Sidama Bank S.C., one of Ethiopia’s emerging private financial institutions, is grappling with a wave of employee resignations as the country’s rising cost of living continues to erode real wages and push professionals toward better-paying opportunities.
According to the bank’s 2024/25 annual report, macroeconomic pressures and low compensation levels across the local banking industry have become major drivers of attrition. “The bank currently falls in the low-tier category in terms of salary and benefits,” the report noted, underscoring a growing mismatch between pay scales and inflationary pressures.
Despite delivering robust financial results—a 77.2 percent increase in net profit and a 111 percent growth in total assets—Sidama Bank admits it is finding it increasingly difficult to retain its workforce.
“Our employees are leaving their jobs in search of better pay, mainly because of the ever-increasing cost of living,” said Abraham Mareshalo, Chairman of the Board of Directors. The management described the high turnover as a “serious challenge” to the bank’s expansion and service delivery objectives.
Ethiopia’s economic environment has been marked by instability, fluctuating commodity prices, and currency depreciation, which have collectively strained household finances. Although annual inflation dipped slightly to 29.4 percent by June 2025, prices of basic goods and commercial rents remain prohibitively high for many workers.
Sidama Bank had planned to hire 226 new employees in the past fiscal year, but filled only 82.3 percent of that target, employing 186 individuals. As of June 30, 2025, the bank’s total workforce stood at 843, with women representing 25 percent of permanent staff. Clerical employees account for the majority of the bank’s workforce at 59.3 percent.
In response to the turnover crisis, the bank’s board has commissioned a third-party review to redesign its salary and benefits structure. The new framework, approved for implementation in the next fiscal year, is expected to boost employee satisfaction and competitiveness in the job market.
“This strategic decision will significantly enhance staff motivation and strengthen our capacity to attract and retain skilled professionals,” the report said, positioning the initiative as a key component of the bank’s 10-year corporate strategic plan.
While profitability indicators remain strong, Sidama Bank acknowledges ongoing capital constraints that could limit its medium-term growth. The bank’s report also points to a shortfall in paid-up capital, restricting its partnerships with international payment operators and foreign currency reserves.
To comply with directives from the National Bank of Ethiopia (NBE) requiring all private banks to raise their paid-up capital to 5 billion birr by June 2030, Sidama Bank mobilized 141 million birr in new share capital during the past fiscal year. Shareholders have been urged to invest further to strengthen the bank’s capital base.
Originally registered as Sidama Microfinance Institution under Proclamation No. 40/1988, the institution transitioned into full commercial banking operations in 2022. Today, it aspires to expand access to technology-driven financial services across both rural and urban markets, while navigating Ethiopia’s shifting economic landscape.
