⛽ Death, Taxes & Fuel Price Hikes

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:

• 🏷️ BUZZ: Guess What? Gas Prices Just Went Up!

• 💯 How Do Countries Keep A Scorecard?

• 🗝️ The Key Takeaways

Thanks for reading!

BUZZ: Expecting The Bad, Fearing The Worst: The Fuel Crisis Continues

Economy

It was March 23, 2025.

The Ethiopian Government, through the The Ministry of Trade and Regional Integration, sent a press release that was dreaded by all.

It informed that newly revised fuel prices in the country have been effective as of March 21.

The new prices? 

• Benzene (Gasoline):            112.67 ETB/liter 

• Diesel:                                   107.93 ETB/liter

• Kerosene:                           107.93 ETB/liter

• Light Black Diesel Oil:      109.22 ETB/liter

• Heavy Black Diesel Oil     106.75 ETB/liter

• Jet Fuel:                               109.20 ETB/liter (For those of you with private jets, አይዝዋቹ our thoughts are with you 🙏)

It seems as though fuel prices only know one direction and that’s up! 

This trend has been going on for years now and it seems as though it will continue for the foreseeable future, unfortunately.

Now before we go out and say, ‘it’s finally time to get that BYD on sale that you’ve always wanted’, let’s look at what this means for the consumer and the broader economy.

1. Higher transportation costs 🚖

Going from point A to B will get even harder, transportation companies and ride-hailing firms will feel the pinch and thus transfer the financial burden to us the consumer.

Sometimes we wonder why A and B couldn’t co-exist in the same place, but that’s another discussion.

2. Purchasing power takes a punch to the gut 👊

Gas is an essential expense in most people’s lives. If income doesn’t change, then we reallocate the cash according to what we feel is a priority.

So instead of eating out, we eat in. That Apple Watch that we were saving up to buy as a Xmas present, it will wait. The knock on effect is huge and slow spending means less businesses deals.

3. Financial stress alleviation 💊

Fuel has been subsidized for years.

The Ethiopian economy does not have enough budgetary cushion for consumers to be able to avoid paying the ‘correct’ retail price. 

This will release funds for the government and will help its efforts to balance the budget— currently spending is higher than its income. But also will go towards essential safety net programs such as partially filling the gaps left by USAID.

4. The Birr 💵

Remember when the 200 Birr note was introduced? 

It wasn’t a surprise, the 100 was losing its value and carrying cash when prices were going to the moon showed a grim outlook, like Zimbabweans going to the bakery to buy bread with a bag of bills.

Point is: inflation. 

Oil prices might rise by the cents on the global markets but the very low purchasing power of the Birr needs to make up by a whole lot to be able to afford the precious foreign currency used to buy fuel.

Overall, this seems like a beautiful mess. 

The country is pushing towards renewable energy and the EV revolution is taking place but that reality is far from near, transitioning from fossil fuels to alternatives requires a monumental task.

Quite frankly, that shouldn’t be the immediate solution right now. Is there a remedy then? 

Well we can always go back to riding horses and donkeys but having gotten used to AC and electric windows, we think it might be a bit of a downgrade…

On a serious note though, it boils down to having a strong economy. An economy is a multitude of supply and demand transactions, those who have it, supply to those who demand it. 

Although Ethiopia is a net importer of fuel, if it had a net export factor of other goods, say like, precious minerals or commodities, the local currency could have stayed strong and dependance on acquiring dollars would have been less of a worry.

Reforms are key with the support of private sector business environment and by encouraging foreign direct investments, Ethiopia might just be able to bridge that trade balance deficit and create a semi sustaining energy sector.

 Key Takeaways

1. High Prices: The Ministry of Trade and Regional Integration has revealed new fuel prices following global price volatilities and a budget crunch

2. Effect: These changes will have a burdening impact for the consumer in the short haul: increased transportation fees and  lower purchasing power. While the Government can use this to plug the hole in the budget deficit

3. What’s next? Although efforts to transition towards renewable energy have seen some traction, it will require a shift of policies to encourage an environment where Ethiopia balances the import/export deficit. Economic reforms can help the Birr gain more power against foreign notes, enabling a more robust purchasing power

ፍራንክ Picks 

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♟️ Innovation: Move Over Google, It’s Time For Gebeta Maps!

Unraveling Ethiopia's Favorite Number

Economy

Ever tried to measure a country's economic health with one number? Well, neither have we, but economists have.

Think of the Gross Domestic Product (GDP) as the pulse of a nation’s economy, showing how much all the goods and services produced within its borders are worth.

Its origins goes back to Simon Kuznets, an American economist who first tried to measure the economic impact of the Great Depression in the 1930s. It’s been around a while, and it’s still one of the most important numbers we look at.

So, what exactly does GDP measure? It's the sum of four key ingredients: