🇪🇹EthiopiaEast Africa
Experts advocate for credit lines to address Ethiopia's WASH financing gap
via The Reporter Ethiopia8 min read
Experts gathered in Addis Ababa for the Aqua for All WASH Finance Program highlighted a significant financing shortfall in Ethiopia's water and sanitation WASH sector, estimated at USD 1.14 billion annually. Despite the need for approximately USD 2.2 billion each year to meet WASH targets, only about one in eight Ethiopian banks and microfinance institutions offer dedicated financing for the sector. Hezkel Aynalem, CEO of the program, noted that private sector risk perceptions, policy constraints, and weak project pipelines limit lending, even though repayment rates are high. He emphasized a lack of understanding of the WASH sector among financial institutions, who often perceive no business case for it. Systemic barriers include insufficient data, a shortage of investment-ready projects, and regulatory hurdles. The Aqua for All WASH Finance Program, running from 2024 to 2026, aims to tackle these issues by collaborating with financial institutions to establish dedicated credit lines, de-risk investments, and build a pipeline of finance-ready projects. The program involves technical assistance, standardized WASH financing toolkits, and a revolving credit facility linking banks and microfinance institutions. Early results show microfinance institutions achieving 97 percent repayment rates on WASH loans, demonstrating the sector's viability. Hezkel stressed that private finance is essential, as traditional public funding is insufficient to achieve universal access to WASH servi
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The National Bank of Ethiopia NBE has postponed its latest foreign-exchange auction, citing unforeseen technical issues. The NBE had previously announced on May 27 that it would conduct two foreign-exchange auctions of USD 100 million each during the fourth quarter of the fiscal year. This amount represents a significant reduction from the previous auction, which offered USD 500 million. The next auction, valued at USD 100 million, was scheduled for June 24, 2026. Demand for foreign currency remains high, with commercial banks submitting bids totaling approximately USD 1 billion in the previous auction, double the amount offered by the central bank, as the Birr continues to weaken against the US Dollar. In that auction, the weighted average exchange rate for successful bids was 159.98 Birr per dollar, with the highest successful bid at 160.90 Birr per dollar and the lowest at 157.30 Birr. Fourteen of the 30 participating commercial banks secured foreign-currency allocations.
Must ReadThe Ethiopian Capital Market Authority ECMA has granted an investment banking license to United Capital Financial Services PLC, a subsidiary of Nigeria-based United Capital Group. This marks the first time a foreign investment bank has established a subsidiary in Ethiopia, signaling increased foreign interest in the country's developing capital market. The license was issued on June 5 and announced on June 9, authorizing the company to provide services under Ethiopia’s investment banking framework. ECMA also approved five board directors and licensed four appointed representatives for the company. This development brings the total number of licensed Capital Market Service Providers in Ethiopia to 18 and raises the number of licensed investment banks to seven. ECMA Director-General Hana Tehelku described United Capital's entry as a significant milestone, reflecting growing confidence in Ethiopia’s financial sector reforms and regulatory framework. She added that it demonstrates recognition of Ethiopia’s market potential and could help deepen market capacity, improve regional integration, and strengthen investor participation. This licensing aligns with Ethiopia's ongoing efforts to operationalize its capital market and attract private investment.
Must ReadThe National Bank of Ethiopia NBE has amended its Franco Valuta Directive, permitting diplomatic missions, foreign investors, and international organizations to import fuel for their own use without relying on the Ethiopian Petroleum Supply Enterprise EPSE. This change allows these entities to use their own foreign exchange for fuel imports, bypassing the need for letters of credit from banks. The volume and value of fuel imported under this scheme will be determined by the approval of the recommending government office. This marks a significant shift, as it is the first time in recent memory that non-governmental entities can independently import and utilize fuel. While the state-owned EPSE will continue to manage fuel imports and supply for most of the market, this new directive aims to facilitate the import of essential commodities without straining national foreign exchange reserves. The directive also extends to other goods and capital items imported by international organizations, NGOs, charities, manufacturers, and exporters.