Earlier in the year and more specifically on July 28th July 2024, Ethiopia made a historic move. It introduced a new macroeconomic reform process, moving away from a crawling peg exchange rate regime for the Ethiopian Birr against the US Dollar to a market-based foreign currency system.

Since then, the Ethiopian Birr has taken on a downward spiralling fall to register most recently 140 Birr to the US Dollar in the illegal market compared to the official 116.7 Birr as of October 12, 2024, in comparison to 57 Birr on the date the new system was introduced.

This widening gap is not comfortable for the economy and presents a serious challenge to both the business community of the country and the consumers. Obviously, the formal financial system has been or is unable to meet the demands of the market and more especially for foreign currency, where now most businesses and people rely on the black market as a source of hard currencies, for their needs, mostly the US Dollar. (Read Addis Insight – Ethiopia’s Black-Market Hits 140 Birr to the Dollar: A Growing Crisis in Foreign Exchange on October 12th, 2024).

This has impacted the economy in more ways than one. The inflation in the economy has risen and is reported to be above 30% resulting, in the main, from increasing costs of goods and services. Importing........

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