Ethiopia’s State Fuel Importer Registers 208 Billion Birr Loss Amid FX Reforms

• Ethiopian Petroleum Supply Enterprise faces 208 billion ETB losses linked to foreign exchange reforms. 

• Government officially classifies fuel subsidies as direct budget spending and  it will be lifted soon.

• Fuel subsidy cap set at 100 billion ETB per fiscal year. 

• Loss valuation reflects accelerated birr devaluation under market-based FX system. 

• National Bank of Ethiopia implemented market-based FX reforms from July 2024. 

Why it matters?

• Nigeria signed MoU with South Korea’s AEDC to establish EV manufacturing plant on Jan 30 2026. 

• Deal signed by Nigeria’s Minister of State for Industry John Enoh and AEDC Chairman Yoon Suk-hun. 

• Project aligned with Nigeria’s National Energy Transition Plan and National Automotive Industry Development Plan. 

• Plant to include EV manufacturing and nationwide charging infrastructure development. 

• Initial focus on vehicle assembly with future expansion to full local production. 

• Facility projected to produce up to 300,000 EVs annually once fully operational. 

• Initiative expected to create about 10,000 direct jobs and additional indirect jobs. 

Why it matters?

The agreement marks a development in African automotive production, creating potential regional manufacturing links and technology transfer. It may influence EV supply chains in Africa.

• Innoson Vehicle Manufacturing’s compressed natural gas (CNG) and electric vehicle factory near completion. 

• Factory expected to rank among world’s largest CNG vehicle facilities by production capacity. 

• Installed capacity to produce up to 3,000 units annually across six vehicle categories. 

• Innoson plans to hire about 2,000 additional workers in 2026. 

• Plant to host technical training programme for young Nigerians. 

• Facility expected to be completed within the next few months. 

• Project highlights Nigeria’s drive into locally manufactured CNG and electric vehicles. 

Why it matters?

• National Bank of Ethiopia plans to allow unlimited deposits of legally earned foreign currency in commercial banks.

• Policy targets individuals and entities earning foreign currency through legal channels.

• Reform aims to ease foreign exchange constraints affecting importers and exporters.

• NBE governor Eyob Tekalign presented the measure during the central bank’s six-month performance report to parliament.

• NBE conducted biweekly foreign currency auctions, collecting ETB 1.3 trillion in the first half of the fiscal year.

• Parliamentary committee raised concerns on credit supply, trade imbalance, and monitoring foreign exchange demand.

  Why it matters?

  The measure could increase formal foreign currency inflows into the banking system.
  It may support import financing, export operations, and foreign exchange availability.

• National Bank of Ethiopia’s 17th FX auction cleared at 155.05 birr per USD. 

• NBE allotted USD 70 million to banks from total bids of USD 127.25 million. 

• Weighted average rate of successful bids was 155.0506 birr per USD. 

• Accepted bid rates ranged from 154.8141 to 155.0519 birr per USD. 

• 19 commercial banks participated; 8 secured foreign exchange. 

• Clearing rate was slightly weaker than previous 154.82 birr per USD auction. 

• Next FX auction scheduled under NBE’s biweekly calendar. 

Why it matters?

The  successive FX auctions set the official dollar price for commercial bank allocations, affecting import financing costs and formal FX market liquidity. It signals ongoing birr exchange rate adjustments under Ethiopia’s auction-based FX management.

• Government to phase out fuel subsidies for petrol and diesel by February 2026. 

• Policy aims to raise retail petrol and diesel prices to cost-recovery levels. 

• Subsidy removal part of broader cost-recovery and economic reform agenda. 

• Phase-out follows IMF advice to end fuel subsidies under reform programs. 

• Previous subsidy elimination moves included partial diesel/petrol price deregulation in 2025. 

• Reform expected to reduce government fiscal burden from subsidised fuel. 

Why it matters?

Phasing out fuel subsidies shifts price setting to market signals and is scheduled by February 2026. The policy affects transport and logistics cost structures and public finances. It stems from IMF-linked reform directives to lower fiscal pressure. The  steady rise of fuel prices has been the single fundamental factor for cost increment across diverse sectors in the Ethiopian market.

• Ethiopia piloted rail transport of 120,000 litres diesel via Ethio-Djibouti Railway. 

• Pilot uses specialised wagons at Indode Railway Depot, Addis Ababa outskirts. 

• Initiative directed by Prime Minister Abiy Ahmed to reduce road haulage reliance. 

• Ethio-Djibouti Railway JSC and National Oil Company oversee fuel rail trial. 

• Trial validates safety standards, logistics procedures, regulatory framework. 

• Government plans to expand rail fuel transport to gasoline and jet fuel. 

• Project aligns with Ethiopia’s transport master plan to expand multimodal freight. 

why it matters?
Rail diesel transport trial could lower Ethiopia’s fuel supply logistics costs and reduce foreign-exchange outflows from road tanker dependency. It advances multimodal freight use along the Djibouti corridor.

• Ethiopia recorded $5.1 billion in merchandise export revenue in H1 of FY 2025/26, achieving 120% of target. 

• Service exports earned $4.5 billion and remittances contributed $4.6 billion in the same period. 

• FDI inflows reached $2.3 billion in first six months of fiscal year. 

• Export revenue exceeded target by $1.83 billion compared to same period last year. 

• Government pursuing $9.4 billion full-year export revenue goal for FY 2025/26. 

• Minister of Trade highlighted Digital Ethiopia 2030 Strategy online trade services implementation. 

• Export performance report delivered at six-month performance review in Dessie. 

why it matters? Strong export performance expands foreign exchange earnings and supports Ethiopia’s economic reform agenda, reinforcing trade sector contribution to growth.

• National Bank of Ethiopia announced a $70 million foreign exchange auction on Tuesday, February 3. 

• Auction follows an oversubscribed previous FX sale. 

• Commercial banks will participate in the FX auction. 

• Bidding window schedule for banks was specified. 

• Auction is part of the central bank’s continuing hard currency allocation operations. 

why it matters?
The planned $70 million FX auction reflects ongoing National Bank of Ethiopia efforts to supply hard currency and address high demand in Ethiopia’s foreign exchange market.

The National Bank of Ethiopia (NBE) enacted targeted measures in response to a recent surge in the parallel foreign exchange market, which saw the informal USD/ETB rate spike. The actions include a large unscheduled USD auction and a new directive tying import foreign exchange allocations to customs valuation benchmarks, aimed at stabilizing the currency and discouraging informal trading.

Key Takeaways:

• Forex spike: Parallel forex rates reached as high as 190 birr per dollar, above official rates below 160 birr.

• Large FX injection:  USD 500 million  was injected via a special forex auction to meet heightened demand.

• New directive: Banks must use Ethiopian Customs Commission valuation data when issuing forex for imports.

• Objective: Measures target illegal/parallel forex activity and enhance consistency in forex valuations.

• Reform context: Steps align with ongoing post-2024 forex market reforms and market-clearing exchange rate systems.

  
  

Why It Matters:

The Ethiopian Investment Commission (EIC) has launched a certification system for investment consultants to standardize advisory services and strengthen investor confidence. The initiative was introduced at the inauguration of the European Chamber of Commerce in Ethiopia (EuroCham) office in Addis Ababa. The system aims to ensure only qualified, certified advisors serve investors, addressing past complaints about poor guidance.

Key Takeaways

• New certification: EIC introduced a competency assessment and certification system for investment consultants.

• Purpose: To professionalize investment advisory and protect foreign investor interests.

• Implementation: Only certified consultants/firms will be authorized to provide formal advisory services.

• Stakeholder support: EuroCham’s new EU FDI Excellence Centre will complement certification by guiding investors.

• Related concerns: EuroCham noted remaining challenges in tax, customs, and policy predictability.

Why It Matters:

The Ethiopian Capital Market Authority (ECMA) has registered 12,211,586 existing shares of Addis International Convention Center S.C., ensuring compliance with the Public Offer and Trading of Securities Directive No. 1030/2024. This step aligns the company’s securities with Ethiopia’s emerging capital market regulatory framework and supports stock market development. 

Key Takeaways:

• 12,211,586 existing shares of Addis International Convention Center were registered for compliance. 

• Registration fulfills requirements under Public Offer and Trading of Securities Directive No. 1030/2024. 

• ECMA clarified the notice is informational, not an endorsement or solicitation to buy or sell. 

  
  

Why It Matters:

Registering pre-existing shares under the new capital markets directive strengthens the legal and regulatory foundation of Ethiopia’s securities ecosystem. For investors and market participants, it enhances clarity and compliance, which are essential for confidence and participation in the country’s nascent stock market.

The National Bank of Ethiopia (NBE) plans to exit the gold purchasing and export market by December 2026, ending its monopoly and opening the sector to private banks, according to the IMF’s Fourth Review. This shift follows sustained financial losses and market distortions attributed to NBE’s premium-based gold purchases. 

Key Takeaways:

• Policy change: NBE will cease gold market operations by end-December 2026. 

• Market entry: Private banks will be permitted to buy gold domestically post-exit. 

• Cost issue: NBE’s prior 15 % premium above international prices led to losses and balance-sheet strain. 

  
  

Why It Matters:

• Share purchase: Existing shareholders can buy additional shares through approved brokers. 

• Required docs: Must submit ID, TIN, email, and authorization evidence. 

• Right offer structure: Both new and previously unpurchased shares are available. 

• Broker role: Purchases processed via Capital Market Authority–licensed brokers. 

• Share register: Bank’s share details and eligibility verified against customer records. 

  
  

Why it matters:

• Event dates: 4–8 February 2026 at Meskel Square.

• Participants: ~50 major companies from 20 countries expected.

• Local engagement: 300+ local companies will participate.

• Purpose: Promote exports, trade linkages, investment partnerships.

• Organisers: Ethiopian Chamber of Commerce & Sectoral Associations (ECCSA).

  
  

Why it matters:

• ECMA registered 15 million existing Bank of Abyssinia shares with the authority’s registry. 

• 3.125 million new shares approved for issuance via rights offer. 

• Registration follows Directive No.1030/2024 requiring public securities to be registered. 

• ECMA emphasized notice is for public information, not a sales offer. 

• Move aligns Bank of Abyssinia with Ethiopia’s evolving capital market regulations. 

Why it matters:

• Ethiopia’s bid to restructure its USD 1 billion Eurobond stalled as creditors rejected the agreement in principle. 

• AIP terms included a 15% haircut, new USD 850 million bond, and USD 350 million repayment due July 2026. 

• Creditors cited comparability of treatment concerns under the official restructuring framework. 

• Ethiopia defaulted on the Eurobond in late 2024. 

• Government says it will continue constructive negotiations with official and private creditors. 

Why it matters:

• Ethiopia lost an estimated USD 24.6 billion to trade-related illicit financial flows (2013–2022). 

• Losses place Ethiopia among the top ten globally for such outflows. 

• Illicit flows result from invoicing mispricing and non-reported trade. 

• Across sub-Saharan Africa, total trade value gaps reached 152.9 billion US dollar in 2022. 

• Report highlights the scale of unrecorded capital movement in foreign trade. 

Why it matters:

• Revenue reported: Ethio Telecom earned 85.02 billion birr in first half of current fiscal year. 

• Growth drivers: Rapid expansion in data consumption and digital services drove revenue increase. 

• Digital services role: Digital solutions including mobile data and value-added services contributed strongly. 

• Telebirr impact: Mobile money and digital payment platforms supported service diversification. 

• Market context: Telecom sector liberalization and competition sustain digital demand growth. 

Why it matters:

• Credit rating lowered: Fitch cut Afreximbank’s long-term rating to BB+ from BBB- (investment grade).

• Ratings withdrawn: Fitch has withdrawn future ratings and analytical coverage of Afreximbank.

• Dispute driver: Downgrade and withdrawal followed disagreements over Fitch’s assessment approach.

• Preferred creditor status questioned: Fitch cited loss of informal preferred creditor protection in Ghana deal.

• Bank response: Afreximbank terminated its credit rating relationship with Fitch. 

Why it matters:

• Bank of Abyssinia’s total deposits exceeded 300 billion birr in early 2025/26. 

• At end of 2024/25, deposits were 243.2 billion birr. 

• Total assets stood at 286.2 billion birr as of June 30, 2025. 

• Net profit was 7.3 billion birr in FY 2024/25. 

• Customers numbered over 11.6 million as of 2025. 

Why it matters:

• Interbank FX market opened: Ethiopia’s central bank has launched a competitive interbank foreign exchange market with real-time pricing. 

• Market pricing: Banks conduct FX trades through competitive bids, enhancing price discovery and transparency. 

• Regulated oversight: The National Bank of Ethiopia (NBE) keeps strict supervision and guidelines over the new trading platform. 

• Platform tech: The market uses an automated trading system (ESX) for efficient transaction execution. 

• Policy change: This move aligns with Ethiopia’s broader market-based FX reforms since 2024. 

Why it matters:
Opening an interbank FX market marks a significant step in Ethiopia’s transition toward market-based foreign exchange pricing, helping align official pricing with market dynamics. This can improve liquidity allocation among banks and provide more reliable benchmark rates for the broader financial and business community.

• Auction size: National Bank of Ethiopia sold USD 500 million in its largest single foreign exchange auction to date. 

• Exchange rates: Weighted average clearing rate was 154.82 birr per USD with bids between 153.50–154.998 birr. 

• Demand: Total bids reached USD 592.3 million, exceeding supply by over USD 92 million. 

• Participation: 31 banks bid in the auction, 25 securing foreign currency allocations. 

• Policy context: Auction mechanism remains central to Ethiopia’s market-based FX regime post-2024 reforms. 

Why it matters:
This record forex auction reflects active implementation of Ethiopia’s market-based foreign exchange policy and provides significant hard currency liquidity to the banking sector. Exchange rate discovery and allocation outcomes inform pricing and liquidity conditions for imports and financial planning across institutions.

• Total assets: Zemen Bank’s assets reached 106 billion birr in the first half of fiscal 2025/26. 

• Profit: Gross profit for the same period exceeded 5 billion birr. 

• Deposits: Customer deposits climbed to 80 billion birr. 

• Capital: Paid-up capital risen to 14 billion birr, strengthening equity base. 

• Mid-year comparison: Figures build on prior fiscal growth trends in profitability and balance sheet size. 

Why it matters:
Zemen Bank’s midpoint financials demonstrate solid balance sheet expansion and earnings performance within Ethiopia’s banking sector. These metrics are key indicators for investors and analysts tracking sector growth and institutional resilience.

• Ethio-Djibouti Railway (EDR) and National Oil Company (NOC) launched a pilot to transport 120,000 liters of diesel by rail from Indode depot on January 27, 2026. 

• Initiative follows a directive from Prime Minister Abiy Ahmed to begin petroleum transport via rail to modernize logistics. 

• EDR has 110 underutilized fuel tank wagons; missing connections to oil terminals have limited use. 

• Negotiations ongoing for a 1.5 km rail link from Horizon Djibouti Terminals fuel jetty to the train station. 

• Doraleh Multipurpose Port first-mile trucking (1.9 km) costs Ethiopia about USD 10 million annually. 

Why it matters: This pilot marks the first operational test of bulk petroleum movement by rail in Ethiopia, aiming to reduce logistics costs and enhance supply chain efficiency for strategic imports. If successful and scaled, it could set a precedent for transporting fuel and fertilizer via rail.

• Zijin Gold International agreed to acquire Allied Gold Corporation for C$5.5 billion (about US$4.0 billion) in an all-cash transaction at C$44 per share, a 27% premium to the 30-day average. 

• Transaction financed entirely from Zijin’s cash reserves with no financing conditions and expected closing by late April 2026. 

• Shareholder & regulatory approvals required; Allied directors holding ~15.4% of shares have agreed to support the deal. 

• Upon completion, Allied Gold will be delisted from the Toronto and New York stock exchanges. 

• Deal includes a C$220 million termination fee payable by Allied under specified conditions. 

Why it matters: This acquisition significantly increases Zijin’s portfolio of large-scale gold assets in Africa, including those in Ethiopia, and reflects continued consolidation in the global mining sector. The all-cash structure provides immediate value to Allied Gold shareholders without financing contingencies.

• NBE now requires banks to use Ethiopian Customs Commission indicative prices for selected imported goods in Letters of Credit and import permits. 

• The measure becomes effective January 27, 2026. 

• It addresses price discrepancies between bank-used prices and customs reference prices. 

• The action follows the implementation of consolidated Foreign Exchange Directive No. FXD/0V2024 from July 2024. 

• Under the reform, banks can negotiate FX buying/selling rates directly with customers.  

Why it matters:

Aligning LC valuations with customs prices improves transparency and consistency in trade financing by reducing discrepancies between bank-approved hard currency amounts and official import valuation. It may enhance predictability of import cost calculations for businesses and customs duty assessments. This policy strengthens coordination between the National Bank of Ethiopia and the Ethiopian Revenues & Customs Authority in managing foreign exchange and trade finance procedures.