It’s Not Just Rates, It’s Roots: Inside the Psychology of Ethiopian Diaspora Remittances

In a June 2025 article, “Why Most Ethiopians Abroad Still Avoid Banks to Send Money Home,” Daniel Metaferiya of Shega provided a timely and well-researched look at the continued dominance of informal remittance channels like Hawala among the Ethiopian diaspora.

The piece highlighted essential factors such as the favorable parallel market rates, convenience, and accessibility of informal systems, which help explain this persistent behavior.

This rejoinder builds on Daniel’s reporting by exploring a deeper layer: the emotional, cultural, and psychological dimensions influencing how many in the diaspora engage with money, risk, and trust.

It offers an external lens based on my advisory work with diaspora clients across the U.S., not to rebut the original piece, but to extend its implications.

Trust Isn't Just Institutional, It's Personal

For many Ethiopians abroad, especially those who migrated under precarious or undocumented circumstances, “formal” doesn’t always mean “safe.” Sending money through a bank implies visibility, and visibility can feel like risk. Whether it’s fear of immigration scrutiny, taxation, or institutional mismanagement, choosing to stay informal can feel like self-protection.

Even highly educated professionals, doctors, engineers, and civil servants sometimes hesitate. The hesitation isn't always logical; it's layered, often rooted in past disappointments or an ingrained sense that neither system here nor there fully represents them.

Informal networks succeed not just because they are faster or cheaper, but because they are deeply relational. The remittance collector who picks up cash at a client’s apartment may know their cousin. The man delivering it in Addis may have been at their wedding.
These are not just transactions. They are emotional bridges. And that’s something many formal systems and fintech platforms fail to grasp. Familiarity trumps formality.

In many Ethiopian diaspora households, there's an unwritten rule: don't talk about money too openly, even among friends. Especially not with professionals. Even when access to sound financial advice is available, many default to what feels familiar: cash, kin, and silence. That silence often leads to scattered capital, missed investments, and exposure to risks that could have been mitigated with simple planning. Financial institutions often approach remittance design with a product-first mindset: better rates, lower fees, slicker interfaces. But what most diaspora clients are missing isn’t innovation, it’s emotional alignment.

They need platforms that offer privacy without suspicion, transparency with protection, and a structure that honors their lived story. Until that exists, informality will remain the default, not because of cost, but because of comfort.

The Way Forward

Remittance behavior won't change until trust is rebuilt. And that trust won't come from technology alone; it must come from understanding.

- Diaspora clients need more than a rate; they need a relationship.
- More than an app, they need assurance.
- More than visibility, they need verifiability, without vulnerability.

If Ethiopia’s financial system wants to formalize diaspora flows, it must first learn how to meet them where they already are in mindset, in memory, and in meaning.