ETHIOPIA: A Foreign Exchange Auction & more – 27th Feb 2025

Salaam salaam from BA! This is the Rorshok Ethiopia Update from the 27th of February twenty twenty-five. A quick summary of what's going down in Ethiopia.

The National Bank of Ethiopia held a foreign exchange auction on Tuesday the 25th, its first after six months. The Bank announced a day earlier that the auction would be open to all the commercial banks, which listened to the call, and twenty-seven turned out to bid for the sixty million US dollars up for grabs.

Even though the winners haven’t been revealed yet, the National Bank said the weighted average of winning bids was at a hundred and thirty-five birr for one US dollar, which is about ten birr more than the rate the banks were exchanging the US dollar for on Thursday the 27th. This is a significant increase from the previous round of auctions held in August, last year; at the time, the weighted average was at a hundred and eight birr per dollar. The National Bank said it plans on organizing more auctions.

In related news, the amount of gold the Bank is buying has increased because of increased gold production. Recall that suppliers can only sell gold to the Bank. So when the Bank bought the gold, it did so using cash, which entered the economy. The problem is that the Bank spent at least a hundred billion birr to buy the gold, which is about eight hundred million US dollars and economists fear that the Bank’s splurge on gold may contribute to inflation. Now, The Bank wants to take back the money that entered circulation when it paid for the gold.

Mihret Mamo, the Bank’s governor, had a busy week. On top of being the Bank’s governor, he is also Ethiopia's representative or sherpa to the BRICS+ bloc of countries. He headed to Brazil’s capital Brasilia to attend the first BRICS sherpas’ summit of the year. He said Ethiopia supports multilateralism and collective security through the UN framework adding that the global system needs to change to address complex global issues.

The sherpa and governor also indicated that Ethiopia is interested in becoming a member of the New Development Bank, a bank the original BRICS member countries operate.

Another top government official went on a work trip abroad. Hana Araya-Selassie, the Minister of Justice, headed to Switzerland’s capital city Geneva to attend the fifty-eighth session of the UN’s Human Rights Council. On the sidelines, she met with Volker Turk, the High Commissioner for Human Rights. She thanked his office for its support in preparing a comprehensive human rights report, which proposed over three hundred recommendations.

She explained that Ethiopia is trying to remedy past violations of human rights through transitional justice and improve the human rights record in the long run through nationwide dialogue. Commissioner Turk, on his part, said his office will continue to support Ethiopia in implementing the report’s proposals.

Prime Minister Abiy Ahmed also had to travel for work, although his itinerary was much shorter. He went to neighboring country Somalia on Thursday the 27th to deepen ties. The Somali president Hassan Sheikh Mohamud welcomed him in the capital Mogadishu. Shortly after PM Abiy’s arrival, in a joint press release, the two leaders expressed optimism on military and economic cooperation.

In news from the Afar region, in north-eastern Ethiopia, over three thousand and seven hundred workers at the Kessem Sugar Factory were laid off, over a thousand of these workers were full-time employees. The Factory, as well as its parent entity, Ethiopian Investment Holdings, didn’t specifically say why workers were fired but it might be related to recent earthquakes which the Factory said a month ago had caused significant damage to its facilities.

Because of the earthquake, workers were forced to relocate to camps. However, the silver lining is that former employees have told media outlets that they’re receiving aid from the federal and regional governments.

Speaking of aid, the United Nations said it will reveal how much Ethiopia needs in aid within the next two weeks. The UN’s representatives in the country said they’re evaluating how big a gap the US Agency for International Development or USAID’s aid suspension has left. Last year alone, USAID provided aid worth 1.2 billion US dollars. The reps also noted that foreign aid has seen a decline in the past four years, globally, and US President Trump’s stop-work order has made things worse.

Numerous aid programs have been halted, including food aid to children in refugee camps who are prone to malnutrition. Last year, the UN said Ethiopia needed three billion US dollars, but only got half of that. Unless the US resumes foreign aid, the country will probably get less aid than last year.

There was even more news on foreign aid as on Tuesday the 25th the German ambassador said in a press conference with UN representatives that Germany had donated over fifty million US dollars to UN agencies operating in Ethiopia. This aid comes with no pre-conditions and will be used to support projects across the country focusing on refugees, women and children. Recall that Germany provided aid similarly last year, supporting drought prevention efforts.

The Addis Ababa City Administration is adamant about complying with a court order as it lost a court battle barring it from collecting the infamous roof and wall tax on properties. The opposition party Enat sued the city’s finance bureau and the Federal High Court ruled that the roof and wall tax has no legal basis and must not be collected.

However, the city’s finance bureau has disregarded the ruling, urging property owners to pay up. The city’s mayor defended the bureau at a council meeting, stating that the administration has the authority to collect the tax. She cited an obscure law that was issued in the nineteen seventies to support her remarks, which said that the city administration has the power to collect the tax, and added that residents have been paying these taxes, despite the court decision.

From property tax to businesses as the Ethiopian Investment Holdings, the country’s sovereign wealth fund, said it will support new entrants in the multimodal transport sector previously dominated by the state-owned enterprise Ethiopian Shipping and Logistics. The government recently licensed three private companies to engage in the sector, but various difficulties have delayed launches.

The delay was put into question because it could have been intentional and done to protect the state-owned company. However, Brook Taye, the sovereign wealth fund’s CEO, disagreed, saying at a networking event that the sector liberalization would only benefit the state-owned company, making it stronger and more competitive.

More news from the sovereign wealth fund as the Commercial Bank of Ethiopia, which is a state-owned enterprise also under the Ethiopian Investment Holdings, revealed on Wednesday the 26th at a meeting with officials of the sovereign wealth fund that the total deposits at the Bank have reached over 1.5 trillion birr, which is more than eleven billion US dollars.

This fiscal year alone, the Bank has collected three hundred and fifty billion birr in deposits, which is over two and a half billion US dollars, according to Abe Sano, the Bank’s CEO. He also reported that from the total transactions that took place in this fiscal year, more than eighty-five percent were done through digital solutions.

Let’s wrap this edition with education updates. On Tuesday the 25th, Berhanu Nega, the Minister of Education and the head of the opposition party Ethiopian Citizens for Social Justice, met with Finland’s ambassador in Ethiopia. After the meeting, the ambassador said that Finland will continue cooperating with Ethiopia in the educational sector. The Minister praised Finland’s quality and inclusive approach to education, saying that they’ve built a model system Ethiopia seeks to emulate.

The ambassador said Finland has been working with Ethiopia in education and will expand these efforts going forward, especially in terms of teachers’ training, special education, tech and innovation.

Aaand that’s it for this week! Thank you for joining us!

In case you didn’t know, besides the Rorshok Ethiopia Update, we also do others! We’ve got many country updates from Africa, Asia, South America, and Europe. But we also have non-country updates, including the Arctic Update, about the area north of the Arctic Circle, the Multilateral Update, about the world’s major multilateral institutions, and the Ocean Update, about the 70% of the world covered in salt water,

If you want to check out the full list of updates, go to https://rorshok.com/updates/. The link is in the show notes.

Ciao!