Leaders and critics in the sector have warned that the global philanthropic system is facing a severe legitimacy crisis. They noted that the current global aid architecture places restrictions on Africa’s economic sovereignty and serves as a moral cover for worsening wealth inequality.

Leaders attending the 10th East Africa Philanthropy Conference in Addis Ababa highlighted this concern. According to them, less than 10 percent of global philanthropic funds flowing into Africa reaches African organizations directly. Instead, the vast majority of capital remains trapped within a complex web of intermediary organizations outside Africa, local branches of Western non-governmental organizations (NGOs) and global think tanks.

Critics argue that this structural exclusion has left African institutions as mere end users of capital rather than designers of their own development strategies. They contend that by routing most resources through Western intermediaries, NGOs and foreign thought leaders, the global philanthropic system dominates the narrative on African development and deliberately stifles radical or structural wealth redistribution initiatives.

“Less than 10 percent of global philanthropic funds flowing to Africa reaches African organizations directly,” said Brian Kagoro, Managing Director of Programs at the Open Society Foundations. “The highest number of consultants and beneficiaries are not Africans. I accept that they love Africa; I accept that they employ Africans. But let’s face reality. In this new era, localization without sovereignty is merely an exercise in sanitized colonialism.”

Kagoro warned that unless African philanthropic organizations move beyond merely managing poverty and transition toward building structural economic systems, they risk becoming complicit in the exploitation of the continent.

“Philanthropy in Africa should not view itself merely as an aid sector; rather, it must be a platform to discuss continental security in an era where others want to contract us, exploit us and build neo-colonies,” Kagoro said. “If this platform does not change, and if we continue to only talk about how to make what we do more effective, we will become highly potent agents for the recolonization of Africa.”

Echoing criticism of frameworks imposed by the West, Evans Okinyi, CEO of the East African Philanthropy Network (EAPN), also pointed out that the legal and policy infrastructures governing philanthropy in many African countries remain deeply rooted in colonial-era mindsets.

Modern legal frameworks often force organizations into rigid categories — for-profit, non-profit or government — which ignores traditional and fluid African socioeconomic structures where communities blend business with social mutual aid.

Okinyi emphasized that changing this trajectory requires a fundamental psychological shift away from short-term emergency interventions toward long-term, sustainable infrastructure.

“This is a matter of mindset; it is a mindset challenge,” Okinyi said in an interview on the sidelines of the conference. “Many of the Western concepts we adopt on this continent are about short-term gains.

But the challenges we face on this continent are long-term challenges. Therefore, the solutions put into practice must incorporate long-term strategies.”

“We are out of the colonial era, but when we talk about inherited concepts, inherited frameworks and inherited tools from the Global North, colonialism is at work right there,” Okinyi said. “To break free from those chains, to change the narratives, to build our own frameworks, we must understand and appreciate that Africans have always been donors and philanthropists since ancient times.”

Kagoro warned that when domestic philanthropy remains weak, governments turn more toward private international creditors. While this approach creates cheap money in the short term, it ultimately increases national debt burdens significantly, thereby shifting the weight of interest rates back onto the low-income households that philanthropic organizations claim to help.

Rather than accepting a system where global elites gain legitimacy by supporting basic needs such as water and primary education, Kagoro called on African leaders to focus on capital creation, asset protection and growth. Pointing out that the African diaspora sends more than $100 billion back to the continent annually — a massive accumulation of capital — Kagoro said governments have failed to properly use these funds for structural economic transformation by linking them to technology, micro-processing or agricultural infrastructure development.

Regional business leaders and chamber executives have issued a stark warning that a constantly changing and unpredictable legal and regulatory framework has made long-term business planning virtually impossible. They expressed deep concern over sudden policies introduced or amended overnight without consulting the business community. This approach is severely eroding confidence in the private sector and forcing enterprises to focus only on short-term exit strategies rather than strategic investment.

The primary threat to sustainable economic growth stems directly from this legal instability, which leaves both local businesses and potential foreign joint-venture investors unable to plan their future operations. According to corporate representatives, new proclamations and directives are frequently introduced or amended overnight, creating policy volatility that disrupts supply chains, destabilizes financial projections and halts capital projects.

These statements were made during a panel discussion themed “Private Sector Participation in the National Dialogue Process,” organized by the Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) in collaboration with the Ethiopian National Dialogue Commission.

Speaking at the forum, Bogale Bitane, president of the South Ethiopia Chamber of Commerce and Sectoral Associations, said a deep culture of fear has emerged, making business owners highly afraid to provide candid policy feedback to government bodies. “A business community that is afraid to express its views has been created,” he warned, explaining that traders are under dangerous structural pressure.

The president noted that under the current environment, laws are changing overnight, with new proclamations stamped and issued before stakeholders can even finish reading the previous ones. Consequently, foreign investors are shunning joint-venture opportunities. He urged the national chamber to move away from passivity and work actively and aggressively toward achieving a predictable legal environment.

The dialogue centered on the reality that the business community is often the first and worst casualty whenever regional conflict arises. According to participants, when conflicts break out, legitimate business establishments become the initial targets of looting, arson and property destruction long before any broader political fallout occurs.

Bogale detailed how business owners who had accumulated wealth and assets over decades — often using a 30/70 bank loan structure — have watched their factories, heavy transport fleets and buildings completely destroyed overnight. This devastation has plunged former investors and factory owners into severe psychological and economic crisis, reducing them to poverty and forcing them to seek employment from their peers.

To counter this structural vulnerability, the South Ethiopia Chamber has proposed the urgent establishment of a Corporate Social Responsibility Fund for Peace. Managed by the business community, the fund would serve as a financial safety net to support traders impoverished by war, whom the conventional banking system is unwilling to assist.

For his part, Berihu Haftu, president of the Tigray Chamber of Commerce and Sectoral Associations, echoed these concerns. Speaking on behalf of a region recovering from five years of devastating war, Berihu warned that the goals of the national dialogue cannot be achieved if some regional business communities still feel marginalized and excluded.

The financial data presented on post-war recovery was staggering. Berihu explained that before the war, Commercial Bank loans held by business owners in Tigray stood at 32 billion birr. Due to accumulated interest, compound interest and penalties accrued during the years the region was completely cut off from the national economy, that figure has now risen to 89 billion birr.

“Even though we have been litigating this matter with the federal government and financial regulators for nearly three years, we have yet to receive any solution,” he said. “If we cannot resolve even the current, immediate and obvious post-war crisis, the idea that they will provide solutions to problems accumulated over eras feels discouraging.” He added that issues such as power outages, a lack of stimulus loans, and kidnappings and harassment by armed groups along transit routes are leaving northern business communities incapacitated and unable to contribute their share to national economic revival.

Reinforcing criticism of the government’s timelines, chamber representatives said that while the work currently being done by the National Dialogue Commission is vital, the process is far too late.

They argued that the commission is operating at a time when crises have already escalated to this level because the dialogue did not begin eight or ten years ago, before the problems erupted. Had such deep consultations taken place earlier, the country could have reached consensus from a position of economic strength.

Sector actors also challenged the misconception that peacebuilding is exclusively the responsibility of government security agencies. They strongly criticized views suggesting that business owners should mind their own business and stay out of peace efforts.

Aynalem Abayneh, vice president of ECCSA, said the private sector can play a major role in Ethiopia’s national dialogue process by representing economic interests, promoting stability and contributing practical solutions to national challenges.

“The Ethiopian Chamber of Commerce and Sectoral Associations has a strong interest in supporting national dialogue outcomes that mitigate conflicts and strengthen predictability,” he said.

During the event, Ambaye Ogato noted that given the business community’s broad membership and reach, it has the potential to serve as an ambassador for peace and unity, thereby strengthening public participation and ownership.

He explained that the Ethiopian National Dialogue Commission, which has been operational for three years, developed 10 screening criteria to identify fundamental national issues, drawing from Article 6 of its establishing proclamation. Accordingly, the agendas have been divided into two categories: the first consists of core national issues to be discussed by the public at the national plenary, while the second includes grievances and inputs gathered from the woreda level upward regarding laws and policies that exist but have failed to be implemented by various stakeholders.

According to Ambaye, preparations have been completed to organize the gathered agendas and submit them to regional presidents, executive bodies and the Prime Minister. He said more than 4,000 delegates have been identified through the process, and consultations are scheduled to begin in Addis Ababa on July 14, 2026.

Ahadu Bank has secured a semi-finished high-rise building in the Mexico area of Addis Ababa, marking a major milestone for the young lender as it expands its presence in Ethiopia’s banking sector. The bank also launched two new mobile applications — Ahadu Le Kulu for retail customers and Mahder for MSMEs — as part of its push into digital banking.

Sources told Capital that the acquired property reportedly consists of two basement levels and 15 upper floors. Sources said Ahadu Bank emerged as the highest bidder in an auction conducted by Nib International Bank on May 21, 2026, and that the bid has since been accepted.

The acquisition is expected to provide the bank with its own high-rise headquarters and support its long-term growth ambitions.

At the same time, Ahadu Bank unveiled Ahadu Le Kulu, a retail banking app developed entirely in-house by the bank’s technology and software team. Board Chairman Anteneh Sebsibe said the app reflects the bank’s motto, “From the Many to the Many,” and is designed to bring a full range of banking services directly to customers’ hands.

He said the app allows users to self-register without visiting a branch, check account information, transfer funds, manage daily cash flow and make payments from anywhere at any time.

A notable feature of the app is its artificial intelligence capability, which analyzes user behavior and displays frequently used services more prominently on the dashboard. The app also generates weekly spending reports and financial analytics to help customers budget more effectively.

Ahadu Bank said security was a core consideration in the design of the platform. The app was built in line with international cybersecurity standards and includes modern fraud-prevention systems intended to protect customer data and guard against cyber threats.

Alongside the retail app, the bank also launched Mahder, a platform tailored for micro, small and medium-sized enterprises. The app serves as both a digital vault and an operational tool, with an integrated digital cash book that helps business owners track sales, expenses and overall performance from their smartphones.

The Federal Office of the Auditor General (OFAG) announced that, out of a staggering 21.57 billion birr and an additional USD 23,200.43 identified for recovery due to illegal or irregular financial practices in past budget years, only 31 percent — approximately 6.61 billion birr — has been successfully recovered. This leaves more than 14.95 billion birr and the entire foreign currency amount unrecovered to date, underscoring what the audit report describes as a persistent culture of financial unaccountability.

OFAG recently presented its consolidated audit report for the 2017 Ethiopian fiscal year to the House of Peoples’ Representatives, exposing severe delays and weaknesses in federal institutions. While a few entities, such as the Kombolcha Customs Branch Office and Arba Minch University, showed commendable corrective efforts by recovering 99 percent and 80 percent of their irregular payments respectively, major branches such as Kality, Modjo and Adama Customs lagged far behind.

Federal institutions also largely ignored directives to provide full documentation for unsupported expenditures. Out of 2.92 billion birr identified over the years as lacking supporting evidence, valid documentation was presented for only 1.8 percent, leaving nearly 2.87 billion birr completely unaccounted for.

In response to these persistent irregularities, the Ministry of Finance intervened during the budget year by imposing financial penalties and issuing stern written warnings to the top management of seven federal institutions that failed to implement laws and directives.

Beyond the outstanding arrears from previous years, the Auditor General’s Office carried out extensive oversight work during the 2017 budget year. After revising its plan due to security concerns and institutional mergers, the office audited 1.51 trillion birr, achieving 99.53 percent of its annual target. The financial review showed some positive shifts: the number of institutions receiving an unqualified, or clean, audit opinion increased by 13.8 percent year on year, rising from 116 to 132.

In addition, no federal institution received a disclaimer of opinion due to a total breakdown in the accounting system. However, the report strongly criticized five major federal institutions that received adverse audit opinions because of material and pervasive irregularities in their financial reports. The detailed analysis of the 2017 budget year highlighted critical areas where public funds continue to be wasted due to systemic gaps, indicating that the government’s revenue collection structure is burdened by a massive accumulation of outstanding arrears.

A joint assessment conducted across 11 customs branches and 12 revenue branches exposed 6.85 billion birr in uncollected customs duties and tax debts, representing a sharp 65.11 percent increase compared with the previous year.

The Dire Dawa Revenue and Customs branches alone accounted for the largest share of this deficit, with billions in uncollected government revenue. Illegal tax practices and non-compliance with the Value Added Tax (VAT) law cost the government an additional 1.21 billion birr in potential revenue.

Furthermore, accumulated uncollected debts and receivables reached 16.32 billion birr across 138 institutions. Most alarmingly, 4.7 billion birr of this amount consists of outstanding arrears dating back more than a decade, with the Ministry of Health and Wachemo University emerging as the top debtors.

According to the report, illegal or unsupported expenditures rose sharply. Payments exceeding 1.18 billion birr were made across 42 institutions without adequate supporting evidence, while 35.8 million birr was recorded as expenditure with no documentation at all.

The Ministry of Health was specifically singled out for making 231.1 million birr in overpayments and duplicate payments, as well as wasting 122.1 million birr on court orders and tax penalties resulting from avoidable payment delays.

Explaining the situation to the House, Auditor General Meseret Damtie said public infrastructure projects continue to suffer from severe delays and weak contract enforcement. Advance payments of 571.1 million birr granted to contractors remain unrecovered, unsupported by active bank guarantees or unrenewed, with Mekelle and Wollega universities facing high exposure in this regard.

“Worse still, 23 major construction projects valued at a total of 1.41 billion birr at Gambella, Salale and Bule Hora universities have ground to a complete halt due to severe breaches of contract,” she said. She pointed out that operating outside standard procurement procedures and directives has severely drained the government’s budget. The audit report noted that more than 1.25 billion birr was used in direct violation of the Procurement Proclamation. This includes 441 million birr in direct procurements that should have been handled through open bidding, and 194 million birr in procurements executed by bypassing the mandatory electronic Government Procurement (e-GP) system.

According to the report, although Ethiopia aimed to reduce the under-five mortality rate to 25 per 1,000 live births by 2030, recent survey data from 2024/25 shows that it has instead risen to 51. At Mugher Cement Factory, vital legal protections were bypassed, with performance guarantees not secured for 28 of 34 machinery procurement projects. All projects reportedly experienced delays of up to four years.

Furthermore, the factory failed to provide any utilization records showing the whereabouts of more than 21,000 tons of cement produced between 2016 and 2017 E.C., and it has yet to collect 84.3 million birr in credit sales dating back to 2010.

When presenting the report to the House regarding the Authority for Civil Society Organizations, the Auditor General said the regulatory body has failed to track the physical addresses of registered NGOs. Out of 5,000 active organizations, only 12 percent have registered their assets, and the tracking system relies entirely on manual paperwork rather than a digital database.

As a major example, it was stated that a prominent organization imported duty-free goods worth 403.5 million birr from the Canadian government and then completely diverted the goods from their intended development purpose. In her briefing, Meseret Damtie urged the House of Peoples’ Representatives to ensure strict legal accountability, calling on the relevant standing committees to question and hold failing institutional heads accountable in order to safeguard the nation’s financial integrity.