🧀 The Promise of 'Made in Ethiopia'

Welcome to the latest 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:

• 🏗️ Progress & Pitfalls: Can ‘Made in Ethiopia’ Be More Than a Slogan?

• 💍 Ethio Telecom & Siinqee Bank Tie the Knot

• 🗝️ The Key Takeaways

Thanks for reading!

Ethiopia’s Homegrown Hustle: Import Substitution

Economy

You know that feeling when you finally find good cheese in Addis 🤩 — not the tasteless, rubbery provolone that you find all over the place, but the real deal?

You savor it. You plan your next grocery trip around it. You even dedicate a cozy fridge space for it.

Then, next week, you come back to the store… and it’s nowhere to be seen. You realize you’ve been ghosted by your new favorite cheese. No goodbye, no explanation. Just an empty fridge space and a vague “maybe next week” shrug from the store clerk.

Sometimes it’s the imported kind that couldn’t dodge port delays. Sometimes it’s a locally produced one, battling shortages of ingredients, packaging, or electricity.

And that’s exactly the bigger problem Ethiopia is trying to fix — not just for cheese, but for everything from edible oil to cement to cars— through a bold strategy called import substitution.

First Things First

What is import substitution anyway?

Simply put: instead of importing what you need (think wheat, edible oil, toilet paper, you name it), you build factories, farms, and businesses to produce it at home.

Make it here, make it reliable, and maybe, just maybe, make those grocery trips a little less heartbreaking.

The hope?

• Save foreign currency

• Create jobs

• Build up local industries

• Maybe even export some leftovers

It sounds fantastic in theory. In practice, though, it’s a tough balancing act — especially when you're trying to swap decades of import habits overnight.

So How’s It Going?

Actually... surprisingly better than many expected.

In the first eight months of this fiscal year, which started in July 2024, Ethiopia saved about $2.7 billion by producing goods locally that would otherwise have been imported.

The goal by the end of the fiscal year?

• $3.9 billion worth of import-substituted products.

• Covering 96 key items across sectors like agriculture, industry, and manufacturing.

It’s part of a bigger 10-year plan to break the country’s heavy reliance on imports, stabilize the economy, and — let's be honest — avoid those awkward moments where there’s no deodorant, no cooking oil, and no diapers anywhere in town.

Where We're Winning

Some areas are actually showing real progress:

• Wheat Production
  Independent assessments estimate Ethiopia’s wheat production was between 6-7.5 million metric tons last year, helped by new irrigation projects and cluster farming models. Meanwhile, official government figures claim up to 23 million tons were produced. A rounding error, perhaps.

  Nevertheless, the country is now supposedly exporting wheat to neighboring countries — a huge turnaround from being a major importer just a few years ago. While still being a recipient of wheat donations from war-torn Ukraine 🤔

• Cement Industry
  No more scrambling to find cement for your construction site — at least in the short-run; even prices have slumped since Lemi National Cement’s plant came online in October 2024, covering roughly 50% of the local market.

  Lemi has bolstered domestic production capacity. But will it face similar issues as its peers, namely a widening gap between actual production and installed capacity due to lack of spare parts and low quality local coal?

• Hygiene Products
  Companies like ONTEX Hygienic Disposables (manufacturers of the Canbebe brand) have ramped up local production of diapers and sanitary pads, targeting what used to be an entirely imported market.

...And Where We’re Still Struggling

Let’s not pop the champagne (or ጠጅ) just yet.

Some sectors are stubbornly resistant to full import substitution. Here’s a few highlights:

• Edible Oil 🏺
  Despite Ethiopia being a producer of oilseeds, over 90% of edible oil on supermarket shelves are still imported.
  Processing capacity, quality supply issues, and packaging material shortages are big bottlenecks.

• Pharmaceuticals 💊
  Despite big plans to localize production, about 80% of medicines and medical supplies are still imported (UNIDO).

• Textiles and Apparel 🎀
  The government had high hopes for the likes of Hawassa Industrial Park. However, foreign currency shortages and exclusion from AGOA had slowed the dream of becoming Africa’s textile hub.

Why It’s Not Smooth Sailing

A few headwinds have hit hard:

• Quality issues: Locally made products often struggle to match imported goods — think construction materials, machinery, consumer electronics.

• Input dependency: Irony alert: many "local" products still rely on imported raw materials. For example, many edible oil processors still need to import crude palm oil and plastic resins to package them.

• Infrastructure bottlenecks: Unreliable electricity, logistics gaps, and poor access to credit are major pain points for new manufacturers.

• Policy inconsistencies: New regulations, bans and restrictions come and go like the rainy season, leaving businesses scrambling.

Why It Matters to You

When Ethiopia can’t produce what it needs locally, the consequences show up in your daily life:

• Prices swing wildly depending on global shipping, fuel prices, forex rates and availability.

• Product shortages become normal — whether it's your favorite cheese, your toddler’s diapers, or your basic deodorant.

• Your birr loses value faster, as hard currency is spent on things we could, in theory, make here.

When it works, import substitution means a stronger birr (allowing for cheaper access to foreign technology/expertise); more jobs and up-skilling opportunities; and industries that cater to specific Ethiopian needs.

So where do we go from here?

Ethiopia’s import substitution journey is still in its messy teenage phase.
The government is targeting a full USD 10 billion in import substitution savings by 2030.
Among other things, it’ll take:

• More patient capital investment

• Smarter incentives for local producers

• Major upgrades in infrastructure

• A clear, stable policy environment (no more surprise "bans" overnight, please)

Maybe most importantly, a culture shift — where "Made in Ethiopia" isn’t seen as second-best or a backup plan, but the first thing we reach for and something to proudly demand.

 Key Takeaways

1. Import substitution: Ethiopia’s attempt to ghost-proof your shopping list — by making more goods locally and cutting our reliance on unpredictable imports.

2. Mixed results: We’re winning with cement, and diapers... but still fumbling on edible oil, electronics, and anything that needs reliable sub-suppliers.

3. When it works: You get stable prices, more jobs and domestic consumer-centric products; when it doesn’t, you get empty shelves.

ፍራንክ Picks 

🚶🏽 Event: African Insurance Organization Conference 2025 [24 - 28 May, 2025]

🗞️ In the news: Unanswered calls as Ethio Tele's 'IPO' expectations fall short

♟️ Innovation: One-stop digital shop for public services with Mesob

A Digital Finance Duo: Walk Into a SuperApp

Banking

Ethio Telecom just made another move in its quest to become more than just the place you call when your data runs out. This time, they’ve partnered with Siinqee Bank to beef up their Telebirr SuperApp—yes, it’s trying to be a super app in the real sense, like WeChat and GCash.

Of course we all know Telebirr already offers digital loans powered by Dashen and CBE.

So, what’s new on the menu?

• Savings Accounts

Whether you're the "stash under the mattress" type or you want your money to earn a little something on the side, there’s something for everyone: interest-free and interest-bearing accounts, even time deposits.

• Microloans a.k.a. ‘Enderas’ Loans

Got an emergency or maybe just a tempting deal on a በግ? You can borrow up to 30,000 Birr and pay it back in 5 to 45 days. It's quick and easy.

• Salary Advances

Now this one's spicy and chunky: Employees—yes, both government and private—can get up to five months’ salary in advance, capped at ETB 1 million. But there’s a catch: your salary has to go through Telebirr, giving them the right to direct debit repayments straight from your paycheck. No excuses.

• Loans for Merchants and MSEs

For the business-savvy crowd, loans range from 30k to 130k Birr (no collateral needed) paid back in 1 to 5 months, or if you're playing in the big leagues, you can access up to 2 million Birr—but this time, bring your collateral, with a longer payback period of 3 to 9 months.

• Smartphone Financing

Digital dreams, meet reality. Ethio Telecom wants to hand out up to 2 million smartphones (valued at a whopping ETB 4 billion) to folks in agriculture, merchants, and agents. Long-term payment plans apply. The goal? Get more people connected, one phone at a time.

But wait… is this all as shiny as it sounds? Well, here’s where things get... interesting.

📱 The Power Play

Ethio Telecom has 52.5 million customers. That’s basically everyone with a phone. Siinqee Bank? Just 7 million. So when banks partner with Ethio, they get access to a much bigger customer pool. Sounds like a win, right?

Yes—but also no.

Banks worry that this kind of arrangement puts Ethio Telecom in the driver seat. They lose out on building direct relationships with customers and, more critically, they don’t get to own customer behavior and credit pattern data. And in a world where data is king, that’s a big deal.

💸 Who’s Holding the Bag?

Even though Ethio Telecom offers the platform and the credit scoring tech, it’s the banks that actually fund the loans. In return, Ethio gets a cut from the loan origination fees. Fair enough—except some banks say the credit scoring system isn’t quite up to the task. Too many non-performing loans (NPLs), too little transparency on how borrowers are evaluated, and some serious headaches trying to recover unpaid loans.

🤔 Are These Loans Really Helping?

Let’s get real: fees on these short-term loans are steep. For small merchants, this often means taking out new loans frequently just to keep the business running. And when you stack up all those fees, you might start wondering if it’s a digital loan or a digital trap.

Then there’s the timing issue. A lot of these loans are short-term—but if you're a farmer waiting for your harvest to come in six months later, that just doesn’t work. Agriculture makes up one-third of Ethiopia’s GDP, two-thirds of employment, and 80% of export revenue, but the sector gets less than 10% of formal bank credit. So, are we really addressing the problem, or just slapping on a shiny fintech sticker?

Bottom Line: Ethio Telecom’s move with Siinqee Bank is big—no doubt about it. Adding lending power and raising credit ceilings. It opens up digital finance access to millions, and that’s something worth celebrating.

But like that extra scoop of በርበሬ in your ዶሮ ወጥ, the devil is in the details. If we're not careful, what starts as a solution for financial inclusion could turn into a headache of hidden fees, mismatched loan terms, and data power struggles.

So, yes, celebrate the convenience—but read the fine print. And maybe think it over.

Be on the lookout in the coming weeks as we cover National Bank of Ethiopia’s initiative to remedy the issues witnessed in digital financing for agriculture.

Key Takeaways

1. One More: Siinqee Bank joins financial titans CBE and Dashen offering savings and loans on Telebirr SuperApp with bigger credit ceilings and smartphone financing options

2. Marriage or Convenience: Banks get access to a wider pool of customers but miss out on direct customer relationships while still holding the bag when it comes to non-performing loans (NPL)

3. Digital Loan: Products suitable and tailored for the average Ethiopian are still lacking. The current fees, loan ceiling and short repayment schedules may lead to debt entrapment rather than financial liberation.  

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