The International Monetary Fund (IMF) Executive Board has completed the second review of Ethiopia’s Extended Credit Facility (ECF), enabling the country to access approximately $248 million to support its balance of payments needs. This decision marks a significant milestone in Ethiopia’s economic reform journey, following the ECF’s approval in July 2024 as part of a broader $10.7 billion support package from development partners and creditors.

The ECF arrangement, totaling SDR 2.556 billion (about $3.4 billion), aims to bolster Ethiopia’s Homegrown Economic Reform Agenda (HGER) by addressing macroeconomic imbalances and laying the groundwork for private sector-led growth. With this latest disbursement, total funds released under the ECF now amount to approximately $1.611 billion.

Ethiopian authorities have demonstrated a strong commitment to achieving the objectives of the Fund-supported program, with all quantitative performance criteria met during this review period. However, the government’s contributions to targeted social safety nets were lower than anticipated due to necessary preparations for expanding these programs amid an increased budgetary envelope.

The IMF noted improvements in the functioning of the foreign exchange market, attributing this progress to significant policy actions taken by Ethiopian authorities to enhance market efficiency. The National Bank of Ethiopia (NBE) has maintained tight monetary conditions while advancing modernization efforts within its monetary policy framework.

Despite these advancements, challenges remain. The government is working diligently to restore debt sustainability and secure a comprehensive debt treatment under the G20 Common Framework. The ongoing negotiations with official creditors are seen as crucial for achieving long-term fiscal stability.

Following the Executive Board discussion, Nigel Clarke, Deputy Managing Director of the IMF, commended Ethiopia’s progress in implementing its Fund-supported program and addressing macroeconomic challenges. He highlighted that the transition to a flexible exchange rate has advanced significantly, contributing to a stabilization of the parallel market premium.

Clarke emphasized that maintaining prudent macroeconomic policies, including tight monetary policy and avoiding monetary financing of government deficits, is essential for reducing imbalances and ensuring overall economic stability. He also urged the Ethiopian authorities to expedite efforts to expand targeted social safety nets to protect vulnerable households.

The organization Voice for Prisoners is intensifying efforts to combat drug trafficking from Ethiopia, focusing on protecting individuals who are coerced or deceived into smuggling drugs to Hong Kong. Founded in 2018, the organization aims to prevent the criminal exploitation of vulnerable individuals who face severe penalties, including lengthy prison sentences, for drug-related offenses.

In response to the growing issue, Voice for Prisoners has launched the “No More Moles” campaign, designed to raise awareness about the dangers of hiring drug mules and to educate potential victims about the risks associated with drug trafficking. Father John Wotherspoon, the founder of Voice for Prisoners, emphasized that many individuals caught in this web are not criminals but rather innocent victims manipulated by drug syndicates.

During a recent trip to Africa, Father Wotherspoon and Miss Jane Chow from the Sound Prisoners Association engaged with former prisoners, families of those currently incarcerated in Hong Kong, journalists, and officials. Their mission was to spread awareness about the serious consequences of drug trafficking and to highlight the harsh penalties imposed in Hong Kong and other Asian countries. “Individuals coerced into trafficking drugs can face sentences of up to 20 years,” he warned.

Statistics reveal a troubling trend: a significant percentage of prisoners worldwide are incarcerated for drug-related crimes, with figures reaching as high as 70% in Singapore and 65% in Hong Kong. The increasing prevalence of drug trafficking through Addis Ababa’s Bole International Airport has made it a key transit point for smugglers, further complicating efforts to curb this illicit trade.

The United Nations Office on Drugs and Crime has noted that West African syndicates are increasingly involved in smuggling operations, often targeting vulnerable individuals. Many of these traffickers exploit desperate situations by promising easy money to those in need. Father Wotherspoon highlighted that women are particularly at risk of being coerced into becoming drug mules.

To address these challenges, Voice for Prisoners is advocating for enhanced security measures at Bole International Airport. The organization calls on Ethiopian authorities to implement advanced screening technologies and stricter oversight to prevent drug smuggling operations from exploiting the airport’s vulnerabilities.

Ethiopian Reinsurance (Ethio Re), the only indemnity organization in the insurance sector, reported a 29% increase in reinsurance income for the financial year.

Established by a combination of public and private enterprises, as well as individual stakeholders in the industry, Ethio Re is the only local provider of additional coverage in the country. In the 2023/24 fiscal year, the company generated 2.2 billion birr in income from both domestic and foreign clients.

Founded in 2016, Ethio Re’s annual report indicates that its income for the reporting period rose by 502 million birr, representing a 29% increase compared to the previous fiscal year.

Additionally, the company’s earnings from investments and other sources during the reviewed period amounted to 317.7 million birr, an increase of 18% over the same period last year.

According to the annual report presented to shareholders a few weeks ago, the company’s reinsurance service expenditures reached 2 billion birr. This amount reflects a rise of 34.5 million birr, or 2%, compared to the same period last year.

Ethio Re’s reinsurance service results for the reporting period showed a profit of 154.2 million birr, which is 174 million birr higher than the performance during the same period the previous year.

The company reported an after-tax profit of 391 million birr for the reviewed period, marking a 60% increase, or 146 million birr, over the previous year. The performance report indicated that the earnings per share (EPS) for the year reached 21.7%, the second-highest level since the company’s inception, with a par value of each share set at 10,000 birr.

This year, Ethio Re generated a profit before taxes of 424.4 million birr, an increase of 195 million birr from the 2022/23 fiscal year.

In August 2024, AM Best assigned Ethio Re a stable outlook, along with a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of “bb” (Fair).

Furthermore, Ethio Re reported that, in line with its strategic goals, it has reaffirmed its credit rating from Global Credit Rating (GCR) for the third consecutive year, receiving a National Scale (ET) AA (Double A) rating with a Stable Outlook.

As the only reinsurance company in the country, Ethio Re has a paid-up capital of 1.96 billion birr and subscribed capital of 2.5 billion birr.

The company has secured 1,585 square meters of land from the Addis Ababa Land Bureau for the construction of its headquarters for office and investment purposes. It is currently in the final stages of purchasing a building.

The government holds a 40% stake in Ethio Re through state-owned financial institutions, including the Commercial Bank of Ethiopia (CBE) and the Ethiopian Insurance Corporation (EIC), while the remaining shares are held by a mix of private financial institutions and individual investors.

As of June 30, 2024, the company has 127 shareholders, comprising seven banks, 17 insurance firms, 102 individual owners, and a labor union.

As the world grapples with economic uncertainties, Sub-Saharan Africa is poised for a modest recovery in 2025, according to the latest World Economic Outlook Update from the International Monetary Fund (IMF). The report, released on Friday January 17, highlights a projected growth rate of 4.2% for the region, indicating a potential rebound from the challenges faced in recent years. However, this optimistic forecast is tempered by significant risks and underlying issues that could hinder sustainable development.

The IMF’s report indicates that while global growth is expected to stabilize at 3.3% in both 2025 and 2026, Sub-Saharan Africa’s growth is anticipated to outpace many other regions. This growth is attributed to various factors, including increased commodity prices and a gradual recovery in domestic demand. However, the region still faces numerous challenges, including political instability, inflationary pressures, and the lingering effects of the COVID-19 pandemic.

Despite the positive growth projections, Sub-Saharan Africa continues to grapple with high inflation rates that have been exacerbated by global supply chain disruptions and rising energy prices. Many countries in the region are experiencing elevated inflation levels that threaten to undermine economic stability and erode purchasing power for vulnerable populations.

Furthermore, the IMF warns of potential downside risks to the region’s economic outlook. These include heightened policy uncertainty, particularly related to trade and fiscal policies, which could dampen investor confidence and hinder economic activity. The ongoing geopolitical tensions and conflicts in various parts of Africa also pose significant threats to stability and growth.

Despite these challenges, there are opportunities for Sub-Saharan African countries to capitalize on their natural resources and enhance economic resilience. The report emphasizes the importance of structural reforms aimed at diversifying economies and reducing dependence on commodities. Investments in technology, infrastructure, and education are crucial for fostering innovation and driving sustainable growth.

Additionally, regional cooperation through initiatives such as the African Continental Free Trade Area (AfCFTA) can help boost intra-African trade and create a more integrated market. By enhancing trade relations within the continent, Sub-Saharan Africa can reduce its vulnerability to external shocks and strengthen its economic position on the global stage.

As Sub-Saharan Africa looks ahead to 2025, it stands at a crossroads between opportunity and challenge. While the projected growth rate offers hope for recovery, it is essential for policymakers to address underlying issues that could impede progress. By prioritizing structural reforms, enhancing regional cooperation, and investing in human capital, Sub-Saharan African nations can pave the way for a more resilient and prosperous future. The coming years will be critical in determining whether the region can harness its potential and navigate the complexities of an ever-changing global economy.