Ethiopia has convened its first annual climate finance summit, bringing together government officials, private sector leaders, financial institutions, and international partners to develop innovative solutions for climate finance and address pressing climate issues facing the nation. The summit aims to mobilize resources for climate action, identify financial gaps, and forge partnerships that promote sustainability amid the country’s ongoing struggles with erratic rainfall, drought, and rising temperatures.

During the summit, Ahmed Shide, Minister of Finance, emphasized the urgent need for international attention on Ethiopia’s efforts to reduce carbon emissions and restore land. He highlighted the significant challenges posed by climate change, stating that the impacts are being felt acutely by communities across the country. “The challenge we are facing in Ethiopia is clear and undeniable,” said Hikmet Abdella, CEO of FSD Ethiopia. “From devastating droughts to rainfall disturbances, our communities are bearing the brunt of the climate crisis.”

Despite these challenges, Ethiopia remains committed to transitioning to a green economy resilient to climate change by 2030. The summit served as a critical platform for exploring financing mechanisms necessary to achieve the country’s ambitious climate resilience goals.

One of the key highlights of the summit was Ethiopia’s updated climate finance strategy, which includes a target to reduce greenhouse gas emissions by 68.8 percent by 2030 as outlined in its Nationally Determined Contributions (NDCs). The discussions at the summit underscored the importance of establishing new partnerships and formulating policy recommendations aimed at accelerating Ethiopia’s transition to a low-carbon and climate-resilient economy.

“This summit is an important opportunity for all stakeholders to come together and chart a clear path forward for climate finance in Ethiopia,” Hikmet noted, emphasizing inclusivity and sustainability as central themes.

The one-day summit featured panel discussions with industry experts, government officials, financial leaders, and representatives from international organizations. Participants explored a wide range of issues related to innovative financial mechanisms and the role of the private sector in leading climate action.

The event also provided an opportunity for stakeholders to share insights on best practices and successful initiatives that can be replicated in Ethiopia to enhance its climate resilience efforts.

The Ethiopian Electricity Utility (EEU) has announced the implementation of a Value Added Tax (VAT) on utility bills for customers who consume more than 200 kilowatt-hours (kWh) of electricity. This new tax will also apply to various service charges incurred by customers, including the costs associated with connecting new customers to the grid.

The VAT, which came into effect in November 2024, will be calculated and added to the monthly utility bills of customers whose consumption exceeds the 200 kWh threshold. Customers will see this tax reflected in their bills starting from December, including back payments for the months of September to November.

According to EEU officials, the introduction of VAT is part of a broader effort to enhance revenue generation and improve the financial sustainability of the utility. The move aims to align Ethiopia’s energy sector with international standards and practices, ensuring that the utility can continue to provide reliable services to its customers.

The implementation of VAT on electricity consumption is expected to affect a significant number of households and businesses across Ethiopia. While the tax is intended to support the utility’s operations, it may also lead to increased costs for consumers, particularly those who are already struggling with rising living expenses.

Critics have raised concerns about the potential burden this tax may impose on low-income households, many of whom may already be facing financial challenges due to inflation and economic instability. The EEU has stated that it is committed to ensuring that electricity remains affordable for all Ethiopians, but the introduction of VAT could complicate this goal.

The announcement has prompted mixed reactions from stakeholders. Some consumer advocacy groups have called for greater transparency regarding how the additional revenue generated from VAT will be utilized by EEU. They are urging the government to ensure that funds are reinvested into improving infrastructure and expanding access to electricity in underserved areas.

On the other hand, industry experts argue that implementing VAT is a necessary step towards achieving financial viability for EEU. They believe that without adequate funding, the utility may struggle to maintain and upgrade its services, which could ultimately affect service delivery and reliability.

AeTrade Group and the Cooperative Bank of Oromia (Coop Bank) have announced a strategic partnership aimed at transforming financial inclusion and economic empowerment across Ethiopia. This collaboration combines innovative digital financial tools with inclusive banking services to uplift underserved communities, particularly women, youth, and small businesses, while supporting Ethiopia’s integration into the African Continental Free Trade Area (AfCFTA).

At a press conference announcing the partnership, AeTrade Group CEO Mulualem Syoum emphasized the transformative potential of this collaboration. “This partnership is a pivotal step toward a more inclusive economy. By introducing solutions like AeTrust and integrated mobile wallets, we are enabling millions of Ethiopians to access financial services, empowering them to thrive in the digital economy,” he stated.

Coop Bank President Derebie Asfaw highlighted the bank’s commitment to rural development and the empowerment of small and medium-sized enterprises (SMEs). “Through this partnership, we are addressing the financial challenges faced by our communities. The Michu Digital Lending platform and cross-border payment solutions will help unlock new opportunities for Ethiopians, making trade more accessible and efficient.”

The partnership will leverage several key features to enhance financial services. The collaboration utilizes AeTrust and Coop Bank’s platforms to deliver affordable and secure services, including collateral-free loans, real-time payments, and multi-currency support for regional trade. Moreover small businesses trading on Sokokuu Marketplace will benefit from pre-approved credit lines and simplified financial management tools, ensuring seamless transactions and sustainable growth. Additionally businesses will gain access to resources that streamline cross-border payments, providing liquidity and enabling participation in continental trade.

This partnership is projected to expand digital financial services to millions of Ethiopians within the next three years, with a particular focus on youth and women entrepreneurs. By strengthening Ethiopia’s financial infrastructure, AeTrade Group and Coop Bank aim to lay the groundwork for sustainable growth, job creation, and enhanced trade connectivity under AfCFTA.

“This partnership is not just about financial services; it’s about creating a future where no one is left behind,” said Mulualem Syoum.

Derebie Asfaw added, “Together, we are building a stronger Ethiopia that is fully integrated into Africa’s economic future.”

The collaboration between AeTrade Group and the Cooperative Bank of Oromia symbolizes a united effort to empower communities, transform businesses, and position Ethiopia as a leader in regional trade. With innovative financial solutions at their disposal, both organizations are committed to fostering an inclusive economy that benefits all Ethiopians.

In line with the newly implemented mandate from the National Bank of Ethiopia (NBE), Bunna Bank has become the first financial institution to appoint independent members to its board of directors.

The election of the board took place during Bunna Bank’s general assembly held a week ago, where nine individuals were selected, including three independent directors, in accordance with the new governance rules.

As stipulated in the “SBB/91/2024 Bank Corporate Governance Directive,” which takes effect on June 12, banks are required to ensure that one-third of their board members are independent individuals with no connections to the bank.

The directive defines an independent director as a non-executive director who does not have any first-degree familial relationships or business, professional, or commercial ties with the bank, and who is neither part of senior management nor involved in the daily operations.

An independent director is described as an experienced board member who is free from any undue influence—whether internal, external, political, or ownership-related—that could compromise their ability to make objective judgments.

Industry experts have noted that this type of governance is common in other countries and will contribute to greater transparency. “The NBE’s decision is positive because independent directors without stakes in the bank tend to adhere more closely to professional principles,” said a banking industry expert.

However, there are concerns about finding highly qualified specialists.

“It is challenging to attract qualified experts at the compensation levels offered by banks. Independent board members are often very expensive in other countries,” one expert shared.

Sewale Abate, chairperson of the interim committee that oversaw the election, acknowledged the challenges posed by committee members who may not be familiar with NBE regulations or the industry.

“I attended the meeting as a shareholder and am not prepared to take full responsibility for the election process, but in accordance with the new law, we nominated candidates during the general assembly and were elected to manage the election,” he explained.

Sewale, who previously served as board chair at Bunna Bank around three years ago and currently holds a position on the board of Zemen Bank, stated, “I am familiar with the process, even though I haven’t participated in this specific type of election.”

He noted that the previous board had submitted nine nominations to select three independent directors, while the remaining board members were nominated during the general assembly as per the NBE directive.

As a result, Meseret Woldemariam, Fikir Abere, and Mulugeta Asmare, a prominent figure in the financial industry who led Goh Betoch Bank until last February, were elected as the first independent board members under the new governance directive.

According to Article Seven of the directive, one-third of the directors must be independent, nominated by the existing board and elected by all shareholders.

Furthermore, it specifies that a third of the directors must be nominated and elected by non-influential shareholders, and that at least two board members must be female.

Independent directors will serve on various committees.