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- 👀 Curiosity Killed the Bank
Welcome to the 101st edition of ፍራንክ Digest!
Your weekly brief on all things Finance and Investing. Quick, enjoyable reads for busy professionals in 5 minutes or less.
Here’s what’s coming your way:
🏦 Half Our Banks Fail A Test. Business As Usual.
⏳ How to Waste Your Time Efficiently Thanks To ጉዳይ ገዳይs
🖼️ Big Picture
Thanks for reading!
Financial Sector is Rated as Stable-ish
Banking
The Story in Three Lines
→ Ethiopia’s banks look strong: bad loans are low at ~3% and liquidity is high at ~30%.
→ But 16 out of 32 banks fail a stress test if their 10 biggest customers were to withdraw their money.
→ In a system where moving cash is restricted, it’s worth asking how much of that “stability” is actually being tested.
The National Bank’s latest Financial Stability Report is, perhaps predictably, exactly what you want to see.
Banks are stable. Loans are being repaid. There’s plenty of cash in the system. Inflation is easing, and digital transactions have surged to around ETB 18.5 trillion.
The headline numbers behave nicely too. Collectively, they’ve made about ETB 93 Billion in profits. Only about 3% of loans are classified as not being repaid, well below the usual 5% threshold. Banks are holding liquidity of roughly 30%, about double the minimum requirement.
In theory, that means if customers show up asking for their money, banks should be able to handle it.
So far, so good.
Then Comes the Slightly Awkward Bit
The report runs a simple scenario: what happens if a bank’s 10 biggest customers all decide to withdraw their money?
Turns out… curiosity killed the bank.
Sixteen banks fail. Half the system.
In a country of ~130 million people, literally 10 individuals and/or institutions at 16 banks are keeping them afloat. Talk about a risky dependency that shouldn’t be brushed off as “nothing to see here”.
At the overall level, the system still holds together. Larger banks have enough cash on hand to absorb the shock. But once you zoom in, the picture is very different.
Half the sector is one bad day away from discomfort.
Who Actually Gets to Test the System?
In Ethiopia, moving large amounts of cash isn’t exactly easy. We’ve received differing information from various banks but, officially, in terms of cash withdrawals, most banks operate at 50,000 Birr daily withdrawal limits for individuals, and 75,000 Birr for businesses. Mobile banking transfer limits vary from bank to bank, but are much higher when the receiver is within the same bank.
So for most people, testing a bank’s liquidity isn’t really an option. You’re not exactly triggering a stress scenario with your daily withdrawal.
When the report says 16 banks fail if their top 10 depositors withdraw, it’s not merely envisioning an extreme scenario. It’s describing what happens if the only handful of people capable of stressing the system decide to do so: very large companies (e.g. Midroc), state institutions (Ethio Telecom etc), major traders.
Everyone else is just a passenger.
One Group, Two Roles
It’s not exactly Ethiopia’s best kept secret that those same large depositors are very likely also the largest borrowers. No surprise there, given they hold so much leverage over these banks.
So the system looks something like this:
A small group of players holds a big share of deposits
The same group takes a big share of loans
As long as they’re doing well, everything works. Deposits stay in place, loans get repaid, and all the numbers look clean.
But if one of them catches a cold, it’s not just one problem.
They might struggle on repayments.
They might also pull their deposits.
That’s a double hit, pressure on both sides of the system at the same time.
About That 3%
Now let’s talk about that 3% bad loan ratio.
It’s a very good number. In developed markets, 2-4% is normal. In tougher environments, it often climbs much higher.
Meanwhile, Ethiopia has gone through inflation spikes, foreign exchange shortages, and generally tight business conditions.
And yet… 3%? That’s impressive.
Or, if you’ve spent enough time around finance, just slightly… optimistic.
Because stress doesn’t always show up immediately. Loans get extended. Payments get rescheduled. Large exposures get managed carefully, while other politically sensitive ones get managed quietly.
In Kenya, this default ratio stands at ~17%, yet their financial system is much more mature than ours.
So the number may be accurate, it just might not be the whole story.
The Risk No One Is Losing Sleep Over
And then there’s the part of the report that feels unintentionally funny.
Banks were asked what risks they’re worried about over the next 1-2 years.
Inflation? Big concern.
Exchange rate? Of course.
Credit risk? Naturally.
Technology risk? Only four respondents mentioned it.
The report even notes this “may reflect limited awareness.”
Which is polite way of saying: digital transactions just hit ETB 18.5 trillion, everything is moving online, but the banks can’t be bothered about the risks that come with that.
It seems cybersecurity, fraud detection, and “ሲስተም የለም” are still afterthoughts.
The Big Picture
Ethiopia’s banking system is not weak. In many ways, it’s stronger than it has been in years.
But it’s also a system at an interesting turning point.
You have 32 banks, many of them relatively small, operating in a system where risk, deposits, and lending are all concentrated among very few large players. At the same time, foreign banks are on the horizon, bringing deeper pockets, better technology, and-fortunately-working mobile apps.
That combination usually leads to consolidation.
In a system where:
Half the banks struggle under basic stress,
A handful of players dominate both deposits and loans,
And competition is about to get a lot tougher,
The long-term question isn’t just “are we stable?” It’s: how many of these banks are actually built to last?
Mergers will happen. Some banks will scale up. Others will either remain irrelevant or quietly become irrelevant. And the arrival of foreign players will likely speed that up, not slow it down.
So yes, the system is stable. But it’s also crowded, uneven, and about to be tested in ways that go well beyond a report.
And those are usually the moments where things get interesting.
ፍራንክ Picks
🗞️ In the news: $13 Billion Secured At “Invest in Ethiopia” Conference
“Hurry Up & Wait” Economy Goes Digital
Economy
The Story in Three Lines
→ Ethiopians spend hours in queues at banks, for fuel, and basic services.
→ A parallel economy has formed around saving time, increasingly powered by Telegram and other platforms.
→ The fastest way to get things done is often… not doing them yourself.
In most places, time is money.
In Ethiopia, time is “I’ll hurry up, then I’ll wait”.
You don’t “quickly” go to the bank. You prepare for it. Government services come with a built-in “come back tomorrow”; you block your entire day, minimum. Fuel queues end up feeling like an extended social event with the other drivers. And somewhere between all that, hours disappear.
Individually, it’s annoying. At scale, it’s an expensive problem.
Ethiopia’s labor force is north of 60 million. If even a fraction of people lose just an hour or two a week to queues and delays, you’re looking at millions of productive hours disappearing into lines, waiting rooms, and “system is down” moments. No one measures, no one reports it, but everyone feels it.
Where there’s inefficiency, there’s opportunity. Naturally, the market responded.
For a couple hundred birr, someone stands in line for you at the immigration office or elsewhere. Someone knows someone inside. Someone tells you whether it’s even worth showing up today. And increasingly, all of this is coordinated on Telegram.
We didn’t really build e-commerce. We built group chats.
On Telegram, you can find products, brokers, services, updates, and shortcuts. No websites, no checkout pages, no customer care. Just a message, a number, and a bit of trust. It’s messy, informal, and surprisingly efficient.
We’ve normalized giving power of attorney or ውክልና for just about anything that we can’t be bothered with. Platforms such as Kezyas (translated as “then what?”) give guidance for those daring enough to do things on their own, but also connect you with people that would handle it for you.
Someone else goes to set up your business. Someone else processes your paperwork at the customs office. Someone else gets you a license plate for your new electric vehicle. You could even get all the above done in parallel, at the same time.
We even have a name for them: ጉዳይ ገዳይ, whose entire business model is standing in line, so you don’t have to.
Entire legal authority… delegated for errands.
Which tells you the real premium in Ethiopia isn’t always money. It’s speed.
Who can skip the queue? Generally, the older ጉዳይ ገዳይ who commands respect. Who can get things processed today, not next week? The one with the right contacts who’s been there, done that countless times.
Money helps, of course. But access, street smarts and experience is what actually saves time.
And this isn’t happening because people are impatient. It’s happening because systems are still catching up. Many processes are manual, digital tools aren’t always reliable, and demand far exceeds service capacity, especially at government offices. So people adapt by working around the system because they can’t hang around and wait for someone to fix all these. Ok, maybe people are a little impatient.
Nevertheless, the result is a quiet, parallel layer of the economy. One that values time properly, prices it informally, and delivers outcomes faster than the official way.
The Big Picture
We talk a lot about inflation, forex, growth and so on.
We don’t talk much about time.
But in Ethiopia, time is one of the most valuable yet least appreciated resources in the economy.
Queues create demand. Platforms like Kezyas & Telegram organize supply. And somewhere in between, a system emerges that works a little better than the one it’s bypassing.
Which leaves a slightly uncomfortable thought: If the unofficial system is faster, more responsive, and closer to reality…what exactly is the official one there for?
Thanks for sticking with us, ፍራንክ family! Keep those wallets smart and your inbox open - we’ll be sliding in next week!
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