Dear readers,

Over the past years, Shega Weekly has aimed to keep you informed on the most important developments across Ethiopia’s markets, sectors, and policy landscape. As our work has evolved, so has our understanding of what is most valuable to you, not just knowing what happened, but understanding what truly matters and why.

Starting this week, we are evolving Shega Weekly. Instead of only covering several stories at a glance, each edition will focus on a small number of key developments, examined through clear, data-driven analysis and on-the-ground insight. Our goal is to help you see the patterns behind the headlines, understand their implications, and make better sense of the markets you are part of.

We hope you find this new format valuable, and we would love to hear your thoughts and feedback as we continue to refine it.

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Unsurprisingly, Iran’s response to U.S.-Israeli strikes, threatening to choke the Strait of Hormuz, has sent shockwaves through global energy markets. Oil prices have surged by as much as 40% since the conflict began nearly a month ago. Brent crude oil has fluctuated between $80/barrel and nearly $ 120/b. Ethiopia, like many fully import-dependent economies, is now adjusting to the resulting supply shock.

Within a week and a half of the escalation, Ethiopia’s Petroleum and Energy Authority introduced a series of demand-curbing measures aimed at channeling limited supply toward priority sectors. Petroleum wholesalers have been instructed to prioritize security agencies, export-oriented manufacturers, and public projects nearing completion, alongside stricter oversight to reduce waste. Retailers, in turn, have been directed to favor public transport providers while enforcing tighter controls to prevent misuse.

More recently, rationing efforts appear to have intensified. Reports indicate that some state-owned enterprises are placing non-essential employees on leave in an effort to reduce fuel demand and conserve limited reserves.

Ethiopia imports 100% of its refined petroleum products, primarily from Kuwait, Saudi Arabia, and the United Arab Emirates, amounting to roughly 3.8 million metric tons, or close to 28 million barrels annually. Diesel and gas oil dominate (around 60% of imports), followed by gasoline (20%), jet fuel (16%), and smaller volumes of fuel oil. The state-owned Ethiopian Petroleum Supply Enterprise procures most of this supply through government-to-government agreements and international tenders.

According to The Economist, Ethiopia is among the 15 countries most affected by the current oil crisis.

Logistically, 90–95% of imports arrive via Horizon Terminal in Djibouti, before being trucked more than 800 km inland. Even under normal conditions, these logistics chains are prone to bottlenecks that can trigger nationwide disruptions.

While EPSE’s 13 national depots provide a limited buffer, Ethiopia lacks a formal, large-scale strategic petroleum reserve comparable to international standards. The economy’s dependence on fuel is broad: diesel underpins road transport, agriculture, and industry; jet fuel is critical for Ethiopian Airlines; and fuel oil supports power generation and cement production. Fertilizer delivery is also likely to be impacted, as 1/3 of global seaborne trade in fertilizers passes through the Strait. The risk is elevated because just 4 million quintals of fertilizers entered Ethiopia by February amid plans to procure 24 million quintals.

Prolonged closure of the strait is likely to reignite inflationary pressures, after a period of relative easing, while straining the federal budget, disrupting exports, and depleting foreign exchange reserves. According to a note by JP Morgan analysts, the oil shock is set to reach Africa in early April with demand losses of around 250,000 barrels per day.

EPSE’s monopoly enables centralized crisis coordination but also highlights the absence of market-driven flexibility. The Hormuz disruption thus becomes a direct test of state capacity, rather than one mitigated through private-sector adjustment.

If the global supply shock persists for several months, existing stocks risk depletion, even with continued procurement efforts. Import costs are also likely to rise by 20–40% as global rerouting, particularly around the Cape of Good Hope, increases freight and insurance costs.

Domestically, conservation measures are expected to intensify. EPSE’s centralized control gives the state significant leverage to enforce rationing, potentially extending to broader curtailment of non-essential services across state-owned enterprises as authorities seek to manage demand under increasingly constrained supply conditions. Nonetheless,  serious implications from the closure of the Strait for fertilizer are very likely to materialize in the short term.

Last week, Ethiopia’s central bank rolled out a cascade of four directives amending the seven-year-old insurance business proclamation. The coordinated legislative package seeks to address core weaknesses in the industry, spanning under-professionalized intermediaries, weak governance controls, audit quality gaps, and limited distribution channels for microinsurance. The reforms fall squarely in the “better late than never” category.

The central bank’s legislative pivot aligns with broader efforts to remake Ethiopia’s financial sector in line with models common in more mature financial ecosystems. While the flurry of insurance directives does not provide immediate springboards to accelerate penetration, at least one, microinsurance, could lay a critical foundation for future growth.

Insurance penetration in Ethiopia stands at about 0.3%, roughly 12 times lower than the African average of 3.6% and nearly 22 times below the global average of 6.5%. An estimated 90 million adult Ethiopians remain uninsured, while around 60% of rural citizens have never heard of insurance.

Product diversity is also strikingly limited. Of the 41.1 billion Birr in gross written premiums recorded in the last fiscal year, nearly half came from motor-related insurance. Life insurance accounted for just 6.3% of the total, while agricultural insurance remains largely confined to pilot and experimental stages.

The central bank’s apparent emphasis on microinsurance could help address several long-standing bottlenecks that have constrained the development of an inclusive insurance market. Across 37 countries, microinsurance has expanded significantly over the past decade, reaching nearly 334 million people, 90% of whom are covered through life and accident products. For Ethiopia, where households often face rapid asset depletion, high out-of-pocket expenses, and debt accumulation during shocks, microinsurance could serve as a critical buffer against financial distress.

While this is not the first time Ethiopia has introduced a microinsurance directive, it is by far the most comprehensive and strategically targeted. The 2015 directive established foundational rules on licensing, capital, product design, and governance for insurers and MFIs. The 2020 revision aligned the framework with updated legislation, modestly opened the door to diaspora capital, and removed complex savings- and investment-linked features. Most notably, last week’s Agents Directive addresses one of the most persistent constraints, distribution, by licensing individual and corporate agents, mandating training, requiring professional indemnity cover, and clarifying intermediary roles. The trajectory marks a shift from supply-side regulation toward enabling real market access for low-income populations. A prudent move, given that previous microinsurance initiatives in Ethiopia have struggled to scale or maintain timely claims settlement.

The rapid expansion of digital financial services, accelerating digital ID registration, and the state’s broader push toward digitization could create room for new entrants in the medium term. In the near term, however, interest from incumbents is likely to remain muted. Any early movement will likely take the form of small-scale operations or partnerships with existing pilot programs, as market participants test viability before committing significant capital.

The Federal Education and Training Authority (ETA) has revoked the licenses of 52 private colleges for failure to comply with regulatory standards. 

Among them are Leadstar College of Business and Leadership, Sri Sai College, International Leadership College, Ibex Hotel and Tourism College, Abyssinia Business and Economics College, and Afran Qallo College. Read more.

Chinese auto group Guangzhou Automobile Group Co., Ltd (GAC) opened a flagship showroom in Addis Ababa on Friday, rolling out four electric vehicle models as it moves into Ethiopia’s nascent EV market.

The launch centres on the GAC JUNTU facility, a 2,300 square metre site built to handle vehicle sales and servicing under one roof. The company said the four models are now available through its local dealer, marking its formal entry into the country. Read more.

Equity Group is pivoting its expansion strategy toward Angola, prioritising an acquisition in Luanda over Ethiopia as restrictive regulatory hurdles in Addis Ababa stall its market entry. Read more.