A lobby group representing soap and detergent manufacturers says forex-related issues burdening a foreign-owned supplier of essential chemical inputs have forced production cuts and closures, warning of higher prices for consumers.

The managers of the Ethiopian Chemical Products Manufacturers Association (ECPMA), which represents basic chemicals, soap and detergent, and paint and adhesive factories, say their pleas for government intervention have gone unanswered for months.

An assessment conducted by The Reporter found that countless small-scale soap and detergent manufacturers, as well as large factories like Repi Soap and Detergent PLC, have been forced to shrink their output as they struggle to access key raw materials.

Assessments conducted by a team of experts at the Chemical and Construction Inputs Industry Research and Development Center Ministry of Industry also confirm that a number of soap and detergent factories have been forced to shut down production lines and cut back employee work hours.

The chemicals in short supply are linear alkyl benzene sulphonic acid (LABSA) and sodium lauryl ether sulfate (SLES) —both crucial components in the production of bar soap, powder soap, liquid soap as well as shampoos, body washes, dishwashing liquids, and detergents. 

Allied Chemicals, a firm established in 2008 with backing from Indian investors, is the primary importer of SLES and LABSA in Ethiopia. The firm processes the imported chemicals at one of several plants it operates in the country before supplying them to soap and detergent manufacturers. 

Manufacturers say the chemicals have been unavailable for months.

“For several past months, Allied stopped supplying these inputs. Since July, we’ve been tabling the problem to the Ministry of Industry, but there’s still no solution. Meanwhile, factories are closing their production lines,” a manager at a detergent production plant told The Reporter.

A manager at Allied who spoke to The Reporter anonymously confirmed the firm faced supply issues between September and last month in light of forex shortages, but contends things are now back to normal.

“Our supply stopped for a brief time due to forex shortages. But we didn’t interrupt distribution as we had adequate stock. Our factories are back in operation now. Challenges like forex shortages happen sometimes. It’s normal,” said the manager.

However, he also claimed this interruption in supply was the first since Allied began processing SLES and LABSA a decade ago.

“We have 300 employees at our factories, we are paying them salaries. Why would we stop supply, seeing as it is our own business and benefit? The benefit of the business is not only for the factories but also for us. We also don’t want interruptions and we are sure it won’t occur again,” he told The Reporter.

The manager argues that fluctuations in supply emanate from the soap and detergent factories themselves.

“They never send us their projected annual demand for SLES and LABSA, so we can’t precisely allocate the forex needed to import the raw materials,” he said.

Allied supplies manufacturers with up to 30,000 tons of LABSA and around half as much SLES each year.

“There’s a shift in the domestic market from bar and powdered soap towards liquid soap. So it’s difficult for us to know which raw material is in greater demand unless factories tell us,” said the manager.

The Ministry of Industry’s report says otherwise.

Over a 16-month period, Allied provided 12,888 tons of LABSA. More than two-thirds of the total volume was supplied to four major detergent companies: Zac, Bekas, Unilever, and Repi. Large manufacturers accounted for the lion’s share of 6,300 tons of SLES supplied by Allied as well.

The report concludes that Allied does not possess the production capacity to meet growing demand from manufacturers.

The total installed capacity of Ethiopia’s soap and detergent factories stands at over 535,000 tons. The report indicates they need at least 80,000 tons of SLES, much higher than the 57,000 tons Allied has the capacity to supply, according to Ministry documents obtained by The Reporter.

In reality, Allied is covering just half of demand from manufacturers.

“Factories manufacturing liquid, powder and bar detergents, have huge manufacturing capacity. However, due to lack of raw material supply, inadequate forex supply to import the inputs, inadequate working capital, security issues, local market fluctuations and growing cost of living; they are unable to manufacture at full capacity. The raw material supply from Allied Chemical is covering only half of their demand,” reads the Ministry’s report.

It indicates that while detergent industries’ demand for SLES and LABSA has been surging substantially, Allied’s supply has remained stagnant for two years. The report also showcases fluctuations in the supply of SLES and LABSA in the months since July 2025.

Allied also managed to generate USD 1.2 million in recent months through the export of SLES and LABSA, according to official documents.

However, the lobby group contends the problem goes deeper than forex shortages and production capacity.

Allied is the beneficiary of an exemption from the 15 percent duty levied on the commercial import of SLES and LABSA. Other importers are not exempted, giving Allied what the lobby group describes as an unfair advantage that has allowed it to corner the market.

“The duty free policy is designed to serve only one supplier. It was designed to serve Allied, not the sector. As a result, the whole sector is on the verge of collapse because one company stopped supplying inputs,” said a senior member of ECPMA, which represents more than two dozen large-scale manufacturers.

He alleges Allied is using its superior bargaining power unfairly.

“Allied typically collects payments upfront before supplying the SLES and LABSA. It takes 50 million or 100 million Birr in upfront payments and holds on to the money before eventually supplying the inputs after five or six months. Several factories have their capital tied up before they even get the inputs,” said the senior Association member.

Because other importers do not enjoy the same duty-free privileges that Allied does, buying SLES or LABSA from them carries a 15-percent markup.

“Then soap and detergent companies have to add 15 percent to the price when they sell their products to the public,” said one plant manager.

The lobby group wants to see an immediate solution to the problems.

Melaku Alebel, minister of Industry, convened industry players to discuss their misgivings and review a study on the problems plaguing the sector.

Manufacturers called on the Minister to push Allied to resume imports, and requested that the company’s duty-free privileges be removed. Melaku promised to table the issue to the Ministry of Finance and get back to them with a solution swiftly, but that has yet to happen, according to people who took part in the meeting.

“If importers were also allowed to import the inputs duty-free like Allied, supply could have been secured and the problem would have been solved,” said one industry executive. “The solution is to grant the privilege to all importers so that the policy works for the sector rather than a single company.”

Industry players say the situation has left them in a state of indecision.

“Factories now have to decide whether they should await a solution or buy the inputs from commercial importers with the 15 percent markup,” said one plant manager. “If we buy from the commercial importers, then we have to add the cost to our products, which would affect end consumers. If we keep waiting for Allied to resume imports, we may be forced to close our factories.”

Ethiopia imported soap and polish valued at seven billion Birr in 2024/5, up from five billion in the previous year, according to data from the National Bank of Ethiopia (NBE). Import volumes have also surged in recent years, nearly doubling to 110,000 metric tons since 2022.

A substantial volume of soap and detergent was imported through the franco valuta scheme, according to the NBE.

While Ethiopia sources most of its SLES and LABSA from suppliers in the UAE, Egypt, Turkey, India, or China, suppliers in many of these countries rely heavily on manufacturers in Iran, whose operations have been affected by Tehran’s feud with Israel and the US, industry insiders say.

“The remaining options are India and China. Importing from China can take up to four months. We hope other countries might resume manufacturing the ingredients after January,” said an Association member.

Importing a ton of these chemicals can cost up to USD 3,000.

“SLES and LABSA are dollar-intensive. The NBE says there is no forex problem, but banks do not allocate when importers ask for more,” said one manager.

Experts at the Industry Ministry recommend that soap and detergent manufacturers be allowed to import their own SLES and LABSA at a reduced import duty of five percent as a short-term solution. They urged the manufacturers be granted priority in forex allocation and called for the establishment of a ‘LABSA-SLES Taskforce’ to oversee Allied Chemicals’ import and distribution process.

However, the experts cautioned that Ethiopia can not afford to depend on imported SLES and LABSA. They see attracting able investors to enable the domestic production of these materials as the only sustainable way forward.

“The shortage of SLES and LABSA emanates mainly from deep-rooted problems of forex shortage, distorted tariff systems, and dependency on imported raw materials. To solve these issues permanently, introducing strategic intervention and ensuring sustainable value chain supply for the sector, and attracting domestic investors in the domestication of the raw materials is critical,” reads the report.

The Ethiopian Securities Exchange (ESX) has ambitions to list nine companies before the end of the Ethiopian calendar year in September, according to CEO Tilahun Kassahun.

“Our plan for this year is to list nine companies in the ESX and I think we can exceed that target,” said Tilahun, who was appointed to head the Exchange in November 2023.

Although the country’s maiden stock exchange went live almost a year ago, its floor has yet to begin trading. So far, only four companies have taken the first steps towards listing on ESX.

They include the state-owned Ethio telecom, whose disappointing initial public offering (IPO) from earlier this year is slated to go live on the Exchange in the near future. The others are private commercial banks Wegagen, Gadaa, and Dashen.

Dashen Bank published a prospectus this week after officials at the Ethiopian Capital Market Authority (ECMA) approved its registration documents for its planned IPO and registered more than 14.3 million active shares.

The bank plans to offer 2.2 million additional shares to its shareholders first, while any leftover shares will then be offered to “qualified investors and/or the public,” according to a statement issued by the Authority this week.

Last year, Tilahun told The Reporter that other state-owned companies under Ethiopian Investment Holdings (EIH) were set to follow Ethio telecom in listing on the Exchange. On the list were the Ethiopian Shipping and Logistics Services Enterprise and the Ethiopian Insurance Corporation.

“We’ve received applications from four companies,” Tilahun told The Reporter this week.

Firms that are not yet listed will continue trading through the Over-the-Counter (OTC) market until they fulfill listing requirements with ECMA.

“Whenever the registration at ECMA is done and companies have an objective of listing, we’ll register,” said Tilahun, noting that draft prospectuses are jointly reviewed by ESX and ECMA before approvals in principle are granted.

Tilahun explains that listing timelines differ depending on whether a company intends to raise new capital. Companies opting for listing by introduction, also known as direct listing, can complete the process faster, while those planning public capital offerings require additional regulatory review and preparation.

Dashen Bank’s prospectus provides a practical example of this process.

The bank has chosen a phased approach in which its listing on ESX is separated from its planned capital-raising exercise. While Dashen has already completed registration with ECMA and secured its place on the exchange list, its public capital raise is scheduled to follow in February 2026, allowing regulators and investors to observe how listing and capital mobilization function as distinct processes within Ethiopia’s capital market framework.

Meanwhile, regulators are enforcing mandatory dematerialization of securities, replacing paper-based share certificates with electronic records held by the Central Securities Depository (CSD). The reform, anchored in the Capital Market Proclamation, is a prerequisite for trading on the Exchange.

Under the dematerialization process, shareholder data are transferred from company share departments to the CSD, after which shareholders must open accounts with licensed brokers to enable electronic trading.

“In this regard, Gadaa and Wegagen banks [Wegagen Capital Investment Bank] have finalized the dematerialization process,” Tilahun said. “Going forward, when other banks come, their shares will be moved, accounts will be created, and trading can start.”

Tilahun explained that trading is generally expected to begin automatically after listing, although delays may occur if account opening or operational requirements are incomplete. In some cases, listing may occur before capital raising, while in others trading can commence immediately once shares are transferred to the CSD.

He emphasized that securities registration deadlines are strictly enforced. Securities required to be registered by November 2025 will not be permitted to trade if registration and dematerialization are not completed.

“ECMA has clearly stated that if companies fail to dematerialize their documents and move securities to the CSD, trading is impossible,” he said.

He further noted that dematerialization alone is insufficient without ECMA registration.

“If the security is not registered, dematerialization alone cannot enable listing and trading,” he said, adding that companies that fail to complete both steps will be barred from the Exchange.

As a regulatory measure, companies that do not dematerialize their securities will be prohibited from trading, limiting shareholders’ ability to transfer ownership, receive dividends, or exercise shareholder rights.

Zenith’s executives, including the bank’s president and board chairperson, visited Addis Ababa this week for talks with central bank chief Eyob Tekalign (PhD) and officials at the Ethiopian Investment Commission (EIC).

Zinabu Yirga, deputy head of the Commission, stated that Ethiopia is ready to welcome reliable and giant international financial institutions, noting that Ethiopia being the third-largest economy in Sub-Saharan Africa, the expansion of trade relations with other countries, and the existence of grand infrastructure and industrial projects have created a favorable environment to conduct long-term financial sector investment.

Zenith’s head of international market expansion, Olukayode Akinbinu, stated that Zenith Bank has a strong desire to invest in the country’s financial market by utilizing the opportunities created by Ethiopia’s rapidly growing economy, recent sectoral reforms, and the liberalization of banking and financial services.

He added that the bank is currently evaluating investment opportunities in Ethiopia by focusing on digital and technology-based financial solutions as well as financing large government-led projects.

Zenith Bank is headquartered in Lagos, Nigeria, and is a sizable financial institution operating through branches and representative offices in Africa and key international financial centers, providing corporate, retail, digital, and infrastructure financial services.

Zenith is the latest African bank to express interest in the Ethiopian market.

In June, sources at the National Bank of Ethiopia (NBE) hinted that Kenya’s KCB Group Limited will be the first foreign banking institution to join the Ethiopian financial sector under the government’s liberalization drive.

The Banking Business Proclamation amended by lawmakers in November 2024 permits foreign banks to enter in one of four ways. They can incorporate a subsidiary in Ethiopia, buy stakes in a domestic bank, establish a local branch office, or open a representative or liaison office. The law caps foreign investment in a bank at 40 percent ownership, while a domestic bank cannot sell more than 49 percent of its authorized shares to foreign investors.

IATA said a total of USD 1.2 billion in airline funds was blocked by governments as of the end of October 2025, despite a marginal improvement of USD 100 million since April.

Of the total amount, 93 percent is concentrated in Africa and the Middle East, reflecting persistent foreign exchange constraints across the region .

Ten countries across Africa, the Middle East, and South Asia account for USD 1.08 billion or 89  percent of the overall blocked funds.

Ethiopia and Pakistan were each listed with USD 54 million, placing Ethiopia eighth among the countries named. Algeria topped the list with USD 307 million, followed by the XAF Zone (a group of six central and west African countries) at USD 179 million, and Lebanon at USD 138 million.

The Association says the blocked funds consist of revenues generated from ticket sales, cargo services, and other aviation-related activities carried out by airlines within the respective countries.

Under bilateral air service agreements, governments are required to allow these revenues to be repatriated in US dollars, a commitment IATA says is being undermined by currency shortages, approval delays, and central bank restrictions.

“Airlines need reliable access to their revenues in US dollars to keep operations running, pay their bills, and maintain vital air connectivity,” Willie Walsh, IATA’s director-general was cited as saying in the report. He urged governments to prioritize airline fund repatriation even when foreign currency is scarce .

In recent years, Ethiopian Airlines has faced similar challenges in managing to recover its own revenues from other African countries.

In July 2024, Mesfin Tasew, Ethiopian Airlines Group CEO, told The Reporter that at one point the carrier had more than USD 200 million in revenues blocked across several African states, adding that although the amount had declined, it remained a “serious concern” for the flag carrier.

Addressing questions on why Ethiopia has been unable to release the USD 54 million owed to foreign airlines, members of management at the airline told The Reporter that foreign currency payment decisions fall primarily under the authority of the National Bank of Ethiopia (NBE).

The NBE did not respond to The Reporter’s attempts to obtain clarification about the unreleased funds.

IATA on the other hand has warned that prolonged restrictions on airline fund repatriation risk undermining air connectivity and the wider economic benefits aviation provides, particularly for economies dependent on international trade, tourism, and cargo transport.

The Association reiterated its call for governments to lift foreign exchange controls affecting airlines and to honor bilateral and treaty obligations guaranteeing unrestricted repatriation of airline revenues.

Sources within EIH told The Reporter that the airline’s board has approved the renewed request and forwarded it to the EIH board, where it is currently under review.

The exact size of the capital increase being sought has not been disclosed, with officials declining to make the figure public.

People close to Ethiopian Airlines said the process is being handled at the highest levels of management, underscoring the strategic importance of the request for the state-owned carrier.

The airline group has previously submitted a similar request in October 2022, seeking to raise its paid-up capital from about 100 billion Birr to 300 billion Birr. At the time, Chief Executive Officer Mesfin Tasew had confirmed to The Reporter that the request had been submitted and that the company was awaiting a response.

The earlier proposal was justified by the rapid growth of the airline’s assets and business transaction volume, which officials said had outpaced the level of its paid-up capital.

Ethiopian Airlines has consistently reported strong financial performance in recent years, including record revenues of USD 7.6 billion in the 2024/2025 fiscal year, which ended on July 7, 2025.

The figure represents an eight percent increase from the previous fiscal year. However, the group’s 2023/24 annual financial report indicates that its paid-up capital stands at around 263 billion Birr.

The renewed capital request has also featured in parliamentary oversight discussions. During a review session held last month, the parliamentary Committee on Government Development Enterprises examined EIH’s first-quarter performance, including issues related to Ethiopian Airlines and capital increment requirements.

During the session, a member of Parliament described Ethiopian Airlines as one of the country’s most critical national brands, noting that the carrier contributes a significant share of EIH’s revenue and a large portion of Ethiopia’s foreign exchange earnings. The lawmaker questioned whether sufficient support was being extended to such strategically important enterprises, particularly given challenges in repatriating foreign-currency revenues earned in other African markets.

Responding to questions on capital demands, Melikte Sahlu, deputy head of EIH, told MPs that capital constraints remain a major challenge across many state-owned development enterprises. She said EIH must balance limited national resources, the need to ensure the sustainability of investments and business operations, and the obligation to generate dividends at the national level.

While acknowledging that EIH would prefer to increase capital for all of its development enterprises if resources allowed, the deputy CEO said priorities are set based on proposals submitted by each entity and assessments of which enterprises could face serious operational risks without timely capital support.

She added that, given the country’s limited resources, expectations around the pace and scale of capital increases must be realistic and based on broad consensus.

The EIH board is expected to determine whether and how the renewed capital request from Ethiopian Airlines will be accommodated within these constraints.

The second National Digital Payments Strategy that regulators envision guiding the financial sector for the coming five years was presented at the Skylight Hotel this week during an event that saw the attendance of new NBE Governor Eyob Tekalign (PhD) and Wamkele Mene, secretary general of the African Continental Free Trade Area (AfCFTA).

The document indicates that although Ethiopia boasts a total of nearly 140 million mobile money accounts, only 15 percent of them are active. ‎It confirms that the rapid increase in digital account registrations has not translated into active usage, and argues that this points to “a need for the deployment of catalytic use cases at scale and more compelling value propositions to transition users from registration to sustained activity.”

The gap remains “one of the core ecosystem challenges” alongside a widespread lack of digital and financial literacy, according to the draft.

It details that two-thirds of women and 60 percent of men report not using mobile money because they do not know how—a significantly higher barrier than in peer ‎countries like Nigeria and Kenya.

‎”This skills gap not only limits uptake ‎but also increases vulnerability to scams and erodes confidence in the digital ecosystem,” reads the draft.

‎The document states that Ethiopia’s digital financial system absorbed fraud losses in 2024 that amounted to 1.3 billion Birr, making it one of the largest recorded losses since the expansion of mobile money and electronic payment platforms began in earnest a few years ago.

‎Alongside these losses, the strategy documents a significant rise in cyber threats. NBE reported 4,623 cyberattack attempts in the first half of 2024, a 115 percent increase compared to the same period in 2023.

This escalation demonstrates the increasing cyber-security challenges facing financial institutions and digital platforms but despite the scale of the losses and rising threats, the document confirmed that Ethiopia still lacks a formal system to protect victims of fraud.

“These security challenges are compounded by the absence of a specific regulatory framework that defines liability and establishes clear compensation mechanisms for fraud victims, leaving consumers with slow and often ineffective recourse,” it reads.

‎The strategy highlights the absence of a national liability system as a critical gap and identifies improving consumer protection as an immediate policy priority under the 2026–2030 plan. ‎It recommends developing a harmonized compensation and liability framework to ensure “clear, consistent, and enforceable protections for consumers” across all digital payment channels.

‎On the other hand, the NBE’s proposed strategy described government digital payments as fragmented and closed, identifying this disharmony as a major structural issue.

‎It states that for instance, many government payment flows, both collections such as taxes, fees and disbursements like social transfers, and salaries, remain fragmented on account of bilateral agreements with financial service providers (FSPs) and cash-based distribution.

“The existing digital government payment platforms are closed-loop systems which restrict interoperability and constrain competition and consumer choice in ‎government digital payments and collections,” reads the document.

Regulators urge for a unified e-government service platform to centralize payment flows, proposing the creation of a digital platform to facilitate the efficient and transparent delivery of government-to-person (G2P) payment.

The platform would allow recipients to choose their preferred payment service provider, eliminating the current practice of assigning beneficiaries to specific providers, according to the draft.

The document also sets an ambitious target to increase the value of annual digital payments from 82 percent of GDP in 2024 to 750 percent by the end of the decade.

While Ethiopia’s digital transaction volume has grown exponentially in recent years, the draft concedes that much of the growth is owed to compulsory use cases such as the mandatory digitization of fuel payments, which processed over 176 billion Birr between August 2024 and May 2025.

‎The document lists fuel digitization as a key catalyst but acknowledges that widespread voluntary adoption still remains limited.

It highlights “underdeveloped” merchant acceptance infrastructure as another obstacle, noting that as of June 2024, Ethiopia had just over 14,000 point-of-sale (POS) terminals or less than 18 per 100,000 adults. The figure pales in comparison to Kenya’s 136 or Nigeria’s 2,139.

Only a quarter of registered mobile money merchants are active, and merchant payments accounted for less than 0.2 percent of total digital transactions in 2023/24, according to the document.

Regulators also addressed the growing divide between digital payment adoption in rural and urban areas. They cited a study from 2024 which reported that 40 percent of urban adults had made a digital transaction within the past year, compared to just 16 percent of rural adults.

The document concludes that “digital payments are becoming mainstream in cities, but cash remains dominant in rural regions,” driven by limited connectivity, fewer agents, and weaker merchant acceptance outside major towns.‎

Another major structural challenge highlighted in the strategy is the lack of a national data-exchange layer, leaving financial data siloed within institutions and preventing providers from offering digital credit, insurance, savings, and other data-driven services at a scale needed in the economy.‎

Regulators say they want to establish a centralized data exchange infrastructure by 2030 in a bid to improve interoperability, data-driven innovation, and public-service delivery efficiency.‎

The draft strategy states that the NBE will require all licensed financial institutions to adopt the ISO20022 messaging standard, noting that it will be mandated within six months, with a one-year window for market implementation .

‎According to the document, this will enable “enriched data exchange” and align the national payment system with global standards. ‎It also proposes establishing a national shared-agent platform to improve viability in rural and low-density areas stating that a new independent entity will “deploy, maintain, and govern the network’s technical infrastructure, and day-to-day operations”.‎

It calls for revising the existing agent regulation by creating two separate regulations for banking agents and mobile-money agents, both of which will formally enable shared agent networks to reduce costs and expand reach.‎

The Commission’s ‘FDI Licensing and Post-investment Implementation Systems’ covers six years leading up to 2025 and was published this month despite being finalized in the first half of the year.

It indicates the Ethiopian Investment Commission (EIC) issued a total of 1,509 permits to foreign investors during the reporting period. However, only 586 investors (39 percent) have managed to start operations since receiving their permits, according to the report.

Its authors criticized the EIC for failing to duly support investors.

The report reveals the Commission responded to only a fifth of the 213 FDI-related complaints it received over the reporting period. Many of the complaints and requests for special support stemmed from security risks, according to the report.

More than half (116) came from investors in Oromia, while 59 investors in the Amhara Regional State made appeals to the EIC.

However, the Commission responded only to 48 of the appeals, according to the report.

For instance, Emirates Steel Ethiopia PLC leased a plot in Gelan, Oromia, for a basic iron and steel manufacturing plant. However, the lack of a power line meant the company was unable to start production, and the Oromia regional administration eventually reclaimed the land.

The report notes the Commission failed to resolve the issue despite repeated appeals from the UAE’s embassy in Addis Ababa. It reveals the manufacturer had paid electricity bills in advance.

Another example is Saudi Agricultural Investment Co Ltd Ethiopia, which planned to build a manufacturing plant in Burayu, Oromia. The company paid lease and right of way compensations ten years ago but authorities denied it access to land, according to the report.

As a result, it was forced to lease space in warehouses to store its equipment for years, incurring huge losses.

The report highlights that while Ethiopia has attracted an average USD 3.3 billion in annual FDI over the six-year period, only 586 foreign-investor-backed projects valued at 281 billion Birr (around USD 1.8 billion at current exchange rates) have been able to get off the ground.

It also indicates that while FDI-backed businesses managed to register USD 953 million in exports over the period, their performance has been declining for the last two years.

Some of the FDI projects assessed by the Anti-Corruption Commission include Ayka Addis Textile and Investment Group PLC, and Saygen Dima Textile SC.

In April 2020, the Council of Ministers opted to write off 2.1 billion Birr in unpaid taxes from Ayka Addis after the textile plant’s Turkish investors defaulted on loans they took from the state-owned Development Bank of Ethiopia (DBE) following years of reported losses.

Ayka Addis also enjoyed 773 million Birr in tax breaks and failed to pay 112.5 million Birr towards its employees’ pensions. 

Similarly, the Council wrote off 28 million Birr in unpaid taxes for Saygon Dima, whose Turkish investors also failed to repay loans taken from DBE. The Ethiopian embassy in Ankara, the Foreign Ministry, EIC, and the bank are reportedly moving towards auctioning off the company.

The report notes that 307 FDI permits remain valid despite remaining inoperational for more than two years, giving the Commission the right to revoke them. Not revoking the permits is illegal, according to the report, which accuses the Commission of renewing permits despite an evident lack of progress.

The report alleges the Commission allowed foreign investors to skirt around the USD 200,000 minimum capital threshold, while others, such as the investors behind Ayka Addis and Saygon Dima, were permitted to access huge loans without collateral.

The report criticizes EIC and the Customs Commission for lacking procedures to follow up on incentives offered to investors, leaving them open to abuse that can cost the government billions of Birr in revenue.

The report highlights that EIC has failed to address forex shortages that have crippled manufacturers like Transsion Manufacturing PLC, domestic producers of Tecno mobile devices. The firm has been forced to shut down 12 of its 14 production lines due to a lack of forex to import inputs.

While presenting quarterly report to the parliament few weeks ago, MPs urged officials of EIC including Commissioner Zeleke Temesgen, to address multiple challenges investors are facing.

Led by Commissioner Samuel Urkato, the Federal Anti-Corruption Commission has recently produced reports across several sectors, seriously criticizing government institutions for the various types of corruption loopholes ending at loss of billions of public money, underperformances.

For the first time in half a century, debt service expenditures by developing countries are exceeding the inflow of new financing, according to the World Bank’s 2025 International Debt Report.

It reveals that between 2022 and 2024, about USD 741 billion more flowed out of developing economies in debt repayments and interest than flowed into them in the form of new financing.

“It was the largest debt-related outflow in more than 50 years. The human toll has been steep: among the 22 most highly indebted countries, one out of every two people today cannot afford the minimum daily diet necessary for lasting health,” reads the new report.

It indicates that in 2024, the total external debt stock of low- and middle-income countries (LMICs) hit a new record of USD 8.9 trillion, 1.2 trillion of which was owed by the 78 most vulnerable countries eligible to receive grants and low-cost loans from the World Bank’s International Development Association.

These countries paid more than USD 415 billion in interest payments alone in 2024, according to the report.

“These payments are 2.4 times higher than a decade ago, driven mainly by a 4.5 percent increase from public sector borrowers, to USD 161.3 billion. This increase in interest payments has had severe consequences in high-debt countries, where on average more than half the population is already unable to afford a healthy diet,” it reads.

China, the largest debtor country among LMICs, accounted for 30.1 percent of LMICs’ interest payments on total debt stock, according to the report.

In 2024, LMICs paid out USD 205 billion more in principal and interest than they received in new loans, marking the third consecutive year of net outflows, according to the World Bank.

The report indicates that debt is now growing more slowly, and cited successful examples of debt restructuring in the cases of Ghana, Haiti, Somalia, and Sri Lanka.

“Progress, of course, is occurring, but it is modest, and considerably more is needed. Debt burdens are now growing more slowly. Creditors were in a forgiving mood last year: they agreed to restructure USD 90 billion in developing country debt, more than at any time since 2010,” it reads.

Elsewhere in the report, the World Bank notes that Ethiopia’s income classification is still in a temporary status of “unclassified” for fiscal year 2026.

“The World Bank still considers Ethiopia an IDA-only country, so the terms and conditions of World Bank financing for the country have not changed. Agencies using the World Bank income classification to determine access conditions to their own resources should still consider Ethiopia a low-income country,” it reads.

Ethiopia’s total external debt as at 2024 stood at USD 36.5 billion, up from USD 7.3 billion in 2010, and USD 30.6 billion in 2022, according to the WB report.

Safaricom-affiliate M-PESA Ethiopia has lodged complaints with the authorities, alleging that its new financial services app has been disabled by state-owned operator Ethio telecom.

M-PESA Lehulum, a telecom agnostic customer-centric financial services app that allows any Ethiopian to transact on Safaricom’s M-PESA mobile money platform, was launched on December 1.

This mobile application can be downloaded from any telecommunication network and provides simple and secure access to digital financial services. The app is designed to work with any SIM card, without SIM and across any telecom platform. Onboarding is through Fayda National ID’s eKYC system.

The app is a rival to Ethio telecom’s massive Telebirr platform, and observers say the state-owned operator is likely concerned that M-PESA might erode its customer base.

A public statement issued by M-PESA on Friday December 5, 2025, reads “We would like to inform the public that M-PESA Lehulum is currently not accessible on smartphones using mobile data services managed by Ethio telecom, leaving our customers unable to log in, transact, or retrieve their funds.”

The app is fully approved by the regulator, the National Bank of Ethiopia and INSA, according to the statement.

M-PESA Ethiopia is a stand-alone legal entity duly registered in Ethiopia and holder of a payment instrument issuer license from the central bank.

“We would like to confirm that our team is working diligently to maintain access to M-PESA Lehulum and restore full digital reachability as quickly as possible. We are actively engaging with regulators to resolve the matter urgently and remain committed to protecting your freedom of choice as well as ensuring uninterrupted access to the digital and financial tools that you rely on,” reads the statement.

The Ethiopian Communications Authority, Ethio telecom, and the NBE have yet to issue an official response to the statement.

M-PESA’s troubles come following a September report from the World Bank highlighting unfair practices in the Ethiopian telecom sector and accusing Ethio telecom of undercutting the competition.

 The app’s launch also coincides with news that Vodacom Group Limited is buying out the Kenyan government’s 15 percent ownership stake in Safaricom for a reported USD 1.6 billion.

An audited financial report of the Group’s performance for the 2022/23 fiscal year was published this month, following more than two years of delays.

The state-run Audit Service Corporation reports the Group, which at the time was run by long-serving CEO Weyo Roba and chaired by Girma Birru, saw its revenues drop by more than 13 percent to 7.4 billion Birr year-on-year.

The Group’s comprehensive losses totaled 9.6 billion Birr during the reporting period, significantly lower than the 22 billion Birr registered the year prior but indicative of its ongoing troubles. Its forex losses also dropped by nearly 12 billion Birr to 3.6 billion Birr, while operating losses eased to 3.8 billion Birr from 15.7 billion.

However, despite the declining losses, the Group reported a two billion Birr drop in total asset value, while cash and cash equivalents on hand dwindled from four billion Birr to 1.5 billion.

The report outlines the dire financial status of the Group, which came into being in 2022 as part of a restructuring of the former Ethiopian Sugar Corporation that was established in 2010 in place of the Ethiopian Sugar Development Agency.

More than a decade ago, the Corporation embarked on a campaign to launch new sugar estates and upgrade existing ones like Wonji Shoa, Finchaa, four in Omo Kuraz, Welkayit and the two Tana Beles estates in the Amhara region.

At present, ESIG operates eight major sugar estates, five of which operate independently as subsidiaries. These include Wonji Shoa, Metehara, Fincha, Kessem, and Tana Beles. The remaining three—Arjo Didessa, Omo Kuraz II and Omo Kuraz III—are still under the direct control of the Group.

Overall, ESIG administers around 86,355 hectares of sugarcane plantations, with estimated annual production of 600,000 tons of sugar, of which between 325,000 and 400,000 tons is consumed domestically.

Additionally, ESIG oversees several sugar plants that are under construction or non-operational, including Omo Kuraz I and V, Welkait and Tendaho, all of which are managed as branches until completion or restructuring.

The Group has ambitions to meet national sugar demand by 2028, targeting nearly 730,000 tons annually by 2026/7, but the report published this month indicates these ambitions are unlikely to be realized.

When ESIG was established in 2022, its paid-up capital was reported to be 115 billion Birr, but later inquiries uncovered a deficit of 10 billion Birr.

The Group’s board of directors decided in September 2025 to officially shrink the capital to 105 billion Birr in light of the deficit, and adjusted its authorized capital down by 30 billion Birr to 420 billion Birr. The adjustments were approved by Ethiopian Investment Holdings (EIH), which oversees the Group.

This month’s audited financial reports reveal the Group’s sales of imported sugar, which makes up a large portion of its revenue, almost halved to 1.3 billion Birr in 2022/23. Sales of locally produced white sugar also dropped by 17 percent to five billion Birr, while molasses sales doubled from 231 million to 484 million Birr.

The report indicates the flagship Wonji-Shoa sugar factory holds a long outstanding construction-in-progress balance of 2.2 billion Birr, primarily related to development and civil and irrigation works on outgrowers’ land.

But these assets remain uncapitalised due to the termination of contracts by the majority of outgrowers, according to the report.

Moreover, an impairment of 434 million Birr was recorded for advances and prepayments to outgrowers, a significant portion of which pertains to sugarcane plantations damaged during the political unrest of 2017 and to farms that unilaterally terminated their agreements with the factory.

As these balances involve public funds and remain unsettled, management needs to re-engage the contractual agreements with the outgrowers, and recover outstanding advance payment, auditors urge.

The auditor identified significant deficiencies in the internal control of intercompany receivables and payables in the Group, resulting in accumulated unreconciled inter-branch balances of 1.5 billion Birr. Differences remain between subsidiaries and the Group, as well as branches and the Group, according to the report.

The residual balance was changed to accumulated losses without appropriately reflecting the economic substance of the transactions, resulting in accumulated loss of 1.5 billion Birr, it reads.

A receivables balance of 1.47 billion Birr is recorded under the Sugar Industry Development Fund (SIDF), for which no supporting evidence was provided.

The report notes inconsistent inventory methods are deployed across the Group’s estates, and identifies a 98 million Birr deficit between physical inventory count and the ledger balances at the Group’s factories and head office project unit.

A further discrepancy of 166 million Birr was noted at the head office between sugar ledger and physical count sheets. This difference remained unresolved, resulting in a continued overstatement of inventory.

Moreover, the Group holds long outstanding goods in transit totaling 523 million Birr, including letters of credit (LCs) issued beyond contractual terms that remain unclear, according to the report.

Auditors say sugar estates lack an effective mechanism for allocating overhead and production costs, leaving them unable to place reliance on the 4.7 billion Birr in reported cost of sales.

They also found trade and other payables totalling 7.4 billion Birr, including 1.2 billion Birr in long-outstanding balances. Advance payments to contractors totaled 14 billion Birr, of which nearly 60 percent is impaired, according to the report.

This high level of impairment reflects significant deficiency in internal control over monitoring and recovery of advance payments, auditors caution, urging the Group to take legal and administrative measures to ensure accountability and recovery.

While factory operations declined, the cost of goods production stood at 4.7 billion Birr. Salary and benefits took up nearly one billion Birr, according to the report.

The report also reveals the extent of the impacts of conflict and insecurity on the Group’s operations and margins.

It details opaque withdrawals of nearly 50 million Birr from bank accounts associated with the Welkait Sugar Factory during the two-year northern war. Military operations in Oromia posed significant problems for the operations of the Arjo and Fincha estates, according to the report.

Arjo incurred losses of 10.4 million Birr due looting and property damage, while Fincha lost 8.3 million, according to auditors.

A confluence of weather- and conflict-related factors continue to pose significant challenges in Tendaho. Management has been unable to gain access to the sugar estate to verify losses owed to theft or misappropriation, according to the report.

As of June 2022, Tendaho’s property, plant and equipment carrying a value of 19 billion Birr remain exposed to risks. Following partial assessments, management recognized impairment losses of four billion Birr, according to auditors.

The Welkait sugar factory has also experienced looting and destruction of property, according to the report.  In light of inability to access the site, management ceased depreciation and recognized an impairment loss equivalent to book value of 112 million Birr, auditors revealed.

Meanwhile, the audited report indicates that interest expenses alone on loans the Group took from the state-owned Commercial Bank of Ethiopia (CBE) and foreign banks stood at five billion Birr in 2022/23.

All debt owed by the Group to the CBE has been transferred to the state-run Liability Asset Management Corporation (LAMC) and the Ministry of Finance over the past few years.

 In 2022, 102 billion Birr in outstanding debt was transferred to LAMC, with another 25 billion Birr owed to Chinese creditors was transferred to the Ministry’s books the following year.

The report reveals that provisions for legal claims arising from litigations of labor cases, contractual and extra contractual liability and property damage claims stood at 1.3 billion Birr in June 2023, up from 759 million Birr the year prior.

Contingent liabilities are also held, as there are a number of legal cases pending. One significant case involves Amibara Agricultural Development PLC.

The firm entered an agreement to supply sugarcane to Kessem sugar factory and later filed a claim for 1.2 billion Birr, alleging damage and losses related to sugarcane that was either spoiled or left unutilized, according to the report.

ESIG disputed the claim, asserting the loss did not result from negligence or contractual breach. The Federal High Court ruled in favor of ESIG, however, Amibara appealed and the case is currently under review.

A number of projects under the Group remain suspended. The estate in Welkait reportedly requires a minimum of 42 billion Birr to recover from the impacts of the northern conflict, an amount Group executives are looking to cover through bank loans.

Tendaho was also affected by the conflict, while the termination of most of its staff has raised uncertainty about the continued existence of the estate. Omo Kuraz I has been at a standstill despite construction on the project progressing to 83 percent, according to the report. The estate has been in limbo since the contract with the former Metals and Engineering Corporation (MetEC) was voided in 2018.

The Group’s management is weighing its options, which include privatising a few or all of the sugar estates it operates. However, the government’s repeated efforts to sell off its stake in the troubled sugar industry have failed time and again.

Earlier this month, the executives of EIH presented a quarterly performance report to Parliament in which they characterized the Group as one of four state-owned enterprises (SOEs) determined to be in “critical condition.”

Meleket Sahlu, deputy CEO of EIH, told lawmakers that efforts to privatize eight sugar estates under the Sugar Industry Group have halted after a number of tenders failed to attract sound offers from bidders, even under direct negotiations.