Ethiopians and diaspora have several ways to grow their money. This guide covers the main options, how they work, and important considerations. This is educational content only—not financial, investment, or legal advice. Always consult a qualified professional before making investment decisions.
Disclaimer
Birr Value does not provide financial, investment, tax, or legal advice. The information below is for educational purposes. Investment returns are not guaranteed. Past performance does not indicate future results. You are responsible for your own investment decisions and risks.
1. Savings Accounts
What it is: Deposit money in a bank; earn interest; withdraw when needed.
Typical returns: 5–10% per year (varies by bank and NBE policy)
Risk: Low. Deposits are with regulated banks.
Best for: Emergency funds, short-term savings, liquidity for daily needs.
Considerations:
- Compare interest rates across banks (CBE, Awash, Abyssinia, Dashen, etc.)
- Minimum balance requirements (often 100–500 birr)
- Inflation may erode real returns if interest is below inflation
2. Fixed Deposits (Time Deposits)
What it is: Lock funds for a set period (3–12 months or more); earn higher interest than savings.
Typical returns: 8–14% per year depending on term and bank
Risk: Low. Principal is with regulated banks. Early withdrawal may incur a penalty or lose interest.
Best for: Goals with a known timeline (e.g., saving for a car, education, travel in 1–2 years).
Considerations:
- Longer terms usually offer higher rates
- Compare rates before locking in; Birr Value lists banks; contact them for current fixed deposit rates
- Inflation: If inflation is high, real returns (after inflation) may be low or negative
3. Government Bonds
What it is: Lend money to the Ethiopian government; receive interest (coupon) and principal at maturity.
Typical returns: Varies by bond type and term; often higher than savings.
Risk: Low to moderate. Government is the issuer; default risk is generally low but not zero.
Best for: Medium- to long-term savings (2–5 years or more).
Considerations:
- Sold through banks or the National Bank of Ethiopia
- Liquidity: May be limited; selling before maturity is not always easy
- Check with your bank for availability and terms
4. Foreign Currency (FX) Accounts
What it is: Hold USD, EUR, or GBP in a bank account. Earn interest (if offered) or preserve value in foreign currency.
Typical returns: Low interest (if any) or capital preservation if the birr weakens.
Risk: Low. Depends on bank and currency. Exchange rate risk depends on your holding currency vs. birr.
Best for: Diaspora saving in Ethiopia; importers/exporters; holding foreign currency for future use.
Considerations:
- See our Regulatory Guide to Opening FX Accounts
- Compare banks for minimum balance, fees, and interest
- NBE regulations apply; conversion to birr may be subject to availability
5. Real Estate
What it is: Buy land or property for rental income or capital appreciation.
Typical returns: Varies widely; rental yields and capital gains depend on location and market.
Risk: Moderate to high. Illiquid; transaction costs; legal and title risks in some cases.
Best for: Long-term investors with capital and local knowledge.
Considerations:
- Legal due diligence is essential (title, zoning, permits)
- Consult a lawyer and real estate professional
- Liquidity is low; selling may take time
6. Equities (Stocks)
What it is: Buy shares in companies listed on the Ethiopian Securities Exchange (ESX) or similar.
Typical returns: Variable; dividends and capital gains.
Risk: Moderate to high. Market volatility; company-specific risk.
Best for: Long-term investors with risk tolerance and understanding of the market.
Considerations:
- ESX is relatively new; liquidity and listed companies are limited
- Requires a brokerage account (check with banks and licensed brokers)
- Research companies and understand the risks
7. Informal Savings (Idir, Equb)
What it is: Community-based savings and lending circles (e.g., Idir, Equb).
Typical returns: No interest; social and mutual support.
Risk: Low to moderate. Depends on trust and group management; no formal regulation.
Best for: Social savings; community support; small-scale savings.
Considerations:
- Not regulated; no formal protection
- Choose groups you trust and understand the rules
Building a Strategy for Your Goals
- Short-term (1–2 years): Savings and fixed deposits for liquidity and stability
- Medium-term (3–5 years): Fixed deposits, government bonds, FX accounts
- Long-term (5+ years): Diversified mix (bonds, real estate, equities if appropriate)
- Diaspora: FX accounts and remittances; Send Money for best rates
Key Takeaways
- Compare options: Banks, rates, and terms vary. Use Birr Value to compare banks and Send Money for remittance rates.
- Understand inflation: Inflation in Ethiopia can be high; consider whether returns are real (after inflation) or nominal.
- Diversify: Don't put all savings in one place. Spread across savings, fixed deposits, and other options based on your goals and risk tolerance.
- Seek advice: Consult a financial advisor, accountant, or lawyer for personalized advice.
- Stay informed: NBE policy and bank rates change. Keep learning.