When Ethiopia announced its Banking Business Proclamation, the move was met with a mix of hope, skepticism, and confusion. For a nation balancing 30 private banks, a growing economy, and a hunger for foreign investment, the proclamation should have been a roadmap—a clear signal of where the country’s financial sector is heading. Instead, it feels like it’s neither here nor there: not quite closed, not fully open, and decidedly undecided.
As someone often mislabeled as being against foreign banks in Ethiopia, let me clear the air. I’m not against their entry. In fact, I believe foreign banks can play a transformative role—if their entry is handled strategically. The problem isn’t foreign banks. It’s a policy framework that lacks focus, clarity, and vision. The proclamation, instead of being a bold step forward, feels like it’s stuck in limbo, trying to appease everyone but satisfying no one.
The proclamation is riddled with contradictions. On one hand, it opens the door—albeit slightly—for foreign banks to enter the Ethiopian market. But then it imposes restrictive caps, heavy bureaucratic oversight, and unclear ownership rules. It’s as if Ethiopia is saying, “Come in, but don’t get too comfortable.” This hesitant approach risks alienating both local players and the very foreign investors the government hopes to attract.
Consider China and Vietnam. Both countries faced similar crossroads. They didn’t open their financial sectors blindly; they adopted clear, phased strategies. China capped foreign ownership and mandated technology transfers, ensuring local banks benefited from the influx of expertise. Vietnam allowed foreign banks to operate but maintained strong regulatory oversight to protect domestic interests. These were calculated moves, rooted in pragmatism. Ethiopia, by contrast, seems to be improvising.
An ideal proclamation would do three things:
Define the Role of Foreign Banks Clearly Are they here to fill capital gaps? Transfer knowledge? Drive competition? The current proclamation doesn’t articulate this. Instead, it oscillates between protectionism and token liberalization. If Ethiopia wants foreign banks to help modernize its financial sector, it needs to spell out their role and align policy incentives accordingly.
Strengthen Local Banks First Ethiopia has 30 private banks, most of which are small and undercapitalized. The proclamation should have included measures to prepare these banks for competition, such as incentivizing mergers, improving governance, and encouraging digital transformation. Instead, it leaves them vulnerable to being overshadowed by foreign players, should the gates eventually open wider.
Send a Clear Signal to Investors Investors thrive on predictability. They need to know the rules of the game. The proclamation, with its half-measures and vague directives, does the opposite. It raises more questions than it answers. Will foreign banks be allowed majority ownership in joint ventures? How will regulatory oversight be balanced with operational autonomy? Without clarity, Ethiopia risks scaring away the very investors it seeks to attract.
Ethiopia’s cautious approach might seem prudent, but it carries significant risks. By trying to strike a middle ground, the proclamation ends up pleasing no one. Local banks, already facing capacity constraints, see the potential entry of foreign banks as a threat rather than an opportunity. Foreign investors, meanwhile, are put off by the lack of a clear, welcoming framework. And consumers—women and youth entrepreneurs included—are left wondering when they’ll see the promised benefits of a more dynamic financial sector.
In economic terms, being “neither here nor there” means missing out on the best of both worlds. Ethiopia could emulate China by using foreign banks strategically to modernize its financial system while protecting local players. Or it could follow Vietnam’s path of gradual liberalization, allowing competition to drive innovation. Instead, the proclamation hovers awkwardly between these models, with no clear trajectory.
Why Open the Market at All? Some might ask, “Why does Ethiopia, a poor country with 30 private banks, need foreign banks at all?” The answer lies in scale, expertise, and integration. Local banks, while growing, cannot yet meet the demands of the African Continental Free Trade Area (AfCFTA) or finance large-scale infrastructure projects. Foreign banks bring global networks, advanced technology, and access to international capital—tools Ethiopia sorely needs.
But let’s not be naïve. Foreign banks aren’t charities. They’re profit-driven entities that prioritize lucrative markets and low risks. Ethiopia must engage them on its own terms, using policy to channel their resources into productive sectors like manufacturing, agriculture, and export financing. That requires a proclamation with teeth, vision, and coherence—qualities the current one lacks.
Ethiopia stands at a financial crossroads. The Banking Business Proclamation should have been a bold, clear step forward. Instead, it’s a hesitant shuffle sideways. It opens the door to foreign banks but doesn’t prepare local banks for competition. It invites investment but scares off investors with ambiguity. It’s neither here nor there.
To move forward, Ethiopia must learn from the likes of China and Vietnam. These nations didn’t just let the wind blow—they built windmills to harness it. Ethiopia, too, must decide: will it leverage foreign banks to build a stronger, more inclusive economy? Or will it keep building walls, isolating itself from the opportunities of globalization? As someone often mislabeled as being against foreign banks, I can only say this: let them in—but on Ethiopia’s terms, with a proclamation that’s clear, confident, and visionary. Anything less is just more wind.
Ethiopia, once hailed for its remarkable economic growth, now finds itself at a critical juncture where security challenges are casting long shadows over its economic prospects. The country, which experienced one of Africa’s fastest-growing economies until recently, is now grappling with a multifaceted insecurity landscape that threatens not just peace but also the economic fabric of the nation.
The roots of Ethiopia’s current security issues are deeply entwined with ethnic tensions, regional conflicts, and environmental crises. The Tigray conflict, which erupted in November 2020 between the federal government and the Tigray People’s Liberation Front (TPLF), has not only resulted in significant loss of life and displacement but has also led to a substantial economic downturn in the region. Despite a peace agreement in 2022, the ripple effects continue to be felt across the country, with insecurity persisting in various forms, including in the Amhara and Oromia regions where insurgencies have taken root.
These conflicts have direct implications on Ethiopia’s economy. Firstly, the agricultural sector, which is the backbone of Ethiopia’s economy, accounting for about 40% of the GDP and providing livelihoods to over 80% of the population, is severely impacted. The displacement of farmers, destruction of agricultural infrastructure, and the inability to access fields have led to reduced agricultural productivity, which in turn affects food security and increases reliance on costly imports.
Moreover, the insecurity has deterred both domestic and foreign investment. Investors, wary of the instability, are hesitant to commit resources to a region where the political situation remains volatile. This reluctance is exacerbated by Ethiopia’s struggles with foreign exchange, making it challenging for businesses to import necessary materials or machinery. The lack of investment stunts economic growth, reduces job creation, and delays infrastructure projects that are crucial for long-term development.
The conflict also disrupts trade routes, particularly affecting Ethiopia’s access to ports, which is vital for its landlocked status. Disruptions in logistics and transportation due to blockades or unsafe conditions increase operational costs for businesses, further straining an already fragile economy. Ethiopia’s foreign exchange reserves have dwindled, partly due to these disruptions, which has led to a significant depreciation of the birr, fueling inflation and making imports, including essential goods like medicine and fuel, prohibitively expensive for the average citizen.
On the humanitarian front, the insecurity has led to one of the worst humanitarian crises in recent years, with millions facing acute food insecurity. The conflict in Tigray, combined with droughts in other regions, has pushed Ethiopia into a situation where over 20 million people are in need of food aid. This crisis not only strains government resources but also diverts funds from development projects to emergency relief, further hampering economic growth.
The economic implications are not just short-term. The ongoing insecurity has long-term effects on human capital development. Educational institutions have been damaged or closed, leading to a generation potentially missing out on education, which is a cornerstone of economic development. Health services have also been disrupted, increasing morbidity and reducing the workforce’s productivity.
Furthermore, the government’s focus on security has led to an increase in military expenditure, which, while necessary, diverts funds from other critical areas like infrastructure and social services. This reallocation of resources could have significant long-term implications for Ethiopia’s economic trajectory, as it might delay or derail projects aimed at economic diversification and modernization.
The international community’s response has been mixed. While there have been efforts to mediate peace, the economic sanctions or suspensions of aid from various countries due to human rights concerns have further strained the economy. However, there’s also a recognition of Ethiopia’s strategic importance, leading to some investments in infrastructure and negotiations for debt relief, which could offer a lifeline if peace stabilizes.
Ethiopia’s security challenges are not merely a matter of regional disputes but a significant economic concern. The violence disrupts economic activities, scares away investors, diminishes agricultural output, and leads to a humanitarian crisis that saps the nation’s resources. For Ethiopia to return to its path of economic prosperity, it is imperative that peace and stability are restored. This requires not just cessation of hostilities but also addressing the underlying ethnic, political, and environmental grievances that fuel the conflict. Only then can Ethiopia hope to leverage its vast human and natural resources to build a resilient economy that can withstand and recover from the current storm of insecurity.
In this interview, we have the opportunity to speak with Harry Anagnostaras-Adams, the Executive Chairman of KEFI Gold and Copper. With a wealth of experience in the mining sector and a strong background in finance, Harry has been instrumental in driving the development of the Tulu Kapi Gold Project in Ethiopia. As we dig into the details of KEFI’s operations, Harry will share insights on the significance of Tulu Kapi within Ethiopia’s mining landscape, the company’s recent initiatives to raise funds through share issuance, and the strategies in place to ensure community engagement and environmental sustainability. Join us as we explore Harry’s vision for the future of mining in Ethiopia and the potential impact of KEFI’s work on local communities and the broader economy.
Capital: Can you provide an overview of Tulu Kapi Gold Mines (Tulu Kapi) and its significance in the Ethiopian mining sector?
Harry Anagnostaras-Adams: Tulu Kapi is one of Ethiopia’s first industrial scale minerals development projects designed to the highest 21st century standards technically, socially, environmentally and financially.
Of the total $500 million financing package from its discovery through to production, the largest single piece is $240 million from leading African development banks. These institutions impose very demanding standards. Tulu Kapi is therefore a showcase project, the success of which could allow Ethiopia to win a more significant share of the $180 billion invested annually globally in development within the minerals sector. For any country to win a good share of that capital allocation, it needs to show good examples of world class projects with transparency and compliance with the most stringent international standards. I believe this will happen and within 5 years, Ethiopian gold exports alone can grow to be triple that of today’s largest export sector – coffee
Capital: KEFI Gold and Copper has recently issued its shares to raise funds. What prompted this decision, and how do you see it impacting the future?
Harry Anagnostaras-Adams: Actually the company merely expanded its number of shares to raise funds from its shareholders. This is exactly in accordance with standard practice and the business model of all explorer-developers pending the launch of their first production operation. It has always been planned for shareholders’ funds to be injected as the company meets milestones along its journey starting with minerals exploration, through development and into production and cash flow generation.
KEFI is one of thousands of explorer/developers around the world who are funded in this manner pending the commencement of production. In fact, the explorer/developers make the vast majority of discoveries in the world and the industry would not continue to progress without them.
The Ethiopia Stock Exchange may well encourage companies like this to form locally, as a means to encourage exploration. If there is no exploration then it follows that there will be no discovery. If there is no discovery then of course there can be no development or production.
Capital: Explain KEFI reporting a loss of approximately £6.1 million over the last fiscal year. How does this reflect on the Company’s performance?
Harry Anagnostaras-Adams: KEFI has made successful discoveries and acquisitions, the value of which far exceeds the amounts recognized in our accounting reports. This is because KEFI’s accounting policy is to write off all exploration expenditure until we commit to development of a project. This is a conservative policy and, if we capitalized onto our books the market value of our projects , then we would not be reporting accounting losses.
Capital: The issuance of 1.9 billion additional shares is significant. How do you plan to use the funds raised from this issuance?
Harry Anagnostaras-Adams: The funds total approximately $15 million and are to pay for costs already incurred and more being incurred to complete of the Early Works at Tulu Kapi. Early Works include the preparation of security systems and preparations of the community for compensation and resettlement. Unlike many other comparable projects, Tulu Kapi cannot commence Major Works until the community is first properly and smoothly resettled to agreed new locations.
Capital: What is the current timeline for launching major works at the Tulu Kapi project? Are there any specific conditions that need to be met before construction can commence?
Harry Anagnostaras-Adams: The Government and the major banks have agreed to complete their essential approval formalities during this month. That will allow us to then confirm final costings for the fixed price lump sum commitments on construction and on community, get independent certification of safety and community readiness in accordance with the relevant standards referred to earlier, complete any other regulatory or legal formalities and then we commence Major Works. This is all in planned for early 2025
Capital: Given past security issues that have affected operations, what measures are being implemented to ensure the safety of your staff and the project site?
Harry Anagnostaras-Adams: As a matter of historical record, in the 20 years of having an exploration and development base at Tulu Kapi, the company has never incurred a serious injury on any employee. This safety record results from a strict adherence to comprehensive policies of ensuring safety. Our safety systems include that we treat the Tulu Kapi district as a high-risk “red zone” and In addition the Government provides security protection
Capital: Is it true that the Oromia regional administration has issued a final warning regarding development, capital or any other requirements?
Harry Anagnostaras-Adams: No. We have no idea what this refers to. The company has received no such warning nor any correspondence relating to this or any other regulatory matter. As regards compliance, we are in continual communication with all relevant government agencies and maintain a very close working relationship on all matters.
Capital: How does Tulu Kapi plan to engage with local communities in Wollega? What initiatives are in place to ensure that local populations benefit from the mining activities?
Harry Anagnostaras-Adams: We have developed policies and procedures based on compliance with all Ethiopian laws and also World Bank IFC Performance Standards. We have already provided a school to year 12, local water supply and local employment at our camp and community liaison officers. You have established the Tulu Kapi Charitable Endowment for social development programs which has recently provided malaria relief to the local community.
Capital: Mining operations often raise environmental concerns. What steps are you taking to minimize its environmental impact and promote sustainable practices?
Harry Anagnostaras-Adams: Our independent base line studies established ground conditions before we commenced project work. We will monitor regularly and report transparently so that there are no concerns due to lack of information. Our processes are designed to contain and re-circulate within the system any industrial reagents used and to avoid any contamination
Capital: Beyond Tulu Kapi, KEFI is looking into additional concessions for lithium, tantalum, and rare earth metals in Ethiopia. Can you elaborate on these plans and their potential benefits?
Harry Anagnostaras-Adams: Ethiopia is blessed with many minerals required for modern society’s existence. Electrification of the world is almost a revolutionary phase throughout the world’s economies. Copper, nickel, cobalt, tantalum, lithium are in heavy demand . Ethiopia has indications of world class potential in these minerals but is under explored.
The comparison with similar geological terrain in Western Australia suggest that the Ethiopia minerals sector could be expanded to exports of $40 billion per annum. Yet there has been negligible modern exploration. It is easy to imagine material benefits to Ethiopia if the minerals and minerals processing sectors provided even a fraction of the hypothetically potential $40 billion per annum export revenues, in comparison with 2023 total Ethiopian exports of $6 bill from all sectors combined. Imagine the benefits of exports significantly exceeding imports!
Capital: How do you envision the future of mining in Ethiopia, particularly in light of KEFI’s operations? What challenges and opportunities do you foresee in the coming years?
Harry Anagnostaras-Adams: The gold industry, the potash industry and certain other sectors can be significant contributors within just a few years. Ethiopia produces efficient renewable or “green” electricity. One can easily imagine many value-adding activities by processing here the mineral products that sustain modern society. Society needs materiaals for its existence and Ethiopia has a competitive advantage for supply of some of these required materials both in a semi-processed and a refined value-added state.
KEFI is ambitious and wants to make a contribution. At the same time, we want to continue to Ethiopianise by emphasizing alliances with strong local shareholders in both the government and private sectors. And we want our personnel to reach minimum 95% Ethiopian as soon as practically possible. Eventually we should become 100% Ethiopian staffed of we achieve our long-term objectives.
Capital: With recent financial challenges of the international mining sector, how do you plan to maintain investor confidence? What message would you like to convey to current and potential investors?
Harry Anagnostaras-Adams: There are thousands of explorer/developers in the minerals sector and the many do not succeed. It is a very challenging and high-risk business. KEFI itself has made discoveries and acquisitions during a very weak past decade in the capital markets for the minerals sector. This is a cyclical phenomenon and metal prices have recently turned around. Plus we have used the past decade to get development-ready. The next decade will be much easier than the past decade.
As you can hear, we are very proud that KEFI has made discoveries and turned around troubled development opportunities in the frontier markets for the modern minerals sector of Saudi Arabia and Ethiopia. And we are very proud to now have attracted to Ethiopia’s Tulu Kapi international and local investors of highest standing achieved against a backdrop of quite challenging local market conditions in Ethiopia. But we are the first to say…this is a challenging business. It is a very high value add and needs investors who understand the challenges and rely on professional technical work for success?
Capital: What is your long-term vision for Tulu Kapi and KEFI Gold and Copper? How do you plan to position the company within the competitive landscape of mining in Africa?
Harry Anagnostaras-Adams: KEFI is focused o the Arabian Nubian Shield geology for the time being and developing Tulu Kapi is our next major milestone. Based on analogous projects elsewhere in the world, we are confident that Tulu Kapi will extend its resources and reserves and produce gold for a decade or two. The Tulu Kapi work force will be trained to the highest industry standards and there will be many opportunities for advancement within the company and within other companies that join us in the Ethiopian industry. The local suppliers of the multitude of inputs for the operation will have the opportunity to develop long term sustainable businesses far beyond the 10-20 year life of Tulu Kapi.
We are ambitious people. We did not come here just to build and operate Tulu Kapi. As Ethiopia opens up more opportunities for exploration and development, we will do our best to make a contribution to the highest standards of integrity and social responsibility.
Capital: As a leader in this sector, what advice would you give to emerging mining companies looking to establish themselves in Ethiopia or similar markets?
Harry Anagnostaras-Adams: Be focused, work hard and do not compromise the standards one should apply
Capital: Is there anything else you would like to share about Tulu Kapi or KEFI Gold and Copper that we haven’t covered in this interview?
Harry Anagnostaras-Adams: Mining is a long game, but also delivers a long future. Our products and services are at the heart of modern society and therefore our processes and practices need to advance with society’s standards and expectations in all respects in order to serve its role properly and responsibly.
We feel very confident about the industry’s future in Ethiopia and we will do our best to contribute wherever we can properly do so.
