The Bank of Abyssinia (BoA) is navigating a high‑stakes tax dispute with the Ministry of Revenues that could result in substantial back‑tax liabilities, even as it prepares for a landmark listing on the Ethiopian Securities Exchange (ESX).

The legal controversy centers on the treatment of dividend withholding tax when dividends are used to cover shareholders’ unpaid subscribed capital. The Ministry, through the Federal High Taxpayers’ Office, views this as a payment of a personal shareholder debt, subject to the 10% dividend withholding tax under the Income Tax Proclamation No. 979/2008.

BoA, supported by the Ethiopian Banks Association, argues that such payments are effectively reinvested capital and should be tax‑exempt. The bank has frequently used this approach to help meet the National Bank of Ethiopia’s minimum paid‑up capital requirements.

However, a recent Cassation Bench ruling in a case between Tsehay Industry S.C. and the Ministry of Revenues has shifted the landscape. The court held that dividends used to fulfill subscribed capital obligations are taxable, and though BoA was not a party to that case, the decision is now being treated as a binding precedent.

While the new Income Tax Amendment Proclamation No. 1395/2024 provides clearer rules going forward, BoA faces the risk of being held accountable for historical dividend allocations made before the amendment. If the tax authority prevails, the bank could face years of back taxes, penalties, interest, and significant legal and administrative costs.

In its 29 January 2026 Prospectus, the bank explicitly warned that this tax dispute “could have a material adverse effect on the Bank’s financial condition, cash flows, and reputation.” The matter remains pending before the Tax Appellate Assembly and the regular courts, and the outcome is expected to set a crucial precedent for the entire banking sector.

Amid the uncertainty, BoA has launched a 5‑billion‑birr Rights Offer, a strategic move to raise capital and prepare for its historic listing on the ESX main board.

The Prospectus outlines three key goals: registering 15 million existing common shares, issuing 3.125 million new “rights to purchase shares” at Birr 1,600 per share, and ultimately listing 100% of its ordinary shares on the stock exchange. The rights issue is designed to strengthen the bank’s capital base and support its growth ambitions.

The 1,600‑birr price was set after an independent valuation by the bank’s board together with Deloitte, using market and earnings‑based methods, since the shares are not yet trading on any public platform. Net proceeds of about 4.9 billion birr will be used to bolster the capital adequacy ratio and accelerate the bank’s shift to 100% digital banking through its partnership with Temenos.

For the 2024/25 financial year, BoA reported a net profit of Birr 7.3 billion, up from Birr 4.2 billion the previous year. Total assets stood at Birr 286.2 billion, with customer deposits of Birr 211.7 billion and loan reserves of Birr 193.4 billion.

The bank acknowledges that “increased competition could reduce market share and erode profit margins,” but sees ESX listing as an opportunity to enhance governance, improve transparency, and attract domestic and international institutional investors, including pension funds and sovereign wealth funds.

The rights subscription period runs until 3 March 2026. Once the capital increase is approved, BoA plans to list all its common shares on the ESX as soon as possible.

African airlines posted the strongest year‑on‑year traffic growth of any world region in 2025, according to the International Air Transport Association (IATA), as demand for air travel and cargo surged across the continent.

In its 2025 full‑year and December performance report, IATA says global passenger demand rose 5.3% in 2025, measured in revenue passenger kilometres (RPKs), with capacity (available seat kilometres, ASKs) up 5.2% and the overall load factor reaching a record 83.6% for the year. African carriers significantly outpaced this global trend, driving optimism about the continent’s growing role in global aviation.

IATA’s regional breakdown shows that African airlines’ annual traffic rose 7.8% in 2025 compared to 2024, the highest growth rate among all regions and well above the global average of 5.3%.

Capacity for African airlines increased 6.5% in 2025, but load factor climbed 0.9 percentage points to 74.9% — a record high for Africa and the strongest load‑factor improvement of any region, despite still being the lowest regional load factor worldwide. Strong international demand contributed to this performance, with African carriers’ December 2025 traffic rising 10.3% year‑on‑year, the second‑highest monthly growth globally.

“Africa’s airlines delivered the strongest growth in passenger traffic in 2025, reflecting rising connectivity, an expanding middle class, and growing intra‑African and international travel,” said Willie Walsh, IATA’s Director General. “This demand surge puts into sharp focus two key challenges — decarbonization and the global supply chain crisis — that must be addressed to sustain long‑term growth.”

Globally, domestic demand grew modestly in 2025, up 2.4% year‑on‑year, while capacity expanded 2.5%, with load factor averaging 83.7% (down 0.1 ppt from 2024).

However, the real story for Africa lay in the international market. Full‑year international demand rose 7.1% globally, with capacity up 6.8% and a record full‑year international load factor of 83.5%. African airlines were a key driver of this international expansion, especially on routes to and from Asia and Europe, where trade and tourism flows remained strong.

December 2025 provided a strong finish to the year, with total global demand rising 5.6% and load factor reaching 83.7%, again just below 84% — a sign that airlines, including African carriers, kept fleets full to meet robust demand.

Walsh noted that the strong and continuous increase in demand highlights two major challenges for the industry: decarbonization and supply chain constraints. Airlines wanted to expand capacity with new, more efficient aircraft, but faced delays in aircraft and engine deliveries, limited maintenance capacity, and cost pressures that IATA estimates exceeded $11 billion in 2025.

“Every new aircraft means a quieter, cleaner fleet, with more capacity and more flight options than at any previous point in history, which is what airlines and their customers want,” Walsh said, urging governments to support rapid expansion of sustainable aviation fuel (SAF) production and stable fiscal frameworks for the energy sector.

Across Africa, many carriers responded by extending the life of existing aircraft and maximizing seat utilization, effectively using higher load factors as a short‑term “band‑aid” to meet rising demand until new capacity becomes reliably available.

On the cargo side, IATA reported that full‑year 2025 demand, measured in cargo tonne‑kilometres (CTKs), rose 3.4%, while capacity (ACTKs) grew 3.7%, with available trade flowing strongly into e‑commerce and just‑in‑time supply chains.

African airlines saw 6.0% year‑on‑year growth in cargo demand in 2025, with capacity increasing 7.8%. In December 2025, African cargo demand rose 10.1% year‑on‑year, the highest monthly growth of any region, with capacity up 9.8%.

Trade lane data shows a notable shift in 2025, with traffic from Asia–North America falling (–0.8% CTK growth), while Europe–Asia (+10.3%) and Within Asia (+10.0%) corridors grew strongly. African carriers, especially those serving the Middle East–Africa–Asia triangle, benefited from this shift, reinforcing Africa’s role as a key node in the changing global air cargo network.

Looking ahead, IATA expects 2026 air cargo demand to moderate slightly to 2.4%, in line with historical trends, while trade and geopolitical developments, including US tariff policy and the removal of de minimis exemptions, will continue to shape cargo flows.

For African airlines, the 2025 figures are a clear signal of growing regional demand and the potential for deeper integration into global air networks. However, unlocking this potential will require coordinated action by African governments and industry on infrastructure, open skies, and support for sustainable aviation technologies.

“Africa’s 2025 performance is impressive, but it must be the foundation for a more ambitious and sustainable aviation future,” said Walsh. “The continent’s connectivity is no longer a niche market — it is a core engine of global air transport growth.”

African leaders have launched a detailed investment blueprint to close the continent’s massive health workforce shortage, warning that Africa will need an additional 6.1 million health professionals by 2030 to achieve universal health coverage (UHC).

The report, “An Analysis of Africa’s Health Workforce Compact Investment,” was released last week by the African Union and Africa CDC in response to a resolution from the 35th Ordinary Session of the AU in Addis Ababa. It provides a first‑ever continental investment baseline for the African Health Workforce Compact, mapping out how much African countries must spend to train and retain the doctors, nurses, midwives, and community health workers required to serve their populations.

The report makes a stark economic argument: while the cost of building a strong local health workforce is high, the cost of inaction is far greater. Africa is already losing an estimated $2.4 trillion through medical tourism, as people travel abroad seeking care that should be available at home.

By investing in its own health workers, the continent can keep this money within its economies, strengthen local health systems, and save lives. The model outlines three pathways: a “status quo” scenario, a “moderate” path to reach 70% health coverage, and an “ambitious” plan aiming at 100% coverage.

Under the most ambitious scenario, the continent’s return on investment is projected to reach 19.4 by 2063 – roughly $19 in economic and social benefits for every $1 spent on the health workforce.

Currently, only two African countries meet the historic Abuja Declaration target of allocating 15% of their national budgets to health. Many others still rely heavily on foreign aid, which the report warns is becoming less predictable.

“With the changing landscape of international financial support, African countries must look inward,” the report urges. It calls on countries like Ethiopia, Ghana, Liberia, and Zimbabwe to prioritize domestic resource mobilization – using tax revenues, innovative financing, and health sector reforms – to pay for the training, deployment, and salaries of the continent’s future doctors and nurses.

As host of the African Union and central to this initiative, Ethiopia is at the heart of the continental strategy. Yet the country faces the same dual challenge as many neighbors: a critical shortage of health workers and a persistent “brain drain.”

The report notes that the annual migration of doctors and nurses from Africa is relatively low (0.5% and 0.4% respectively), but the desire to emigrate among health professionals is alarmingly high, averaging about 42.2%.

To stop this exodus, the report recommends improving working conditions, scaling up diaspora repatriation programs, and negotiating bilateral service agreements so that trained professionals choose to stay or return.

The compact proposes clear targets: for every 10,000 people, Africa needs 11.1 doctors (including specialists and general practitioners), 83.77 nurses and midwives, 36.2 community health workers, and 20 laboratory scientists.

Since not all students who start medical or nursing school complete it – the report cites completion rates of about 74.7% for doctors and 82.6% for nurses – governments must significantly increase enrolment to compensate and reach the overall goal.

Each additional doctor, the report estimates, saves an average of 1.72 mothers and children under five per year. Reaching ambitious workforce targets could prevent millions of deaths and illnesses, with total benefits in the highest scenario reaching about $410 trillion by 2063, including saved lives and avoided illness.

A recent surge in the parallel forex market has prompted the National Bank of Ethiopia (NBE) to implement aggressive corrective measures. These actions include an unscheduled auction to sell half a billion dollars and a weekend directive requiring banks to exercise increased caution in their Letters of Credit (LC) issuance. The directive mandates that LCs for non-essential imports, which require significant amounts of foreign currency, align with the valuation benchmarks established by the Ethiopian Customs Commission.

Financial experts indicate that this new ruling, which instructs banks to synchronize their LCs with Customs Commission valuations, primarily targets the illegal exchange market.

This market experienced a significant spike the previous week, with rates reaching as high as 190 birr per dollar, compared to the official bank rate of under 160 birr.

The surge was fueled by a sudden increase in foreign currency demand from importers, prompting the NBE to act swiftly. On Tuesday, January 27, 2026, the central bank injected $500 million through a special auction to help banks meet this heightened demand.

Major investors who spoke with Capital attribute this timing to the Chinese New Year (CNY). This period, typically from late January to mid-February, often sees a significant slowdown in economic activity.

“Production slows, ports become congested, and global freight networks operate less efficiently, not only during the holiday but for several weeks afterward,” they explained. To mitigate these supply chain disruptions, expected to peak around February 17–March 3 in 2026, importers are rushing to secure necessary commodities for as far ahead as April or May.

“As far as I understand, the government recognizes the link between foreign currency demand and CNY. This understanding is a major reason for the substantial sum provided in the extraordinary forex auction and the push for banks to help combat the illegal forex market,” a major exporter told Capital. Experts added, “I expect the black market will gradually diminish due to the NBE’s measures.”

The NBE’s latest directive, effective January 27, 2026, requires all commercial banks to use Ethiopian Customs Commission price data when processing forex for imports. In a statement on Sunday, the NBE noted that this move aims to “strengthen consistency and data integrity,” citing significant discrepancies between values declared on LCs and official customs reference prices.

A key detail that remains unspecified is the exact list of “selected imported items” to which the rule applies. The NBE stated that, “with the objective of harmonizing price references and ensuring consistency in balance of payments data,” banks must now apply customs values “as indicative prices.”

This marks the latest phase in Ethiopia’s forex market reforms, which began with the introduction of a market-clearing exchange rate system in July 2024.

While experts initially believed that the indicative rate would target major forex-consuming commodities like steel, a list reviewed by Capital also includes non-essential items such as vehicles, home and office furniture, electronics, and wires.

The central bank emphasized that this step aligns with its broader reform agenda and that it “will continue to monitor implementation and take appropriate measures.”

However, the lack of specificity regarding covered goods is likely to raise concerns among importers, who will face an imminent shift in how their transaction values are assessed for forex access.

Financial experts note that the directive is part of a broader government effort to curb forex flight and illicit remittance practices, which are seen as critical to the nation’s economic reform program.

This action follows substantial forex injections; in the past two months alone, the government has sold $890 million via auction, including $650 million through extraordinary, unscheduled auctions.