Ethiopia, one of Africa’s fastest-growing economies, is facing structural barriers that threaten its long-term export ambitions, according to the newly released African Export Competitiveness Report 2024 (AEC). The study identifies the lack of “demand sophistication” in the domestic market as a central factor hindering the country’s ability to develop high-value, diversified exports.

Measured under the African Export Competitiveness Index (AECI), demand sophistication reflects the extent to which local consumers drive innovation by requiring more complex, higher-quality goods. Ethiopia scored just 12.06, placing it among the continent’s lowest performers—above only Mauritania (10.13) and Niger (9.70). Analysts warn these figures signal insufficient pressure on manufacturers to innovate for both domestic and global markets.

By contrast, countries such as South Africa (94.76) and Namibia (65.74) lead the index, driven by strong, high-income urban markets that demand advanced goods and services. Experts note that meeting such domestic demand equips local producers with the skills, technology, and production standards needed to compete internationally. In Ethiopia, however, the report finds “opposite trends” in urbanization and income concentration, limiting the emergence of such markets.

Development economist Kidane Tekeste (PhD) said the lack of a sophisticated domestic market structure undermines Ethiopia’s export competitiveness and could weaken economic security in the long term. “If the domestic market does not demand high-value products, firms have no strong incentive to innovate, and the export basket remains limited,” he noted.

The AEC 2024 report also highlights Africa’s underperformance in global trade, with the continent’s goods exports accounting for only 2.67% of the global total. Among the 40 countries assessed, only 17 scored above the average index score of 34.65. South Africa tops the continent at 70.79, followed by Morocco and Mauritius, while Ethiopia remains well below the median.

The study stresses that export challenges in Africa are not solely external. Structural and internal obstacles—such as poor transport and logistics networks, complex regulatory systems, and bureaucratic inefficiencies—raise the cost of doing business and reduce competitiveness. The report proposes a dual approach: accelerating regional integration through frameworks like the African Continental Free Trade Area (AfCFTA) and implementing gender-responsive policy reforms to widen participation.

Ethiopia is identified as a critical player in realizing the AfCFTA’s vision of a unified continental market. The report urges investments in infrastructure, improved governance, and stronger export promotion policies to unlock its potential. Gender inclusion is also emphasized, with data showing women make up 60–70% of Africa’s cross-border informal traders but contribute only 20% to total export value.

According to the AEC, bridging this participation gap is both a social equality goal and an economic imperative. Implementing protocols such as the AfCFTA’s Trafficking in Women and Youth provision could expand opportunities for women traders, strengthen value chains, and boost overall export capacity.

The findings present Ethiopia with a clear challenge: without cultivating a more sophisticated and innovative domestic market, the path to competitive, high-value exports will remain elusive—limiting the country’s role in Africa’s broader trade transformation.

Wegagen Bank has reported strong financial performance for the 2024/25 fiscal year, posting a pre-tax profit of 3.85 billion birr while maintaining its Non-Performing Loan (NPL) ratio within the National Bank of Ethiopia’s (NBE) regulatory threshold of below 5 percent. The results were released during the Bank’s 32nd Ordinary General Meeting of Shareholders held on October 7, 2025.

According to its annual report, Wegagen’s total assets increased by 29 percent, climbing from 65.7 billion birr in the previous year to 84.7 billion birr. The bank, which is owned by 14,871 shareholders, also reported robust loan portfolio expansion, with total loans and prepayments rising by 18 percent to reach 53.5 billion birr.

Board Chairperson Abdishu Hussein attributed the performance to the strategic focus on the bank’s core lending activities, achieved while maintaining disciplined risk management. “Our steady credit growth has been guided by prudent lending practices that align with the NBE’s regulatory standards,” Abdishu said. He added that the low NPL ratio demonstrates Wegagen’s ability to manage growth effectively while preserving portfolio quality.

The continued profitability also boosted returns for shareholders, with earnings per share rising to 46.10 percent and Return on Average Equity (ROE) reaching 25.3 percent. Capital adequacy remained strong, with a ratio of 14.97 percent—nearly double the central bank’s minimum requirement of 8 percent.

The detailed breakdown of the bank’s 53.5 billion birr lending portfolio shows diversified exposure across key economic sectors. The import sector led with a 25 percent share, followed by domestic trade and services (18 percent), export trade (16 percent), manufacturing (15 percent), and construction (15 percent). This portfolio composition underscores Wegagen’s alignment with Ethiopia’s broader economic development priorities.

Wegagen’s deposit base also surged by 28 percent to 66.5 billion birr, supported by a 20 percent increase in its customer base. The bank added 737,712 new customers during the year, bringing its total account holders to over 4.37 million. International banking operations performed strongly despite global trade challenges, generating 273 million U.S. dollars in revenue.

The bank’s total capital grew by 39 percent to 12.8 billion birr, driven primarily by a 2-billion-birr increase in paid-up capital, which brought total paid-up capital to 7 billion birr. Wegagen continues to make strides as a pioneer in Ethiopia’s financial sector, having been the first company listed on the Ethiopian Securities Exchange (ESX).

Wegagen also expanded its presence through the launch of Wegagen Capital Investment Bank S.C., the country’s first licensed investment bank. The report noted steady growth across digital and branch networks: mobile banking subscribers reached 3.4 million, cardholders increased by 29 percent to 369,872, and the physical branch network expanded to 455 locations, supported by 398 ATMs and 467 sales terminals.

The Addis Ababa Environmental Protection Authority (EPA) is set to begin enforcing a new federal directive targeting emissions from aging vehicles, in a move aimed at curbing pollution in Ethiopia’s capital. The directive, issued by the Ministry of Transport and Logistics (MoTL) under the title Directive on Vehicle Emission Pollutant Control, introduces stricter environmental standards and penalties for non-compliance, including the possible permanent suspension of vehicles that fail to meet requirements after an initial grace period.

Dida Diriba, General Manager of the city’s EPA, confirmed that the authority is fully prepared to implement the regulation in coordination with the Transport Bureau, Traffic Police, and traffic management agencies. “Gas emission is a key challenge we are now prioritizing,” Dida told Capital. “A standard has been set, and every vehicle must now possess a certificate of verification. We will also conduct instant inspections, similar to alcohol tests, to ensure compliance.”

As part of the broader campaign, the government has also halted the importation of used cars, a measure intended to reduce the number of high-emission vehicles on the roads. Authorities plan to work closely with garages to carry out the necessary mechanical and technological upgrades needed to meet the new standards. The directive is expected to take effect this week.

In line with the government’s push for cleaner transportation, local company Eco Tech Solution plc has introduced the “Combustion Optimizer,” a fuel efficiency and emissions reduction device manufactured by Italy-based Supertech. The aftermarket device is designed for both gasoline and diesel engines, improving fuel combustion efficiency by using detergents to clean critical engine components. This process, according to the manufacturer, enhances fuel burn, cuts unburned hydrocarbon emissions, and improves fuel economy.

Supertech’s Commercial Director, Luigi Salemi, said the device has been available for a decade in overseas markets and has been particularly effective in countries with older vehicle fleets. “We see significant potential in growing economies like Ethiopia, where cars are typically older than in Europe or North America,” Salemi told Capital. He confirmed the company had engaged with Ethiopian authorities and chosen Eco Tech Solution as its local partner based on its capability to oversee a project-based rollout.

Eco Tech Solution’s Marketing Manager, Nahom Mesfin, said the device can reduce carbon emissions by up to 80% and cut fuel consumption by around 20%, aligning with the government’s new environmental requirements. To ensure both reliability and efficacy, the company will avoid direct-to-consumer sales. Instead, products will be distributed exclusively through a network of trained agents and licensed garages.

“We are providing specialized training for technicians at garages and vehicle inspection centers to ensure the device is installed correctly,” Nahom said. “This controlled distribution model is crucial for guaranteeing the technology’s effectiveness for consumers and for delivering the intended environmental impact.”

With both regulatory enforcement and technological solutions moving in tandem, officials and market players hope the combined effort will accelerate Addis Ababa’s transition toward cleaner, more sustainable urban transportation.

The Ethiopian birr has emerged among the weakest performing currencies in sub-Saharan Africa this year, depreciating by more than 10 percent against the U.S. dollar by the end of September 2025. The decline marks a significant setback for Ethiopia’s foreign exchange market, deepening challenges for businesses struggling to access hard currency and widening the premium in the parallel market.

Recent data show that the birr’s decline places it alongside the South Sudanese pound among the region’s poorest performing currencies of 2025. Analysts note that the ongoing volatility highlights persistent structural constraints in the country’s foreign exchange environment and underscores difficulties many businesses face in securing dollars through official channels.

A World Bank report released on October 8, 2025, revealed that the National Bank of Ethiopia (NBE) has implemented a string of corrective measures aimed at stabilizing the currency and narrowing the black market divergence. The measures include tightening regulations on banks’ foreign exchange transaction and service fees while restricting sales to priority sectors such as trade, personal travel, and essential goods.

The report also noted that despite escalating forex pressures, Ethiopia’s 2025 economic growth forecast has been revised upward by 0.7 percentage points, driven by resilient domestic activity and stronger performance in key industries. This gain, along with improvements in Nigeria and Côte d’Ivoire, has positioned Ethiopia among the few African economies with an upgraded growth outlook this year.

Over the long term, Ethiopia’s per capita income had grown at an average annual rate of 5.9 percent between 2000 and 2019, according to World Bank figures. However, recent data from global trading platform XS.com underscore the birr’s continued depreciation against major currencies. As of October 7, 2025, the exchange rate stood at approximately 144.50 birr per U.S. dollar, or $0.0069 per birr.

Economists attribute the weakening currency to multiple domestic pressures, including high inflation, a persistent trade deficit, and political instability that have collectively undermined investor confidence. While the government continues to pursue gradual foreign exchange liberalization, the birr remains under downward pressure, with its official rate still overvalued relative to parallel market rates.

The World Bank’s regional review placed the Ethiopian birr 18th among Africa’s 21 weakest currencies in 2025. A similar assessment by the XS.com Economic Institute ranked Ethiopia as the 26th poorest country globally, positioning its currency just below Yemen and slightly above Haiti in comparative strength.

The International Monetary Fund (IMF) has reiterated that exchange rate evaluations are based on official currency benchmarks against the U.S. dollar, reflecting each country’s macroeconomic fundamentals and market confidence. For Ethiopia, the current trend underscores the complex balance between market reforms and macroeconomic stability as the nation moves toward more liberalized foreign exchange management.