UN Secretary-General António Guterres expressed that he is “gravely concerned” by the sudden outbreak of intense military clashes across northern Ethiopia, warning that foreign intervention and fresh fighting threaten to ignite a wider crisis across the Horn of Africa.

In a high-level diplomatic statement issued in New York by UN Spokesperson Stéphane Dujarric, the Secretary-General called for an immediate cessation of hostilities and urged all belligerents to prevent further destabilization.

“The Secretary-General is gravely concerned by the resumption of hostilities,” Dujarric said, noting that renewed fighting across the Tigray, Afar, and Amhara regions risks triggering a broader regional conflict.

The sudden flare-up of violence threatens to dismantle the historic 2022 Pretoria Agreement, the diplomatic framework that successfully halted two years of fighting between federal troops and the Tigray People’s Liberation Front (TPLF).

Guterres urged all signing parties to honor the accord and return immediately to dialogue under its framework, offering the good offices of the UN to mediate. He further reminded neighboring states of their obligations under the UN Charter to respect territorial integrity and refrain from interfering in domestic affairs.

The UN warning comes as diplomatic relations between Addis Ababa and Asmara reach a boiling point. In a formal letter to the UN Security Council, Ethiopia’s foreign minister accused Eritrean troops of launching an “all-out invasion,” claiming foreign forces had advanced up to 60 kilometers into Tigrayan territory.

Eritrea’s government rejected the claims, accusing Addis Ababa of orchestrating an “unprovoked war of aggression” aimed at forcing regime change in Asmara. Eritrean officials also denied Ethiopian allegations that Asmara was backing TPLF forces.

Military reports indicate that combat intensified this week, with Ethiopian drone strikes hitting positions near the northern town of Adigrat. On the ground, federal troops have regained control of Tigray’s regional capital, Mekelle, following a tactical withdrawal by TPLF forces last week.

The military escalation has thrown humanitarian operations into disarray. UN Humanitarian Chief Tom Fletcher appealed to all warring factions to grant immediate, safe access for relief convoys attempting to deliver emergency food and medical assistance.

Fresh fighting has displaced thousands of civilians across central, northwestern, and eastern Tigray, though verified casualty and displacement figures remain unavailable due to ongoing combat.

In neighboring Amhara, a government program designed to return displaced families from the town of Kobo to their home villages was abruptly halted following a sharp breakdown in local security. Humanitarian agencies stressed that any future civilian relocations must remain safe, voluntary, and dignified.

Oromia Bank posted a 49% surge in pre-tax profit to 3.82 billion Birr for the 2025/2026 fiscal year, weathering severe liquidity pressures that have constrained Ethiopia’s banking sector over the past year.

Speaking at the bank’s 17th Annual Regular and 6th Extraordinary General Meetings, Board Chairman Asfa Semee outlined how the institution navigated severe macroeconomic friction. Despite industry-wide liquidity constraints and broader sector challenges, the bank expanded its financial footprint while maintaining strict cost discipline.

Asfa stated that the lender generated 15.24 billion Birr in total revenue, fulfilling 99.9% of its annual target and marking a 23.3% jump year-over-year. Operating costs were capped at 11.42 billion Birr, allowing revenue growth to significantly outpace expenses.

According to the annual report, total assets crossed 105.7 billion Birr—a 24% annual gain—while total deposits rose identically by 24% to hit 88.1 billion Birr. Paid-up capital climbed 14% to 7.8 billion Birr, bringing overall equity capital to 14 billion Birr.

Despite an unstable economic backdrop, the lender managed to preserve asset quality. Its non-performing loan (NPL) ratio stood at 2.43%—well below the central bank’s 5% regulatory threshold—signaling disciplined risk management relative to industry peers.

The bank’s retail footprint also expanded, as deposit accounts grew 9.7% to reach 7.54 million, while digital banking adoption climbed to 5.7 million users. To diversify revenue streams, Oromia Bank launched the “Abbaa Ferda” remittance app and partnered with Visa and Premier Switch Solutions (PSS) to issue international payment cards (Oro Visa Classic, Gold, and Platinum).

Import-dependent enterprises in Ethiopia are facing mounting working-capital pressures and price uncertainty following sweeping macroeconomic and foreign-exchange reforms aimed at transitioning the country toward a more market-driven economy.

While the policy shifts are intended to support long-term economic stability, improve transparency and attract foreign direct investment, commercial sectors that rely on imported inputs are experiencing immediate operational disruptions, according to economists and sector experts.

The reforms began in earnest with the National Bank of Ethiopia’s revised foreign-exchange framework in July 2024, marking a departure from years of administrative currency allocation and a tightly managed exchange-rate regime.

Berhanu Denu, an Economist at Addis Ababa University

Under the previous framework, the central bank regulated the distribution of foreign currency and kept the Ethiopian birr within controlled trading bands. However, persistent structural imbalances—including a balance-of-payments deficit, rising external debt and an overvalued currency—prompted a broader market adjustment supported by international financial institutions, including the World Bank and the International Monetary Fund.

Speaking on findings from policy research conducted through a joint collaboration between the Center for International Private Enterprise (CIPE) and the Forum for Social Studies (FSS), Berhanu Denu, an economist at Addis Ababa University, said the official exchange rate adjusted rapidly after the birr was floated.

The birr, which traded between 43 and 47 per US dollar before the reforms, moved to more than 82 per dollar within a month of liberalisation and later approached 160 per dollar. While the changes were intended to narrow the gap between the official and parallel-market exchange rates, the adjustment significantly altered input-pricing models for domestic firms.

Berhanu said the main effect on businesses has been increased costs for imported raw materials, machinery and intermediate goods. Companies that had based their financial planning and pricing on the previous exchange-rate system have struggled to absorb the higher acquisition costs.

Field assessments examining the operational effects of the reforms indicate that manufacturers and small and medium-sized enterprises are responding differently. Many firms have attempted to pass higher input costs on to consumers, with some transferring up to 60 per cent of the increase in costs to retail prices, adding to domestic inflationary pressures.

Tilahun Girma, Economist

For small and medium-sized enterprises, the challenges are compounded by liquidity constraints and strict collateral requirements imposed by banks.

Central-bank regulations have expanded foreign-exchange retention rights for exporters, allowing service exporters to retain up to 100 per cent of their foreign-currency earnings. The National Bank has also capped transaction commissions at 1.5 per cent. However, non-exporting importers remain dependent on commercial-bank allocations and trade-finance facilities.

Access to foreign exchange remains linked to commercial banking relationships, documentation requirements and sector-specific priority lists. Smaller firms often face delayed or inadequate allocations, tying up working capital and disrupting production cycles.

Despite the immediate pressures, analysts argue that the reforms could produce important long-term benefits by improving price discovery, transparency and confidence in the financial system.

Under the new framework, the National Bank publishes indicative daily exchange rates based on market transactions, providing businesses with clearer information on currency conditions.

However, experts at a recent financial forum said monetary reforms alone would not resolve Ethiopia’s overlapping economic vulnerabilities. They argued that the country must also address structural constraints affecting exports, domestic production, access to finance and competitiveness.

Although export earnings from commodities such as gold and coffee have grown, Ethiopia remains heavily dependent on imported fuel, fertiliser, machinery and industrial inputs. Higher global prices for these goods have added to imported inflation, increasing costs for households and businesses.

The rise in raw-material prices has also raised daily working-capital needs for domestic manufacturers, preventing some from operating at full capacity. Government policy is increasingly focused on domestic production and import substitution as ways to reduce exposure to external price and currency shocks.

At the same time, the liberalisation of the banking sector and Ethiopia’s bid to join the World Trade Organization are expected to reshape the financial industry.

Opening the domestic market to foreign banks could increase competition, introduce modern financial technologies and reduce transaction costs for corporate clients, according to analysts.

Tilahun Girma, an economist, said concerns about foreign-bank entry have often been overstated. He noted that large global institutions, including Citibank, derive only a limited share of their revenue from Africa and often maintain a regional presence through representative offices.

He said the institutions expressing interest in Ethiopia are largely regional East African banks, creating pressure on domestic lenders to improve technology, customer service and operational capacity.

Tilahun added that the National Bank has started using open-market operations to manage liquidity. Recent reforms have also allowed major lenders, including the Commercial Bank of Ethiopia, to direct more than 70 per cent of their credit portfolios toward the private sector.

The introduction of Basel III guidelines further requires banks to issue credit in proportion to their capital base, a measure intended to strengthen financial stability and reduce systemic risk.

Engineering leaders have called for the rapid adoption of Building Information Modelling (BIM), artificial intelligence and advanced geospatial systems to address skills shortages, improve project delivery and strengthen infrastructure development across Africa.

The call was made at the opening of the 27th Ethiopian Association of Civil Engineers (EACE) Convention and International Infrastructure Conference at the Sheraton Addis Hotel.

Held under the theme, “Building Africa 2050: Engineering Resilient, Sustainable, and Smart Infrastructure,” the conference brought together industry executives, government officials, engineers, academics and international partners to discuss the challenges facing Africa’s construction and infrastructure sectors.

Participants warned that Africa’s development ambitions could be constrained by project-delivery bottlenecks, a growing shortage of certified project-management professionals and an estimated annual infrastructure-financing gap of between US$68 billion and US$100 billion.

Speakers said finance alone would not solve the problem without addressing structural weaknesses in the construction ecosystem, including limited technical capacity, fragmented supply chains, weak project controls, low labour productivity and slow digital adoption.

At the domestic level, Ethiopian contracting and consulting firms continue to face operational challenges, including shortages of raw materials, administrative skill gaps, inconsistent project-management standards and limited use of digital tools.

Engineering leaders said the broader use of BIM, AI and geospatial technologies could help improve planning, reduce delays, strengthen cost control and support better monitoring of construction projects throughout their life cycles.

Amanuel Mekonnen Hailemariam, President of EACE, said Ethiopia’s infrastructure sector was expanding rapidly alongside broader economic and technological development.

He pointed to projected national economic growth, rising mobile-network coverage, renewable-energy investment and major infrastructure projects, including the Grand Ethiopian Renaissance Dam, the planned regional mega-airport hub and the National Corridor Development Programme.

The corridor programme is reshaping urban centres through integrated transport corridors, underground utility networks and climate-resilient green infrastructure.

“The core issue facing our industry is not merely the volume of assets constructed, but the precision, sustainability and capital efficiency with which they are executed,” Amanuel said.

He noted that the Council of Ministers had recently endorsed a comprehensive construction-industry policy framework intended to improve safety, strengthen regulatory compliance and accelerate the use of BIM and digital-management tools in both public and private projects.

Engineer Zahra Abdulhadi, Deputy Chief Executive Officer of the Construction and Real Estate Cluster at MIDROC Investment Group, said integrated project delivery required strong systems for managing time, cost and quality.

“Integrated project delivery requires that time, cost and quality parameters are governed through transparent project controls,” Zahra said.

She said that institutionalising international standards, including Project Management Professional certification and BIM, would help Ethiopian engineering firms compete more effectively and participate as equal partners alongside international contractors and development-finance institutions.

BIM is a digital process that allows engineers, architects, contractors and clients to create, share and manage detailed information about a construction project. It can support project planning, cost estimation, design coordination, procurement, construction monitoring and long-term asset maintenance.

Artificial intelligence and geospatial systems can also assist in identifying construction risks, assessing land and environmental conditions, monitoring project progress and improving infrastructure maintenance.

Participants said these technologies could help African countries move from conventional construction practices toward data-driven asset-lifecycle management.

The conference also recognised individuals who have contributed to the development of Ethiopia’s built environment.

Professor Alemayehu Teferra, recipient of the EACE Lifetime Achievement Award and Chairman of the General Assembly, welcomed international delegations from Germany, Cyprus, Italy, the Netherlands, Nigeria, Somalia, Djibouti and Angola.

The multi-day conference includes technical panels organised around six thematic tracks. The sessions will cover structural and seismic engineering, transport and logistics, digital infrastructure, smart urban planning, sustainable construction and project-management systems.