Happy Epiphany.
The week began with a public holiday, setting a festive tone across the country. Streets, churches, and public spaces were filled with celebration, as communities marked Epiphany with vibrant ceremonies, joyful gatherings, and beautiful traditional dresses that reflected the richness of the season.
Let’s get into last week’s update …
Regional Trade & Logistics
Ethiopia to Drive Djibouti Port Growth, IMF
The IMF says Ethiopia’s fast-growing economy and major infrastructure projects will boost demand for Djibouti’s ports from 2027 onward, supporting economic growth of about 6%, despite rising competition from rival regional ports and geopolitical risks.
Djibouti’s economy grew an estimated 6.5% in 2025, driven mainly by port activity linked to Ethiopia, which still channels over 90% of its maritime trade through Djibouti. While transshipment volumes have softened, Ethiopia-related cargo remains the backbone of port revenues.
The IMF cautioned that regional tensions and growing competition could pressure earnings but said Ethiopia’s growth trajectory and joint cross-border infrastructure projects provide a strong buffer. It also urged Djibouti to strengthen revenues, manage debt, reform state-owned enterprises, and invest more in health and education to sustain long-term stability.
Monetary Policy & Economic Sovereignty
Ethiopia to Establish Domestic Currency Printing Capacity
Ethiopia plans to begin printing its own banknotes locally as part of a broader push for economic sovereignty, Prime Minister Abiy Ahmed announced at the Finance Forward Ethiopia 2026 conference.
The initiative will be led by Ethiopian Investment Holdings (EIH) and aims to reduce risks associated with printing currency abroad while building key national capabilities under public ownership.
Abiy said EIH’s role will expand significantly, with its contribution to GDP targeted to reach 20% by 2030. Since its establishment in 2021, EIH has grown its asset base to Birr 8.2 trillion, with revenues rising sharply and foreign exchange holdings reaching USD 48.7 billion.
The Prime Minister also announced:
- An ongoing gold refinery project, aimed at adding value instead of exporting raw gold
- Partnerships with crypto mining firms, expected to generate future returns
Source: Birrmetrics
Trade Policy & Geopolitics
US Extends AGOA to 2028, Ethiopia Still Excluded
The US House of Representatives has approved a three-year extension of the African Growth and Opportunity Act (AGOA) through 31 December 2028, ensuring continuity for duty-free trade between the US and eligible Sub-Saharan African countries.
However, Ethiopia remains suspended from the program. The Office of the US Trade Representative confirmed in December 2025 that the list of 32 eligible countries remains unchanged, despite renewed diplomatic efforts.
AGOA, in place since 2000, is viewed by US lawmakers as a key economic and strategic tool in Africa, particularly amid rising competition from China and Russia.
Ethiopia was removed from AGOA in 2021 following the Tigray war and related human rights concerns—a decision that led to factory closures and job losses, especially in industrial parks. While the extension provides stability for current beneficiaries, Ethiopia’s path back into AGOA remains uncertain.
Regional Diplomacy & Energy
Trump Signals Renewed U.S. Mediation on GERD Talks
U.S. President Donald Trump said he is ready to restart U.S.-led mediation between Ethiopia and Egypt over the Nile water dispute and the Grand Ethiopian Renaissance Dam (GERD), placing the issue high on his agenda for regional stability.
In a letter to Egyptian President Abdel Fattah El-Sisi, Trump stressed that no single country should unilaterally control Nile waters. He proposed renewed negotiations backed by technical expertise, transparency, and U.S. coordination.
Trump suggested an agreement that:
- Ensures predictable water releases during droughts
- Allows Ethiopia to continue power generation
- Includes the possibility of sharing surplus electricity with Egypt and Sudan
The move signals a potential return of active U.S. involvement after years of AU-led talks. Trump also warned against military escalation, urging dialogue instead. Neither Ethiopia nor Egypt has officially responded. Read more
Multilateral Finance & Macroeconomy
IMF Approves $261m Disbursement for Ethiopia After Fourth ECF Review
The IMF has approved an immediate disbursement of USD 261 million to Ethiopia following the fourth review of its Extended Credit Facility (ECF) program, bringing total IMF support to USD 2.18 billion since July 2024.
The Fund cited strong macroeconomic performance, including:
- Growth projected at 9.3% in 2025/26
- Falling inflation, expected to decline toward single digits
- Improved revenue collection
- Rising exports
- Stronger foreign exchange reserves
Most reform targets were met, including tighter monetary policy and new limits on FX intervention. While some fiscal and transparency benchmarks were delayed, the IMF welcomed progress on debt restructuring and stressed that continued reform momentum is essential for sustaining growth, stability, and poverty reduction. Read more
Banking & Financial Services
Coopbank Posts Strong Half-Year Results
The Cooperative Bank of Oromia (Coopbank) generated USD 303 million in foreign exchange inflows in the first half of FY 2025/26, driven by trade finance, exports, and remittance services.
Key domestic performance highlights:
- Birr 36.7 billion mobilized in new deposits
- Birr 32 billion disbursed in loans
- Total loan portfolio reached Birr 140.1 billion
Digital banking remained a major growth engine, with COOPay e-Birr processing transactions worth Birr 4.9 trillion during the period. The results reinforce Coopbank’s growing role in forex generation, lending, and digital financial services amid Ethiopia’s financial sector reforms. Read more
Agriculture & Global Branding
Ethiopia, Starbucks Move to Expand Coffee Partnership
Ethiopia is in talks with Starbucks to deepen their strategic partnership and increase the share of Ethiopian specialty coffee in the company’s global supply chain.
Discussions between Investment Commissioner Addisu Arega and Starbucks Vice President Roberto Vega Alonso focused on:
- Specialty coffee supply
- Quality assurance
- Global marketing
Starbucks reaffirmed its support for Ethiopian smallholder farmers, aiming to boost productivity, quality, and incomes.
As Africa’s largest coffee producer and the birthplace of coffee, Ethiopia views the expanded partnership as a key step toward higher export earnings and stronger global branding. Read more
Stay tuned for next week’s insights, where we unpack more sectoral trends and policy moves shaping Ethiopia’s future.
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