So You Think You Own Your Cash?

Welcome to the 59th 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:

• 🔫 Freeze! Keep Your Hands Where We Can See Your Money!

• 🍝 Equipment Financing: Giorgio’s Place

• 🗝️ The Key Takeaways

Thanks for reading!

💸 Who Really Owns Your Money? The Curious Case of Central Banks

Economy

Let’s talk about something we don’t question enough: Do you really own your money?

Sure, you earned it — maybe pulled long hours or built a side hustle. But anywhere in the world, how you use your cash is increasingly dictated by central banks — in ways that might surprise you.

Central banks like our very own National Bank of Ethiopia (NBE) have the sole authority to design, mint and even destroy 🔥 cash.

In Nigeria, the popular party practice of spraying — throwing cash into the air at weddings and parties like you just don’t care — has gone from cultural flex to criminal offense.

The Economic and Financial Crimes Commission (EFCC) is cracking down on what it calls “naira abuse,” reviving an old law to fine or jail people who throw or step on money. Why the sudden strictness? The naira’s taken a nosedive — down over 70% in just two years — and the government is trying to protect its dignity, one sprayed note at a time.

But many Nigerians aren’t buying it. With deep-rooted corruption and economic hardship, critics argue that chasing partygoers over cash-tossing is missing the plot.

Ethiopia’s doing its own version of monetary micromanagement. Here’s a quick rundown of how Ethiopia handles cash — whether you're running a business, hopping over a border or coming back from abroad, here’s what to know:

👜 Cash hoarding? Not so fast.
Individuals are legally allowed to hold up to ETB 100,000 in physical cash, while businesses get a slightly higher cap at ETB 200,000 — based on a 2021 directive. But with inflation doing what it does, that cap doesn’t stretch as far as it used to. Especially for businesses, an update is long overdue.

✈️ Travelling with birr? Keep it light.
You’re only allowed to carry ETB 3,000 in or out of Ethiopia — which, let’s be honest, isn’t much considering most countries don’t even consider the birr freely convertible. One exception: Djibouti, where travelers headed there (mostly truckers working the trade route) can carry up to ETB 10,000. Why the restriction? It’s likely aimed at limiting the flow of counterfeit cash (in ‘n out).

🕶️ Birr is boss.
In Ethiopia, the law is clear: you can’t transact in any foreign currency — not for purchases, not as a gift, not even donations. The birr reigns supreme within the country’s borders.

🏠 Returning home? Convert your dollars, quick.
Ethiopian residents must convert any foreign currency within 30 days of arriving in the country. Got more than $4,000 USD in your luggage? You’ll need to declare it at customs. The limit is bumped up to $10,000 for Ethiopians residing abroad or foreigners staying longer than 90 days.

So what’s going on? Basically, both Nigeria and Ethiopia are trying to reinforce control over monetary policy; curb black market currency trading; and maintain trust in the legal tender.

From a macroeconomic perspective, it makes sense— when physical currency is hoarded, destroyed or flooded into informal markets, central banks lose visibility and control. That impacts everything from inflation targets to interest rate policy.

But in practice, these moves often feel more symbolic than strategic. Particularly when the parallel (black) market is thriving and is essential for many businesses to stay afloat. Ordinary citizens celebrating cultural traditions get penalized, while elite corruption (think smuggling gold) remains untouched.

Still, laws are laws. And yet, many continue to break them — whether it’s about survival or a deep love for cultural expression. Spraying in Nigeria isn’t just about throwing money; it’s a statement of identity, pride and social status. Similar customs are witnessed at Ethiopian weddings.

When enforcement feels selective or symbolic, it raises a deeper question for those of us watching markets, money and policy. If you can’t spray, stash or spend your money freely, do you really own it? Or are you just another pawn in a national Monopoly game?

Catch us soon as we dive deep into cryptocurrencies that sell a dream to ‘de-Central Bank’ the financial system. Spoiler Alert: still not a legal tender in Ethiopia despite crypto miners flooding into the country.

 Key Takeaways

1. You don’t really own your money: At least not like you think. From how much cash you can hold to what currency you’re allowed to use, central banks call the shots.

2. The rules hit regular people, not the real culprits: While economic reforms aim to protect fragile currencies, enforcement often feels symbolic — punishing everyday people for small infractions, while elite corruption remains untouched.

3. People seek workarounds: With strict currency limits and volatile exchange rates, informal markets have become survival tools for many businesses and households. When the formal system doesn’t work, people create their own parallel markets and cryptocurrencies.

ፍራንክ Picks 

🚶🏽 Event: Food, Coffee, & Packaging Take Center Stage [Expo, 19-21 June]

🗞️ In the news:  Fintech’s New Barrier: Minimum 100 Million Birr Capital

♟️ Innovation: Another E-Commerce Startup Makes A Splash

Equipment Financing: The Next Credit Experiment?

Financing

Meet Giorgio. 

He came to Ethiopia for love. Not for the weather, not for business, not even for the fast Wi-Fi. Just love.

After marrying an Ethiopian, he set up a a cozy little pizzeria around Bole.

In his ላጤ life, Giorgio worked in a restaurant in Genoa. He wasn’t much of an entrepreneur but he loved making food for people, so naturally, he was going to own his restaurant.

6 years deep into the business his place has begun to create a cult following. Real authentic Italian style pizza from an Italian. What could go wrong?

Well, Giorgio realizes that his trusted old pizza oven is slowing him down. Orders take longer and temperatures are uneven. He sees adding a new, more efficient and automated pizza oven doing wonders to his business. 

One problem: it costs an arm and a leg! He doesn’t have that kind of cash lying around. For once, the dough master was out of ideas. 

Almost everything in Ethiopia is bought with cash upfront. 

No cash? No equipment. Simple rule 📏.

Plot twist: one of his regulars turns out to work at a lease company financing equipment. 

The idea is straightforward: Equipment Financing is simply the act of obtaining a loan or lease that is used to buy machinery or equipment for your business. This form of credit helps alleviate the cash burden on businesses, allowing them to spread the costs of the purchase over time—ideally using the income that new equipment helps you generate.

If your business is solid, you can borrow to buy the tools you need, and pay it back as your revenue grows. You just need to show some sales history and get an invoice from the supplier that shows the costs of the equipment.

Giorgio is ecstatic. Could this be it?

As with any borrowing, the ‘Are you good for it?’ will come into question and thus the age old question of credit scoring system will need to be revisited.

But here is why equipment financing could potentially become the first real breakthrough financial product of the credit market.

📈 Rising consumerism: the economy is seeing more and more buyers which signals strong incentive for businesses to service that demand. Spending on marketing, branding, equipment financing will be huge

💎 Chasing Quality: particular consumers are becoming more discerning, with various options, some segments for the market seek quality products, pushing providers to look for the best machinery to deliver that quality.

🧮 Standardized Finances: Official businesses operate with a bank account. Transactions can be seen and tracked. This enables borrowers to look at patterns and determine good business health (Again, credit scoring comes knocking )

Now let’s be clear, equipment financing is not a novel concept, Ethiopia sees these types of transactions all the time. But old and outdated lending practices (L/C, long wait times for FX, back and forth with the banks and releases of funds) are making it hard to distinguish from other types of loans.

Some companies have appeared over the past few years, essentially to remedy this problem. Thinking of Ethio-Lease (Now defunct), Ethio Credit Systems (Defunct…another one), Addis Capital and the champion Development Bank of Ethiopia (DBE) among others.

The system is currently wobbly because capital lease companies face currency asymmetry risks. By this we mean, they procure equipment from foreign markets using own reserves of foreign currency and then lease to local companies in Ethiopian birr. Repatriating the Ethiopian birr is a hurdle and to top it all the value of the birr historically only goes one-way 👇. Ethio-Lease tried to lobby for lease payments to be made in foreign currency but NBE stood its ground on its ‘Birr is boss’ law.

Consider this too: not all leases need to be from overseas suppliers. Lease companies can offer financing for locally produced products or already imported items by well seasoned businesses.

Local suppliers could benefit from equipment financing on an integrated platform much like Telebirr’s recently launched e-commerce platform ‘Zemen Gebeya’, but more geared towards industries. 

The whole process needs a major overhaul with financial services institutions, borrowers, suppliers and even third party facilitators (like clearing firms and last mile delivery companies) accessing one big platform.

So in summary? Will equipment financing be the new credit experiment?

In theory? Yes.
In reality? Not yet.

While the structure of already established lending practices exist, a more robust credit scoring system and end-to-end platform for each player involved is needed.

Funding is key, with many equipment costing dear, financing companies struggle to make cost of capital attractive. In the end, it’s all about a policy change and a willingness to give the sector a chance.

Who knows, maybe the NBE sandbox will produce an innovative company or two, pushing the current boundaries and re-shaping the sector. Maybe that company is right around the corner 👀

Key Takeaways

1. Giorgio may be fiction, but his financing woes are all too real. Many businesses operate with the hope of using future earnings to pay for their machines that are ever so important to their businesses. Depending on cash to pay for them could be dangerous.

2. High hopes: as a financial product, equipment financing can seamlessly integrate into the current borrowing environment. But current lending practices are outdated, and leasing companies have come and failed. Major overhaul is needed to accommodate more practical practices, especially where technology can step in.

3. Important piece: Borrowing still requires creditworthiness. Hence, a credit scoring system has to take center stage for any type of financial product to be considered. Equipment financing is no exception.

Thanks for sticking with us, ፍራንክ family! Keep those wallets smart and your inbox open - we’ll be sliding in next week!