia’s digital finance transformation, setting a new benchmark for customer experience and operational efficiency. Read more
Ethio Fidelity Becomes ESX’s 3rd Trading Member
Ethio Fidelity Securities S.C. has officially joined the Ethiopian Securities Exchange (ESX)—adding momentum to the capital market rollout.
Now licensed alongside Wegagen Capital and CBE Capital, Ethio Fidelity brings market-making, brokerage, and liquidity support to a budding exchange. Read more
PSS Approved as Visa-Card Vendor
Premier Switch Solutions (PSS) has become Ethiopia’s first Visa-approved personalization vendor, paving the way for:
- 8.1M+ locally issued cards
- Reduced foreign vendor reliance
- PCI-compliant secure production
A major leap for fintech capacity and payment infrastructure. Read more
FX Update | Parallel Pressures & Policy Gaps
CBE Allocates $121M Amid FX Crunch
As Ethiopia’s parallel market rate hits 174/USD—38% higher than the official 137.13—CBE disbursed $121M to fulfill 81% of private sector FX requests.
Cause of the gap?
- Halted FX auctions
- Persistent capital controls
- Real negative returns
- Fragile financial trust
Experts urge consistent policy, auction revival, and broader structural reforms to restore formal market confidence. Read more
Awash & Hibret Banks Step Up FX Support
- Awash Bank supplied $125M in FX in July—$70M for fuel, $55M for essential goods. Read more
- Hibret Bank renewed its $50M trade finance line with Afreximbank—enhancing L/C services and global trade engagement. Read more
These moves highlight private banks’ growing role in bridging Ethiopia’s FX gap.
Leadership Update | New Minister for Agriculture
Addisu Arega has been appointed as Ethiopia’s Minister of Agriculture, tasked with transforming food systems, agro-industry, and resilience-building.
With prior roles in Oromia and rural clusters, Addisu is expected to drive the sector’s reform as part of the Home-Grown Economic Reform 2.0 and Ten-Year Plan.
Enjoyed this roundup? Forward it to someone who needs a smarter take on Business, Capital Market, Finance and Tech.
Have a scoop or feedback? Hit reply — we’d love to hear from you.
Stay curious, stay caffeinated
And as always, crush your week ahead!
— Written by the StockMarket.et Newsroom
Byeee
