Personal Finance

Money Culture - Ethiopian Style!

April 29, 2000

There is one thing that we Ethiopians are really good at: living for today, not worrying about tomorrow! After all, there is even the saying “lejochu endehon be-idilachew yadgalu”. And what a destiny many of them grow up to! One of poverty, unemployment, illiteracy and extremely limited opportunities.

Granted, that’s not all that life is about! After all, we have a proud history and a rich heritage. But ultimately, that’s not enough! They are meaningless to a starving child. If only the parents had planned & saved for the future…If only our national leaders had done just that! But it’s not just the leaders, the nation as a whole has to be accountable for a culture that does not value thinking for the long-term, saving for the future, etc. Of course, the argument will be made that the vast majority of Ethiopians live below the poverty line and cannot even begin to think about saving. True enough! But what about those of us that can? Do we? Probably not! Even if just middle class Ethiopians were frugal (not stingy) and saved/invested their money, well - that has a ripple effect on the economy. New businesses would be started & jobs created which would improve the living standards of many. That would in turn lead to more people that have disposable income to spend and save as well. And the ripple effect continues. 

As harmful as these negatives are, there are positives as well. These are:

Ekub: traditional savings association

Edir: traditional insurance system

Unfortunately, these are not practiced widely enough or on a scale that is large enough to really make a difference in terms of the overall economy. Investing for retirement exists to the extent that people invest in their children who will, by and large, be the only source of financial provision for the elderly. This reflects the communal value system, based on close-knit families and communities. However, from a purely economical standpoint, it places undue hardship on young people who not only have to provide for their own burgeoning families but also for elderly parents. The challenge for many is achieving the fine balance between meeting their financial obligations to their parents/children & communities and simultaneously making wise financial decisions & planning for their future.

Are Ethiopians in Diaspora any different? Do they handle their finances well? At least in the US, there is a decent portion of us here (arguably) that have managed to buy a home. Most of us own cars but that my not be anything to write home about given that many Ethiopians live above their means and are up to their ears in credit-card debt etc. “So do many others” one might say and true enough! But if we can pick up on those habits, why not also learn smart money management skills from our environment such as budgeting, thoughtful/planned giving, saving and investing? We certainly have the resources right here! In the final analysis, it’s not what you earn that matters it’s what you keep!

So be smart! Start by making the decision to change how you handle your money and even more importantly, your attitude towards money! Changing the harmful aspects of our money culture has to start at the individual level - in each of our homes. It’s perhaps the only thing we have complete control over that can benefit our families and ourselves.