Ethiopia’s Next Great Dam Should Be for Forex

Three decades ago, when I was in fourth grade, we studied Ethiopia’s rivers such as the Abay (Nile), Awash, Omo, Tekeze, and Baro. Our teacher explained how they carved valleys, nourished farmland, and then flowed beyond our borders. When he came to the Abay, he said almost dismissively, “This river ends up in Egypt. For us, it is useless.”

The room fell silent. A classmate raised her hand: “But couldn’t we re-route it? Build something to use it here?” The teacher smiled and replied, “Maybe in your time.”

At the time, it felt like a polite way to end the discussion. But decades later, the Grand Ethiopian Renaissance Dam (GERD) rose from that same Nile, proof that what once seemed untouchable could become a national project. GERD turned a river once thought “useless” into a source of electricity and pride. It showed that with design and persistence, Ethiopia could reshape what seemed inevitable.

Today, the defining challenge is no longer re-routing the Abay River but building systems for financial resilience and, above all, foreign exchange. Remittances, exports, and aid inflows are powerful streams of hard currency. Just as Ethiopia once had to turn rivers into reservoirs of energy, it must now look upstream from remittance flows to the remitters themselves and build the trust and structure that can transform their broader financial capacity into stability.

The diaspora sits at the center of this challenge. Ethiopians abroad already send billions each year, but remittances are money to be spent, not saved. The deposits and investments that would build reserves and deepen markets remain largely untapped.

Across the banking sector, nearly every major institution, from the Commercial Bank of Ethiopia to private banks, has recently renewed their outreach to the diaspora. This growing attention is an encouraging sign that Ethiopian banks are taking their financial relationship with Ethiopians abroad more seriously. But it’s important to remember what remittances truly are: transfers designed to be spent, not saved. They sustain households, cover education, health, and emergencies. That function is vital and should continue.

While this is understandable, true resilience will come only when those flows are supported by trust and long-term financial depth. Over time, remitters must be persuaded to keep a part of their financial lives anchored at home.

That is where Ethiopia’s next national project truly lies. Just as GERD turned the Nile into a reservoir of power, diaspora deposits and investments could become the country’s next dam, a reservoir of financial stability. Properly channeled, they can generate the reserves, liquidity, and confidence the economy desperately needs. The question is not whether the diaspora has the capital, but whether Ethiopia has the structure to capture it.

For the diaspora, the logic is simple and universal. Wherever they live, households decide where to place their savings by looking at the same factors: credibility, transparency, and competitive returns. That standard does not change when the choice involves Ethiopian banks.

This means the real competition is not between Awash, Dashen, or Berhan. It is between Ethiopian banks and the global institutions that diaspora households already trust. Those that can meet those standards will capture not only remittances but also the long-term savings and investments the country needs to grow.

Encouragingly, Ethiopia is not starting from zero. Repatriation rules have been eased, new diaspora accounts exist, and the securities exchange has launched. The infrastructure for diaspora banking is taking shape. While the commotion now is among Ethiopian banks themselves, the real contest is global. To win diaspora capital, they must demonstrate credibility and service on par with the institutions the diaspora already uses abroad.

Technology can accelerate this shift. Fintech platforms, instant transfers, and digital wallets can deliver the speed and convenience the diaspora expects. Ethiopia has a chance to leapfrog: it can bypass decades of legacy inefficiency and move directly into real-time, transparent settlement. A diaspora customer should be able to send money home with the same ease as sending a WhatsApp message and with the same confidence they feel when wiring funds through Citi or J.P. Morgan.

But technology is not enough. Fintech must be embedded in a framework of compliance strong enough to satisfy both local regulators and international partners. 

Compliance is often treated as a bureaucratic burden, but in truth, it is the very wall of the dam. Anti-money-laundering rules, reporting standards, and supervisory structures are not “Western demands.” They are the foundations that keep capital flowing without fear of collapse. Without them, Ethiopia cannot be viewed as a safe steward of diaspora deposits.

Even with fintech pipes and compliance walls, one ingredient remains decisive: trust.  Diaspora investors will not commit to slogans or patriotic appeals; they commit to safeguards. Trust is built when institutions prove they can hold capital with integrity, when governance is transparent, and when instruments inspire confidence. 

And finally, this trust must be reinforced by markets that function. Recent reforms, while encouraging, remain unfinished. Interbank trading is limited, secondary bond markets are illiquid, and banks depend overwhelmingly on deposits. Until that bridge is strengthened, policy intentions will remain symbolic, and capital will continue to leak away.

Yet none of this is impossible. Ethiopia has already proven, with GERD, that what once seemed out of reach can be achieved. The lesson is clear: ambition may inspire, but structure delivers. Patriotism may stir hearts, but it cannot hold back a river or anchor billions in diaspora deposits.

To harness financial flows, Ethiopia must build the equivalent of a dam: fintech as the pipes, compliance as the walls, and trust as the turbines. If GERD lit up Ethiopia’s homes, a forex dam can light up its future. Every generation inherits a challenge that tests its imagination. Ours is to turn financial trust into national strength.

When my teacher said, “Maybe in your time,” he could not have imagined GERD rising from the Nile. Today, the same challenge stands before us, not of stone and water but of trust and capital. The diaspora’s wealth is ready to flow. The question is whether we will build the dam strong enough to hold it.