Thursday, October 15, 2026
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African governments drive new forest finance progress as global report warns funding globally must scale faster

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African governments are developing new ways to finance the protection and restoration of forests, providing practical examples of how forest finance can move from promising models to delivery at scale, according to the first Progress Report of the Forest Finance Roadmap launched at the Forest & Climate Leaders Partnership (FCLP) Forest Finance Day during Climate Week NYC.

The global assessment finds that forest finance is beginning to move and credible mechanisms capable of scaling are gaining momentum, but the pace and scale of change remain below what is required to halt and reverse forest loss by 2030. The Roadmap was created to help change the economics of forest protection and close an estimated US$66.8 billion annual forest finance gap. Forests currently receive less than one per cent of global climate finance despite offering around one fifth of the world's cost- effective mitigation potential. (Press Release)

Initial Public Offering (IPO)

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An IPO, or initial public offering, is the term for the first time that a private company sells shares of its stock to the public on a stock exchange.

Coffee exporters turn to China as EU deforestation rules loom

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Ethiopia’s coffee industry is increasingly pivoting towards Asian markets, with China rapidly emerging as a primary destination for its flagship agricultural export.

This strategic shift comes as the European Union’s deforestation regulation approaches implementation.

The move is critical for Ethiopia’s coffee sector, which sustains an estimated 20 million livelihoods and generated a record US$3 billion in foreign exchange during the 2025/26 fiscal year. Industry stakeholders are concerned that the EU’s new traceability requirements could impose substantial compliance costs on Ethiopia’s millions of smallholder coffee farmers, despite the country’s long-standing tradition of shade-grown and agroforestry-based production.

In the recently concluded fiscal year, China became Ethiopia’s third-largest coffee purchaser, importing 47,836 metric tonnes valued at US$347 million. This marks a significant increase from the previous fiscal year’s 34,284 tonnes, worth US$219 million. Just two years prior, China ranked seventh among Ethiopia’s coffee export markets, buying only 12,163 tonnes.

The Ethiopian Coffee and Tea Authority (ECTA) anticipates China will become an even more vital market for Ethiopian coffee.

“China will remain one of the new market destinations for Ethiopian coffee, but now we are seeing an increasing volume of coffee shipments heading to China,” ECTA stated recently. “We hope that the country will become the largest buyer of Ethiopian coffee in the next two years.”

The European Union Deforestation Regulation (EUDR) will take effect on December 30, 2026, for large and medium-sized operators. Most micro and small enterprises will follow on June 30, 2027. Coffee is among the commodities subject to this regulation.

Under the EUDR, products entering the EU market must be proven “deforestation-free,” meaning they could not have been produced on land deforested after December 31, 2020. Operators will be required to submit due-diligence statements and provide geolocation data for all plots where relevant commodities were grown.

For Ethiopia, compliance presents a complex challenge. Over 5 million smallholder farmers produce coffee across diverse regions, often through informal supply chains involving multiple intermediaries before reaching an exporter.

An industry expert and major coffee buyer, who spoke to Capital anonymously, emphasized that Ethiopia’s coffee production fundamentally differs from plantation-based systems elsewhere.

“More than 5 million smallholder farmers produce coffee across various growing regions of the country,” the expert explained. “The production system operates under shade trees, as it has since Arabica coffee was discovered in Ethiopia. Local coffee production does not contribute to deforestation.”

Ethiopian coffee is widely associated with permanent shade-based agroforestry systems, where coffee plants thrive beneath native canopy trees. Forest-coffee systems can maintain over 60% canopy cover, while semi-forest systems typically retain between 40% and 60%.

The expert argued that the new regulation might inadvertently burden producers who have preserved tree cover and conserved forest landscapes for generations.

“In other major producing countries, coffee production primarily occurs in open fields and is heavily mechanized,” the expert noted. “Because those countries cleared land long ago, before the December 2020 cutoff date, their risk of non-compliance is lower.”

“Conversely, millions of coffee farmers in regions like Ethiopia, who have maintained agroforestry systems for generations, are being penalized by the EUDR,” the expert added. “This is not due to their contribution to deforestation, but because the regulation’s complex tracking system creates a significant obstacle to proving compliance.”

Europe accounts for approximately 30% of Ethiopia’s coffee exports, making it the country’s largest regional market. Industry stakeholders warn that failing to meet EUDR requirements could jeopardize export earnings and prompt European buyers to source coffee from origins already equipped with traceability systems.

Ethiopia has initiated preparations for the regulation. In late March, the government completed the technical handover of the Ethiopian Coffee Traceability and Management System (ECTMS), a national digital platform developed with support from Germany’s development agency, GIZ.

This system integrates farm-level geolocation data, supply-chain tracking, and deforestation-risk assessment tools. It includes a mobile application designed to collect data directly from coffee producers and trace beans from farms through washing stations, warehouses, and export channels.

However, industry actors indicate that implementation remains a significant challenge.

“Establishing the traceability system required by the EUDR has proven difficult due to the vast number of farmers involved and a lengthy value chain where coffee changes hands multiple times before export,” the expert stated.

This challenge is particularly acute because a substantial portion of Ethiopian coffee is traded through informal channels. Farmers often lack formal sales records, digital tools, and detailed land documentation. Existing data may also be fragmented across government bodies, cooperatives, traders, and exporters.

In remote communities, requests for GPS coordinates can also raise farmer concerns about land rights, ownership claims, and potential future disputes. Therefore, building trust will be as crucial as developing the technical system.

While the EUDR is increasing the urgency of market diversification, the expansion into Asia also reflects growing consumer demand, particularly in China and South Korea.

“The shift toward Asian markets is primarily linked to the recent growth in coffee consumption in countries like China and South Korea,” the expert explained. “The EU’s new deforestation regulation simply provides an additional incentive to pursue these expanding markets.”

China’s increasing role is already evident in Ethiopia’s export figures. According to ECTA data, coffee shipments to China rose by approximately 40% in volume and 58% in value during the 2025/26 fiscal year.

Ethiopia has expanded its coffee exports to 84 countries, adding 20 new destinations in the past fiscal year. While Saudi Arabia and Germany remain leading buyers, growth in China demonstrates the country’s active efforts to reduce dependence on Europe and broaden its foreign-exchange base.

For Ethiopian exporters, the opportunity in Asia extends beyond increasing coffee sales. It also offers a chance to market Ethiopia’s diverse origins, specialty varieties, and coffee heritage to a growing consumer base increasingly interested in premium and traceable products.

Efforts by Capital to obtain further comment from ECTA before publication were unsuccessful.

For many industry participants, however, the central concern remains unchanged: a regulation intended to reduce global deforestation could place a disproportionately heavy administrative burden on smallholder farmers who have protected agroforestry systems for generations. Ethiopia’s ability to meet that challenge while expanding markets in China and elsewhere may shape the future of one of its most vital export industries.

Ethiopia must not let the north become the road to national rupture

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The renewed fighting in northern Ethiopia is more than another security emergency. It is a warning that the country may be approaching a far more dangerous political threshold: a conflict that could weaken the state, deepen ethnic separation and turn a fragile federation into a collection of armed, distrustful territories.

Reports from Tigray, Amhara and Afar indicate that a new round of hostilities has spread beyond a local confrontation. Tigrayan forces have reportedly moved against federal positions and taken control of airports in Mekelle, Axum and Shire, while fighting has been reported in neighbouring Amhara and Afar. Federal authorities and Tigrayan leaders accuse each other of initiating the escalation, and casualty claims from both sides remain difficult to independently verify. What is clear, however, is that the peace that ended the 2020–2022 war has been placed in grave danger.

It is tempting to frame the current crisis as a battle between two political-military establishments: the federal government and the Tigray People’s Liberation Front. That would be a serious mistake. The victims of a renewed war will not be the leaders who issue statements from protected offices. They will be civilians in Tigray, Amhara and Afar: farmers whose planting seasons are disrupted, traders whose routes are closed, children whose schools become shelters or military posts, patients cut off from medicine, and families once again forced from their homes.

Ethiopia has already paid an unbearable price for the previous northern war. Its social fabric was damaged; its economy was strained; humanitarian needs expanded; and relations between communities were poisoned by fear, grief and narratives of collective blame. A return to large-scale war would not simply repeat that devastation. It would compound it.

The immediate danger is military escalation. Fighting has reportedly widened beyond Tigray, with clashes and artillery fire affecting areas in Amhara and Afar. The reported involvement or alignment of armed groups across regional boundaries raises the prospect of a conflict that no longer fits the narrow label of a federal-Tigray dispute.

But the deeper danger is political fragmentation. Ethiopia’s constitutional order already faces intense pressure from unresolved territorial claims, contested regional authority, the proliferation of armed actors and mutual suspicion between federal and regional institutions. When political disputes are repeatedly settled through force, every region learns the same destructive lesson: security comes from armed mobilisation, not constitutional compromise.

That lesson creates a vicious cycle. Communities grow fearful; fear produces militarisation; militarisation creates new abuses and retaliatory demands; and every new round of violence makes peaceful coexistence appear less credible. In time, national institutions lose legitimacy not because Ethiopians reject the idea of living together, but because the state seems unable to guarantee rights, resolve disputes fairly or protect people from collective punishment.

Separation is not inevitable. Ethiopia’s diversity is not a weakness, and its federal system need not lead to disintegration. But a country cannot remain united by force alone. Nor can it remain stable if citizens believe their identity, security and economic future depend on the military power of their region.

Unity must be rebuilt through consent: credible institutions, fair representation, accountable security forces, lawful dispute resolution and an economy that gives people a stake in peace.

The November 2022 Cessation of Hostilities Agreement offered Ethiopia an opportunity to stop a catastrophic war and begin the difficult work of recovery. It was never a complete solution. It left difficult questions about disarmament, political recognition, contested territories, humanitarian access, accountability and reconstruction. Yet its incompleteness was a reason to implement it more seriously—not a justification to abandon it when political tensions returned.

A peace agreement is not a ceremonial document to be praised in international meetings and ignored when it becomes inconvenient. It is a framework meant to prevent the next generation from inheriting the violence of the last.

The parties must therefore agree immediately to halt offensive operations, protect civilians, restore communications and allow unhindered humanitarian access. An emergency ceasefire should not wait for either side to achieve an imagined military advantage. In Ethiopia’s recent history, battlefield victories have repeatedly produced only temporary silence before the next eruption.

Regional and international actors—including the African Union, the United Nations, the Intergovernmental Authority on Development and Ethiopia’s neighbours—should support de-escalation, monitoring and dialogue. But outside involvement cannot substitute for Ethiopian political responsibility. The essential decision must come from Ethiopian leaders: whether they will treat the country as a shared political home or as territory to be captured and controlled.

The renewed conflict also exposes the failure of elite bargaining that excludes ordinary people. Peace cannot be sustained through agreements negotiated only among armed and political leaders. Farmers, women, youth, displaced people, religious leaders, civic groups, traders and local administrators must have a meaningful role in shaping the political settlement.

This requires difficult conversations. It requires acknowledging the suffering of all communities without ranking victims by ethnicity or political affiliation. It requires rejecting language that turns entire peoples into enemies. It requires credible accountability for abuses, regardless of the perpetrators. And it requires a national commitment that no Ethiopian should lose rights, safety or dignity because of the language they speak, the region they come from or the political group that claims to represent them.

The economy also matters. War thrives where unemployment, displacement, inflation and hopelessness make armed mobilisation seem like one of the few available paths to status or survival. Ethiopia cannot separate peacebuilding from recovery. Reopening roads, restoring trade, rebuilding schools and health facilities, supporting farmers and creating jobs for young people are not secondary development tasks. They are core security policies.

The alarming events in the north should not be treated as distant news for people elsewhere in the country. A war in Tigray, Amhara and Afar will affect every Ethiopian: through higher prices, disrupted transport, lost investment, insecurity, displacement and deepened mistrust.

The country now faces a stark choice. One path is familiar: escalation, collective blame, military pride and another cycle of retaliation. It may promise decisive victory, but it can only produce a weaker, poorer and more divided Ethiopia.

The other path is harder but necessary: an immediate ceasefire, restoration of the Pretoria process, inclusive political dialogue, protection of civilians and a serious national effort to repair the institutions that have failed communities across the country.

Ethiopia is in danger not because its peoples are incapable of living together, but because political leaders have too often allowed disagreement to become warfare. The country’s future will depend on refusing that pattern—before another northern conflict becomes a national rupture.