Traders in the Tigray region are grappling with significant financial burdens as they are being forced to pay off arrears accrued over the past three years, following the devastating conflict between the federal government and TPLF militants. Many businesses suffered extensive damage during the conflict, yet banks are now demanding repayment for loans taken prior to the war.
At the onset of the Tigray war, the National Bank of Ethiopia closed banks in the region, effectively halting financial operations. However, as these banks have reopened, they are now insisting that the business community repay their outstanding loans, despite the challenging conditions that have left many traders in dire straits.
Berihun Habtu, Representative of the Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) in Tigray, expressed concern over the situation, statithe loan, which was 31 billion birr in 2021, now stands at more than 60 billion birr .” He emphasized that the accrued interest on loans due to the conflict has compounded the financial difficulties faced by traders.
The total amount owed by businesses has skyrocketed from 31 billion birr in 2021 to over 60 billion birr today, according to Girma. He called for credit incentives and government stimulus loans to revitalize the struggling market, noting that many businesses have been partially destroyed or have gone bankrupt as a result of the war.
The ECCSA has urged the government to extend loan repayment terms and provide additional financing to support the recovery of affected industries. The need for a transparent and efficient property tax system has also been highlighted, as many businesses are still facing confusion regarding their tax obligations.
The ongoing challenges faced by traders in Tigray are compounded by the destruction of infrastructure and assets during the conflict, with many facilities either completely destroyed or partially damaged. The government has recently launched a four-year program aimed at rehabilitating micro, small, and medium enterprises in the Afar, Amhara, and Tigray regions, which are directly affected by the war. This program is funded by 2.2 billion birr from the governments of the European Union, Germany, and the Netherlands.
The program, implemented through a partnership involving a development bank, a German development organization, and the United Nations Capital Development Fund (UNCDF), aims to provide much-needed support to businesses as they navigate the challenging post-conflict landscape.
As traders in Tigray continue to face financial strain, the call for government intervention and support remains critical to ensure the recovery and sustainability of the region’s economy.
