Why entrepreneurs should distinguish productive expansion from debt-fuelled size

“Give me a place to stand, and a lever long enough, and I will move the world.”

The line attributed to Archimedes captures one of the most powerful ideas in physics: leverage. With a fulcrum and a long enough lever, a small force can move an enormous load. Two thousand years later, leverage is equally powerful in business. Only the lever has changed. Today it is called debt.

Many entrepreneurs, perhaps without realising it, repeat their own version of Archimedes: “Give me enough bank loans, and I will grow my company at a meteoric rate.”

And sometimes they do. One factory becomes three. One location becomes ten branches. Trucks multiply, warehouses appear, payrolls swell and revenue climbs. The company becomes visible everywhere.

From the outside, this looks like spectacular growth. But there is a question that entrepreneurs, bankers, investors and even policymakers often fail to ask: is the business actually growing, or is it merely ballooning?

The answer can determine whether an enterprise is building lasting wealth or quietly preparing the conditions for its own collapse.

Bigger Is Not the Same as Stronger

In everyday conversation, “growth” describes almost any increase in size. But size and economic strength are different things. A company can double its assets while weakening its balance sheet. It can triple revenue while generating less cash. It can open new branches while destroying shareholder value. It can report impressive profits while struggling to meet next month’s loan instalment.

Real growth increases the productive capacity of a business while preserving its ability to sustain that capacity. It produces cash flows that justify the capital invested and builds competitive advantage, resilience and, ultimately, equity value.

Ballooning is different. Ballooning occurs when the visible size of a company expands faster than the economic strength underneath it. And debt is the easiest way to make that happen.

Imagine a company with ETB 100 million in shareholders’ equity. It borrows ETB 400 million and invests in buildings, machinery, vehicles and inventory. Suddenly it controls ETB 500 million of assets, and the transformation looks extraordinary.

But the owners have not created ETB 400 million of wealth. They have created ETB 400 million of obligations alongside those assets. Whether the expansion becomes genuine wealth depends entirely on what the assets produce, and that is the part of the story that photographs of new factories never show.

Debt Is Not the Enemy

None of this means borrowing is bad. Quite the opposite.

Credit is one of the most important instruments of economic development. Without it, viable businesses would take decades to accumulate enough capital to expand. Used intelligently, debt brings future productive capacity into the present.

A business that earns a return comfortably above its cost of borrowing can use leverage to accelerate value creation. If an investment generates a sustainable 25 percent return while financing costs 15 percent, the difference accrues to shareholders, and leverage magnifies it.

The problem is not leverage itself. The problem is leverage without sufficient productive economics underneath it.

Archimedes’ lever worked because there was a fulcrum. In business, that fulcrum is sustainable cash flow. Without it, the lever does not move the world. It may crush the person holding it.

Revenue Can Mislead

Ballooning can continue for years because conventional measures of success conceal it. Suppose a company borrows heavily to open twenty new outlets. Sales naturally increase, and management proudly announces that revenue has doubled. But what happened to operating margins? To interest expense? To inventory days and receivables? Most importantly, what happened to free cash flow?

Even accounting profit can offer false comfort. A rapidly expanding business may report profits while consuming enormous amounts of cash, because working capital grows with every additional unit of sales. More customers mean more receivables. More production means more inventory. More employees mean a larger fixed payroll.

Meanwhile, the bank does not accept accounting profit as repayment. It requires cash. This is where many apparently successful companies discover the difference between being profitable and being solvent.

The Psychology of Expansion

There is a psychological dimension too. Expansion is visible; financial resilience is not.

A new headquarters can be photographed. A factory can be inaugurated. A branch opening attracts officials, customers and media. Nobody holds a ribbon-cutting ceremony because a company shortened its cash-conversion cycle, yet that may create far more economic value.

This creates a subtle incentive to pursue what can be seen. The entrepreneur with three factories appears more successful than the one with a single, highly efficient factory. Eventually, expansion itself becomes the strategy. Management begins asking “how large can we become?” rather than “how much value can we create?” That is a dangerous shift. Businesses exist to create economic value, not to accumulate assets.

When the Bank Becomes the Business Model

The danger deepens when continued borrowing becomes necessary to sustain the appearance of growth. At the beginning, a company borrows to finance the business. Later, the business operates to support the borrowing. Old loans are refinanced. New facilities fund working capital. Rising asset values create room for still more credit.

As long as banks keep lending and the economy remains favourable, the arrangement looks successful. Then something changes. Interest rates rise. Foreign currency becomes scarce. Demand slows. A major customer fails to pay. Banks tighten their standards. Suddenly the company discovers that its enormous asset base carries equally enormous fixed obligations. This is the asymmetry of leverage. A factory may run at 60 percent capacity, but the loan does not fall to 60 percent. Customers may delay payment, but the repayment calendar does not wait.

Debt has no loyalty.

Leverage Cuts Both Ways

Consider two companies, each investing ETB 100 million. Company A finances the investment entirely with shareholders’ money. Company B uses ETB 20 million of equity and ETB 80 million of debt.

If the investment performs well, Company B’s shareholders earn a spectacular return on their small equity stake. That is the attraction of leverage.

Now suppose the investment loses 20 percent of its value. Company A has lost ETB 20 million and still holds ETB 80 million of equity. Company B has lost the same ETB 20 million, but because lenders are still owed ETB 80 million, the shareholders’ entire ETB 20 million has been wiped out.

The same decline that bruises one company can erase the owners of another. Leverage magnifies success on the way up and failure on the way down.

Why This Matters in Ethiopia Now

The distinction is becoming harder to ignore. A market-determined exchange rate, interest-rate-based monetary policy and a newly opened securities exchange are pushing the true cost of capital and the true quality of earnings into the open. Businesses that intend to raise capital from the public, or simply to keep their banks comfortable through a tighter cycle, will be judged less by the size of their balance sheets and more by the cash those balance sheets generate. Ballooning that once hid behind cheap credit and limited disclosure will be far more visible.

The Right Question

The question entrepreneurs should ask is therefore not “how much can the bank lend me?” but “how much debt can this business safely carry through a difficult cycle?”

The first is answered by collateral, banking appetite and credit conditions. The second is answered by economics.

A prudent entrepreneur stress-tests expansion before celebrating it. What happens if revenue falls 20 percent? If interest costs rise? If a major receivable goes unpaid for six months? If the next loan is simply unavailable?

If the company survives these scenarios, leverage is serving the business. If it needs everything to go right merely to meet its obligations, it may already be ballooning.

The same discipline applies to lenders. Collateral matters, but repayment comes from cash flow. Buildings do not make monthly repayments. Businesses do.

Growth Should Leave a Company Stronger

Perhaps the simplest test is whether each stage of expansion leaves the company fundamentally stronger. A genuinely growing company steadily improves productive capacity, profitability, cash generation and market position. Its debt may rise, sometimes substantially, but the capacity supporting that debt rises with it.

Ballooning produces the opposite pattern. Assets grow faster than productivity. Debt grows faster than operating cash flow. Interest consumes a rising share of earnings. Management spends more time negotiating financing than improving the business. Eventually, a company that once borrowed to accelerate growth finds itself growing merely to service what it previously borrowed. At that point, the lever has become the load.

There is nothing wrong with wanting to build a large company. Ethiopia needs ambitious entrepreneurs willing to invest, borrow and scale, and excessive fear of debt can be as damaging as excessive enthusiasm for it. But sustainable businesses are not measured by how quickly their balance sheets expand. They are measured by what those balance sheets can produce.

Factories matter because of what they manufacture. Hotels matter because of the cash their rooms generate. Branches matter because of the profitable customers they serve. Assets are tools. Debt is a tool. Even growth is a tool. The objective is sustainable economic value.

Archimedes taught humanity the power of leverage, and finance later rediscovered the same principle. But every entrepreneur should remember the addition: a lever that can move an enormous load can also multiply the force moving against you.

So before celebrating another factory, another branch or another billion borrowed, ask one question.

Are we growing, or are we simply getting bigger?

A passenger selects a flight. The schedule works, the fare is right, they add a bag and choose a seat. But the sale is not complete until the payment works.

That final step needs to be quick, secure, and familiar. If it’s slow, confusing, or does not offer the payment option the customer wants to use, the sale is at risk.

That risk is not theoretical. IATA’s 2025 Global Passenger Survey found that 17% of travelers who attempted to purchase an ancillary service—an extra bag, seat assignment, or other upgrade—could not complete their purchase. Why? Because the initial payment attempt failed and no other option was available.

The implication is straightforward: payments can directly affect revenue, as well as how much airlines spend, how quickly they receive their money, and their exposure to fraud or failed transactions. In 2024, IATA and Edgar Dunn & Company estimated that airlines processed approximately USD 977 billion in payments, at a cost of USD 22.2 billion.

At this scale, payment choices need to be managed deliberately. And that starts with recognizing that there is no single one-size-fits-all solution. From the customer perspective, an individual traveler might prioritize speed and simplicity of payment. On the other hand, a corporate buyer’s needs include policy compliance, approvals, reconciliation, and reporting.

Meanwhile, airlines cannot view payments solely as a cost. Passengers are using an increasingly diverse range of payment methods. While physical cards still dominate, options such as instant payment and digital wallets are growing rapidly. If an airline does not offer a passenger’s preferred payment method, it risks losing the sale.

This growing choice also creates greater complexity. Without effective payment orchestration, matching the right payment method to each customer, sales channel and transaction, settlement costs and delays can increase. To help airlines manage this complexity, IATA supports the industry through the IATA Financial Gateway (IFG) and IATA Pay.

Pleasing all customer segments while maintaining control over cost, fraud risk, settlement timing, refunds, chargebacks, and cash flow is no small challenge. The answer is often different depending on whether you work in commercial, finance, treasury, distribution, digital, risk, or technology functions.

The Airline Payment Framework

IATA has developed the new Airline Payment Framework – Management Foundation to help management teams look at payment options. Cost remains an important consideration. But the framework broadens the discussion by helping management teams evaluate what payment options enable, and the trade-offs that come with them.

The framework helps airlines look at payments holistically, enabling airlines to make decisions with the same rigor applied to other strategic areas and to track performance over time. Essentially the framework is a common lens through which commercial, finance, treasury, digital, and technology teams can efficiently evaluate payment options together. This avoids fragmented decisions that may serve one purpose but compromise others.

Adopting this disciplined approach does not require major transformation. The payments framework makes ownership clearer, improves visibility of key issues, and facilitates more structured conversations across the business. Elevating payments strategy to this level of rigorous consideration alone will bring benefits across the business.

Publishing the framework now is timely. As the move toward Modern Airline Retailing accelerates, managing payment effectively will become more important. More dynamic offers, richer service offerings, and more personalized customer journeys will require management teams to make decisions on payment options.

In the world of modern airline retailing, payment is no longer a back-office function. It is a strategic capability that influences whether a sale succeeds, how customers experience the airline, and how effectively revenue is converted into cash.

Airlines that recognize the business impact of these decisions will be positioned strongly to compete and grow in the era of Modern Airline Retailing.

Boosting trade flows amongst African countries remains a key economic priority. There is significant opportunity to accelerate the growing intra-African trade in order to unlock investment, catalyse industrialisation, especially processing and adding value to our natural resources.

According to the Africa in Figures 2025 report released by African Export-Import Bank (Afreximbank), intra-African trade grew by 5.4 percent in 2024 to stand at US$206.6 billion, with continued implementation of the African Continental Free Trade Area (AfCFTA) expected to further enhance it. It is imperative to persist in closing long-standing gaps in trade, investment, and market intelligence that continue to constrain business growth. Across the continent, enterprises are held back by limited knowledge of market opportunities, as well as unclear regulatory information and restricted access to trade finance, all of which hamper their ambitions to expand across borders.

Enter the Intra-African Trade Fair (IATF), Africa’s premier trade and investment marketplace and a driving force behind the continent’s economic integration agenda. Building on the success of the record-breaking fourth edition, IATF2025 in Algiers, which generated US$50 billion in trade and investment deals, the Fair continues to cement its position as a catalyst for intra-African commerce. IATF’s true impact lies in its ability to connect businesses, unlock opportunities, and translate ambition into tangible commercial outcomes.

IATF2025 highlighted the growing momentum of trade within Africa, with significant increases in participation, deal volume and transaction value. More than a showcase, the Fair proved its effectiveness as a platform for expanding market access, promoting African products and services, attracting investment, and connecting businesses to new opportunities. It continues to deliver tangible results by facilitating partnerships, fostering and strengthening regional and continental value chains.

IATF has firmly established itself as one of Africa’s most influential engines for trade, investment and economic integration. The spotlight now shifts to Nigeria. Lagos will host IATF2027 from 5–11 November 2027, bringing together businesses, investors, policymakers, researchers, creatives and innovators from across the continent. The ambition for the 2027 edition in Lagos reflects the sheer scale of Africa’s opportunity. With targets of over US$50 billion in trade and investment deals, more than 100,000 visitors, and 2,500+ exhibitors, IATF2027 is set to be the largest edition yet. Anchored by the theme “Global Africa, Smart Trade: From Market Access to Market Power,” it signals a bold shift, positioning Africa not just as a participant, but as a decisive force shaping its own economic future

Beyond the headline figure, more than 180,000 participants, 6,600 exhibitors from 132 countries, and over US$167 billion in cumulative trade and investment deals across its first four editions the message is clear: African businesses are ready to scale, compete, and lead, and the continent is rich with opportunity. The real constraint is not demand, but access specifically, the need for structured and efficient pathways that enable businesses to identify opportunities, connect with the right partners, and execute transactions at scale. IATF is at the forefront of breaking down these barriers and unlocking Africa’s full trade potential.

According to, ‘The Impact of the Intra-African Trade Fair (IATF) on Development and Trade, 2018–2024’ report, an impressive 62.4 percent of concluded deals directly supported intra-African trade, amounting to more than US$8.5 billion for each edition of the trade fair since 2018. Nearly 360,000 small businesses and SMEs are benefitting, including thousands of women and youth-led enterprises. The positive impact on employment is also significant. For every US$1 million invested into IATF, roughly 42 jobs are created – meaning each fair supports more than half a million direct employment opportunities across the continent. What this tells us is that Africa’s challenge is not capacity but connecting with each other. The priority for the continent in sustaining the trade and investment momentum is ensuring businesses continue to access the intelligence, partnerships, and support systems they need.

This is why platforms like IATF Virtual, designed to keep engagements amongst businesses alive, maintain visibility for exhibitors, enable governments and corporates to follow up on leads, and support year-round dialogue across sectors matter. The platform has potential to serve as the continent’s permanent marketplace. For SMEs that often face cost, travel, and logistics barriers, such platforms bridge these issues.

As Nigeria prepares to host IATF2027, it could not be timelier. The country is central to the AfCFTA’s success, not just because of its market size, but due to its vast resource base and industrial potential. As a leading producer of oil and gas, solid minerals, including lithium, iron ore, and gold so critical to future value chains, and key agricultural commodities, Nigeria is uniquely positioned to drive the industrialisation the continent needs.

It is essential for Nigerian and African businesses to fully seize opportunities presented by the continental free trade area. The good news is that the continent is already moving in the direction of addressing this. In Nigeria, for example, capacity-building programmes, export readiness clinics, certification support and partnerships with institutions like the Nigerian Export Promotion Council and the Small and Medium Enterprises Development Agency of Nigeria are helping equip SMEs with the knowledge and tools needed to trade across African borders. Lagos State, for instance, is strengthening foundations for success from investments in the Lekki Deep Sea Port and logistics corridors, to the development of industrial clusters and support through business development hubs.

Looking ahead, the message is clear. Africa is primed and ready to increase intra-African trade, but momentum must not be lost. The continent has showcased the concept, proven there’s appetite, and seen the results. With one of Africa’s largest economies and most populous nation now hosting the continent’s biggest marketplace, the challenge is to transform the current success into exponential progress.

Money has always been more than metal and paper; it is the invisible architecture of modern life. From the moment we wake to the instant we sleep, its presence shapes what we can access, whom we can become and how securely we move through the world.

For centuries, we understood this power through a single, enduring image: money as blood, circulating through the body of the economy, keeping every organ alive and connected. But that image is no longer enough. The digital revolution has not just accelerated the flow of money—it has changed its very nature. We are witnessing a transformation from the old biology of cash to the new reality of a cashless economy, where money moves not as substance, but as information.

Many people once believed money could solve almost everything. No one was able to belittle its value. Its extraordinary ability to solve problems of resource allocation and coordination shapes a huge share of practical life. It buys access to healthcare, education, food security, shelter and legal representation—even time, through delegation or hiring people to do things you cannot or will not do for reasons of capacity or preference.

It is a widely held view that money removes a massive amount of baseline life challenges: bills, basic comfort, access to opportunity. That is why it is often regarded as a kind of magic, offering simple solutions to complex or long-standing problems—resolving material anxiety while freeing significant cognitive and emotional energy. Basic survival needs like hunger, thirst and exposure to the elements are immediately addressed with money. You can pay someone to mow your lawn, fix your car, handle your taxes or clean your house—freeing up mental bandwidth and hours in the day.

There is a common saying that likens money to blood vessels carrying the essential elements of life: circulating what is needed, removing waste, keeping every part of the system connected and alive as one functioning organism. This is not just a folk image—economists have used it since the 18th century, and central banks still speak of liquidity and credit flow in exactly this bloodstream language. Money’s three classic functions give the metaphor its structure: medium of exchange, store of value and unit of account. The monetary unit—birr, dollar, euro—measures wealth in a comparable form across contexts; liquidity expresses how easily an asset converts into that unit without loss.

Yet this circulatory function is changing in the digital world. You may not even have physical touch or eye contact with hard currency when it is transferred—you see only a confirming text. This is the new reality of tightening financial conditions and ensuring the smooth functioning of payment and credit systems without any physical contact with monetary units. It spares no economic unit, including capital, where a far larger stock of wealth circulates and is allocated. Capital markets were already the most digitised, most leveraged and least physically anchored part of the system even before retail payments went fully digital—so the shift simply completes a process capital had already started.

When money existed as notes and coins, the blood-vessel metaphor had a literal anchor: something tangible moved from hand to hand, vault to vault. What the digital world describes is the completion of that process—money reduced almost entirely to symbolic confirmation: a text message, a ledger entry, a database update, with no physical instantiation most of the time. Things are changing to narrow money’s function mainly to a unit of measurement of wealth and a fluid whose movement is controlled by owners or central banks—regulating and measuring the flow of credit and capital so the system avoids clotting or bleeding out.

Large pools of wealth—pension funds, sovereign wealth funds, institutional capital—are essentially pure information now, reallocated by algorithmic and human decision in fractions of a second across global markets. This makes the digital transaction closer to an electrical or nervous-system signal than a circulatory one: entitlement transmitted and confirmed rather than physically delivered. It is arguably the better biological analogy for modern finance—a system less about substances feeding the body and more about signals coordinating it, informing wherever needed, instantly.

Come what may, here is the key shift: money’s store-of-value function is preserved, but its circulatory role—how it moves—is now largely digital, invisible and text-mediated. What you see are notifications, SMS alerts, app confirmations and account statements: certificates that a transfer occurred, not tokens that moved.

This changes the speed and reach of monetary policy transmission enormously. Physical money forces central bank action through slow, tangible channels—banks physically holding reserves, credit contracting through individual loan officers’ decisions. Digital money lets a rate decision or a liquidity signal propagate through the entire system within seconds—interbank lending, capital markets and currency markets adjusting nearly simultaneously. This is part of why financial contagion moves so much faster than in earlier eras: flash crashes and sudden liquidity crunches, driven by information alone, are modern phenomena unimaginable when capital required physical settlement.

This is a natural bridge to AI and allocation. Because money’s circulatory function is now almost entirely informational, the case for AI improving allocation gets stronger on mechanical grounds alone—the system already runs on real-time digital signals, ready-made for AI-driven optimisation to refine further. Physical settlement is becoming obsolete; the new requirement is digital infrastructure, not printed notes.

This is the forward, fast move toward a cashless economy: mobile money, online transfers, card payments, contactless transactions—value moving without contact with a single note. Credit allocation—loan approvals, disbursements, repayments, risk assessment—is now logged and transmitted electronically end to end.

Capital now flows through digital market rails, depositories and cross-border payment systems, with no need for physical notes at any point. Policymakers must now manage this digital bloodstream directly, without printing money, focused on keeping the payment and credit system running smoothly.

The digital world spares no one on the line. Households, firms, banks, investors and governments are all required to operate within this digitally mediated network. The question now is whether you go along, or you get left behind until you board the vehicle with an understanding of every layer of the system.

Money has long been celebrated as a near-magical tool, solving survival needs and freeing cognitive energy by outsourcing what we cannot or will not do ourselves for different reasons. It used to serve us as economic blood all the while performing its three classic roles and coordinating a vast, decentralised system of producers, consumers, savers, borrowers, labour and capital.

Thus the old metaphor of money as the economy’s bloodstream captured this well when cash and coins physically moved from hand to hand and vault to vault. Yet the digital transformation of finance has quietly rewritten the biology of the system to create a cashless society. In this new reality, the nervous-system metaphor fits better than the circulatory one.

In a cashless economy, money’s biology is shifting: from physical cash flowing hand to hand, it is now a nervous-system-like motion where instant, invisible signals—ledger entries, app confirmations and algorithmic trades—coordinate activity.

The shift from cash to digital is not merely a change in payment technology; it is a fundamental rewriting of money’s biology. Where we once felt money move—hand to hand, vault to vault—we now see only notifications, confirmations and algorithmic trades. The circulatory metaphor that served economists and central bankers for centuries has given way to a nervous-system reality.

This new order brings extraordinary speed and efficiency, but also new vulnerabilities—flash crashes, digital exclusion and the concentration of power in those who control the infrastructure. The challenge ahead requires not resisting this transformation, but governing it wisely: to ensure that the digital bloodstream remains inclusive, stable and accountable. Money will always be magic—but in the cashless age, that magic runs on code, not on notes or coin. That is the biological shift in a cashless economy.

But the most important thing in life is not money, but the things money can’t buy. For me, these are peace and love.