Addis Abeba — As Ethiopia implements Digital Ethiopia 2030, the swift deployment of digital platforms, the expansion of e-services, the growth of fintech, and the rollout of the national digital ID registration project collectively convey an image of decisive modernization--what development practitioners refer to as "leapfrogging," policymakers describe as "progress," and technologists characterize as "scale." Yet emerging evidence reveals a more troubling dynamic: digitization can accelerate even as governance quality, development outcomes, and public trust stagnate or erode, thereby transforming rapid expansion into a source of systemic instability. This "Ethiopian paradox" is not a rhetorical flourish but a structural warning--akin to stress fractures in a load-bearing structure before it collapses.
The illusion arises from a flawed assumption that technology automatically produces institutional capacity. In reality, digital transformation is socio-technical. A digital state is not an app or a strategy document, but a set of load-bearing relationships--between power and trust, networks and legitimacy, identity and consent, payments and redress, infrastructure and governance capacity. Impressive digital façades can rise even as foundations quietly weaken.
Ethiopia's ambition is real, and so are its achievements: mobile money is scaling, digital ID is operational, and telecom liberalization is reshaping markets. The steel is rising fast. The unresolved question is whether the foundations can carry the load once systems become essential, tightly coupled, and politically stress-tested--when failure no longer remains technical but becomes systemic.
Hidden fault lines beneath Ethiopia's digital ambition
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The metaphor "building suspension bridges and skyscrapers on quicksand" carries significant weight because Ethiopia is not constructing a simple road that can be repaired section by section, where traffic can be redirected and failures remain localized and manageable. Instead, Ethiopia is building something closer to a suspension bridge: the digital economy and digital state hang between two cliffs--public authority on one side and social adoption on the other--supported by cables of infrastructure, governance capacity, and public trust. If the cables fray, the bridge does not merely wobble; it collapses through cascading failure, where the loss of tension in one cable redistributes load until others snap in sequence.
Or, to use the more brutal image that captures the geological risk: Ethiopia is constructing skyscrapers on quicksand. The towers may look magnificent for a time. The architecture may win awards. The elevators may run smoothly. But when the ground shifts--and in complex socio-technical systems under political stress, the ground always shifts--height becomes a liability rather than an achievement.
This is how digital transformation fails in the twenty-first century: not with one dramatic collapse announced in headlines, but through a cascade of small failures that compound, erode trust, push people back to analog alternatives, and eventually leave governments with expensive infrastructure citizens refuse to use because dependence has become dangerous.
Digital expansion outpacing infrastructure
Ethiopia's digital progress is substantive, not cosmetic. It is visible in dense agent networks across cities, the normalization of mobile wallets in urban markets, the rise of fintech and applied AI startups, and the policy shock introduced by telecom liberalization. These are real shifts in behavior and institutional thinking, not branding exercises.
The scale is evident in official data. In its November 2024 Financial Stability Report, the National Bank of Ethiopia (NBE) reported over 198 million digital accounts as of June 2024, including more than 110 million mobile money accounts and around 47 million mobile banking accounts, with the ecosystem processing over 7.5 million transactions per day. Importantly, the NBE acknowledges inactive and duplicate accounts, a transparency that underscores both scale and uneven usage. Even with these caveats, digital financial rails are clearly being deployed at the national level.
Other official and sectoral sources report over 107 million registered mobile money accounts by mid-2024, highlighting not only rapid growth but also fragmented measurement, a governance signal in itself where institutions apply different definitions and standards.
Telecom liberalisation has similarly shifted expectations. While Safaricom Ethiopia remains early-stage and loss-making, its presence has forced policy debates on interoperability, agent liquidity, service quality, and consumer trust. Independent African telecom reporting indicates that by September 2025, M-PESA Ethiopia had approximately 3.4 million active users, processing billions of birr in transaction value over six months--significant not for dominance, but for demonstrated behavioral change.
Digital identity has also moved from concept to operation. Fayda has registered around 30 million individuals and is integrated with more than 55 institutions, enabling service coordination impossible under paper-based systems. Yet the gap remains stark: as of March 2025, adult coverage was roughly 15.5%, against an ambition of 130 million citizens by 2027, implying an order-of-magnitude acceleration while maintaining data quality and security. A broader ecosystem is emerging in Addis Ababa and other cities, supported by a youthful population--over 70% under 30--and active innovation hubs in fintech, service digitization, and applied AI. This is the steel in the bridge: tangible progress that cannot be dismissed. But steel alone does not ensure safety. Resilience comes from engineering discipline--redundancy, stress testing, inspection, clear accountability, and incident response. It is at this level--institutional capacity rather than ambition--that Ethiopia's digital program begins to resemble a high-speed build over unstable ground.
Electricity is not a footnote--it is the first cybersecurity control: Digital transformation is fundamentally a power-reliability problem, not a software one. When electricity is unreliable, digital systems fail in predictable cascades--telecom outages, payment failures, interrupted biometric registration, unstable data centres--and citizens learn the most damaging lesson of all: the state disappears when it is needed most.
Ethiopia is constructing skyscrapers on quicksand."
The data are stark. A 2023 study found nine times their electricity bill Ethiopian firms experience 39 power outages per month, causing about 21 hours of downtime, while households face 46 hours of outages monthly. Firms lose roughly 2.22% of monthly sales--about--showing that unreliability imposes structural economic costs, not minor inconvenience.
Each outage carries social consequences: lost income for traders, delayed salaries for workers, wasted journeys for rural citizens. These failures accumulate into political narratives that erode trust. In fragile infrastructure environments, breakdowns do not remain technical; they become legitimacy crises. This is why reliability is governance. No encryption or access control can secure a system that stops working when the power fails. A digital state that cannot operate under stress is not modern--it is brittle and unsustainable.
The 198-million-account mirage: provisioning is not adoption: Ethiopia reports over 198 million digital accounts for a population of roughly 120 million, implying more than 1.6 accounts per person even before adjusting for duplicates, inactive registrations, and business accounts. Administratively, this reflects extraordinary scale.
Yet actual use remains limited. World Bank Global Findex data, cited in Ethiopia's National Digital Payments Strategy (2026-2030 draft), shows that only 19.7% of adults made or received a digital payment in the past year--meaning four out of five adults remain outside the digital payments ecosystem. The gender gap is stark: 24.3% of men versus 15.4% of women, highlighting structural barriers tied to literacy, device access, social norms, and economic agency.
This gap reveals the Ethiopian paradox: accounts measure institutional capacity; usage measures trust. Ethiopia is creating accounts faster than it is building the trust institutions that make digital dependence rational--effective consumer protection, accessible dispute resolution, meaningful digital literacy, and reliable systems.
This is not a benign adoption lag. Partial adoption in a rapidly scaling system is risky: failures remain manageable while digital use is limited, but as services become digital-only and cash alternatives shrink, the same failures escalate into economic and political crises. Ethiopia's digital infrastructure is expanding faster than its institutional "adaptive efficiency," creating a credibility gap that manifests as non-use despite availability.
Connectivity is expanding, but the divide is structural--and legitimacy cannot survive a two-speed state: Ethiopia's connectivity gap is structural, not merely infrastructural. It reflects affordability constraints in a low-income economy, difficult terrain, multilingual realities, uneven literacy, limited device access, and demographic divides that shape who can use digital systems effectively.
By late 2025, only 21.7% of the population used the internet, leaving about 107 million people offline. Mobile penetration reached 68.4%, but many connections are voice-only or data-constrained. The divide is reinforced geographically: 75.7% of Ethiopians live in rural areas, where connectivity is weakest, costs are highest, and digital literacy is lowest.
The danger is not Ethiopia's low starting point but the entrenchment of a two-speed digital state: one Ethiopia of platforms and efficient services, another of paper, queues, and exclusion. This divide is self-reinforcing--low adoption discourages private investment, weak investment sustains poor service and high costs, and low usage then justifies policy deprioritization, concentrating resources in already-connected urban centers. The digital dividend does not merely bypass rural areas; it leaks away from them.
This threatens legitimacy. A federal state cannot sustain trust when digital transformation is perceived to benefit urban centers disproportionately, turning infrastructure meant to unify the state into evidence of unequal attention. Although Digital Ethiopia 2030 acknowledges the need for rural reach and inclusive design, only treating affordability, multilingual access, and rural inclusion as first-order implementation requirements--not rhetorical goals--can prevent connectivity from deepening existing inequalities.
Governance under strain
If electricity determines whether digital systems can function at all, governance determines whether they function effectively, accountably, and in ways that build public trust. Ethiopia's digital push is often described as state-led, implying coordination and capacity, but state-led does not automatically mean state-capable. The gap between ambition and administrative capability is where digital transformation most often falters--and current evidence suggests Ethiopia is operating within that gap.
A digital state that cannot operate under stress is not modern--it is brittle and unsustainable."
A government can announce bold targets and still lack coordination capacity, technical expertise, institutional checks, and adaptive agility. This gap is visible in international assessments. The UN's e-government assessment 2024 ranks Ethiopia 169th out of 193 countries in overall e-government development, placing it in the bottom quartile globally. More concerning is its e-participation score of 19.3%, which reflects weak citizen engagement, limited feedback mechanisms, and thin participatory governance in digital spaces. These indicators point to poor learning loops and limited capacity to course-correct when implementation problems arise.
A digital state that does not listen cannot self-correct; one that cannot self-correct cannot be resilient. Resilience requires early problem detection, accurate diagnosis, and rapid adjustment before small failures become systemic crises.
Governance fragility, however, is not only a capacity problem. It is also political economy. Digitization reduces discretion, formalizes processes, and creates audit trails that expose informal arrangements and shift power from personal negotiation to rule-based systems. This is precisely why digitization often triggers passive bureaucratic resistance: delayed approvals, strategic under-resourcing, silo protection, and formal compliance without substantive cooperation. In socio-technical terms, the social subsystem pushes back against the technical subsystem when technology threatens established power relations.
Treating this resistance as a technical delay rather than institutional conflict leads to misdiagnosis, wasted resources, and mounting frustration. Ethiopia's digital trajectory therefore cannot be understood only through platforms and infrastructure. It must be analyzed through authority and accountability: who controls data, who authorizes access, who is accountable for harm, who can audit systems, who can sanction failures, and how trust is repaired when it breaks.
These questions remain largely unresolved. In rapidly scaling systems, unresolved governance becomes an operational vulnerability--open to misuse, exploitation, or collapse under stress when responsibility is unclear. From a public administration perspective, this reflects what James Scott described as "seeing like a state": imposing simplified, legible systems on complex social realities, often triggering resistance from those who lose autonomy or face new risks.
Fayda: Why Ethiopia's digital ID needs more than biometrics
Digital identity is not merely technical infrastructure; it is citizenship made machine-readable, determining access to services, mobility, transactions, and recognition by the state. As such, it carries political weight far beyond databases or biometrics.
Fayda, Ethiopia's national digital ID system, is positioned as the foundational layer of Digital Ethiopia 2030, enabling integration across health, education, finance, telecoms, and government administration. It has registered approximately 15.99 million individuals and is integrated with over 55 institutions, enabling coordination impossible under fragmented paper-based registries. Yet the scale gap is stark: as of March 2025, adult coverage stood at roughly 15.5%, against an ambition of reaching 90 million citizens by 2027--requiring a five- to six-fold acceleration while maintaining data quality, security, and public confidence.
From a public administration perspective, the logic is sound: identity becomes the authentication layer for everything--services, accounts, SIM cards, records, and credentials. But in a federal system with contested center-periphery relations, national digital ID can be perceived not only as coordination, but as consolidation that threatens regional autonomy. Where trust in the center is weak due to historical grievances or recent conflict, biometric registration is read less as efficiency and more as surveillance and control. In such contexts, centralized identity databases are seen as exposure points that could be misused to restrict movement, deny services, or target populations if political conditions deteriorate.
This is why Fayda cannot succeed as a technical rollout measured by registration velocity or system uptime. It must function as a trust institution, supported by enforceable data protection laws with real sanctions, independent oversight with investigative powers, transparent reporting on use and incidents, and accessible redress mechanisms. Without these safeguards, Fayda risks becoming what many fear: a surveillance infrastructure framed as public service.
While Digital Ethiopia 2030 recognizes identity as foundational, it does not yet specify the full trust envelope--the legal, institutional, and accountability frameworks required to make digital identity politically sustainable in a contested federal system. Without enforceable protections and credible oversight, identity systems become contested assets rather than enablers of inclusion.
Ultimately, Fayda will be judged not by enrollment numbers but by legitimacy under stress--whether it retains public confidence during political tension, conflict, and leadership change. The gap between technical enrollment and political legitimacy is dangerous, because once legitimacy is contested, technical competence no longer matters. As Francis Fukuyama notes, the challenge is not just building state capacity, but trustworthy state capacity, constrained by law and accountability.
When Systems Fail, Trust Falters: Lessons from CBE incident
The March 2024 Commercial Bank of Ethiopia (CBE) incident should be read not as an isolated technical failure, but as a systemic warning. In rapidly digitizing financial systems, when transaction volumes grow faster than monitoring capacity, access controls, segregation of duties, and incident response maturity, cascading failure becomes likely. Scale without controls turns breakdowns from possibilities into probabilities.
This is not uniquely Ethiopian. Mature systems have failed under similar conditions. The UK's banking sector and the 2018 TSB TSB IT migration failure--which locked customers out of accounts for weeks--was ultimately diagnosed as a governance failure rather than a technical one: inadequate oversight, poor testing, weak contingency planning, and failure to communicate honestly. Regulators pointed to board-level accountability gaps and a culture that treated IT as an operational detail instead of a strategic risk.
The lesson is consistent across contexts: when digital finance becomes a daily survival utility, technical failures become political crises. Reliability becomes a form of social protection, not a service metric. The state's responsibility extends beyond enabling payments to ensuring systems fail safely, incidents are communicated transparently, and trust is restored through competent response.
Ethiopia is building tightly coupled systems--where power affects telecoms, telecoms affect payments, payments affect commerce, and commerce affects social stability--without sufficient redundancy or response maturity. In such systems, as Charles Perrow showed, failures cascade faster than operators can intervene. The question is not whether further incidents will occur, but whether Ethiopia builds the institutional capacity to prevent, detect, contain, and recover from them before they become legitimacy crises that undermine digital transformation itself.
Demographic dividend or digital liability
Ethiopia's demographic advantage is real: over 70% of the population is under 30, a potential engine for rapid adoption, innovation, and digital growth. But youth alone is not capacity. Without skills, training, and institutional support, demographic potential becomes frustration--and when expectations exceed opportunity, political volatility.
A digital state requires more than young users. It needs skilled technicians, cybersecurity professionals, inclusive service designers, data stewards, auditors, procurement specialists, and regulators capable of governing platforms responsibly. It also needs digitally literate citizens who can use systems safely--recognizing scams, protecting credentials, navigating disputes, and understanding their rights when systems fail.
Ethiopia's targets--70% digital literacy and one million digital-sector jobs by 2030--are ambitious, yet participation remains uneven, particularly among women and rural communities where access to training is limited and returns to digital skills are less immediate. Without multi-layered human-capital development across specialists, institutions, and citizens, digital platforms may expand while meaningful participation remains shallow, turning exclusion into a political risk amid youth unemployment.
Targets alone do not deliver outcomes. What matters is execution: early integration of digital skills in education, community-based adult training, multilingual and accessible service design, cyber hygiene education, and treating inclusion for women and rural populations as a first-order requirement. Without sustained investment and institutional accountability, the demographic dividend leaks away, becoming a structural liability rather than a digital advantage.
From Service to Surveillance: How conflict undermines Ethiopia's digital revolution
Conflict does not merely damage infrastructure; it dissolves the social contract that digitisation depends on--trust, legitimacy, and willingness to engage with the state. In Ethiopia, this reality undermines optimistic narratives of digital transformation.
A 2025 Ethiopian Economics Association study identifies a disturbing pattern: since around 2017, improvements in e-government capacity have coincided with declines in GDP per capita, human development, and governance quality--the empirical core of the Ethiopian paradox. The same study estimates $44 billion will be required over five years to repair conflict-related damage to infrastructure, economic capacity, and institutions, directly competing with resources needed for digital expansion.
A digital state that does not listen cannot self-correct; one that cannot self-correct cannot be resilient."
Conflict destroys digital infrastructure--power lines, mobile towers, fiber cables, data centers, agent networks--but its deeper damage is to legitimacy. Violence, displacement, and discrimination erode trust in state neutrality, the rule of law, and accountability. As trust collapses, citizens reinterpret digital systems: service platforms become surveillance tools, digital ID becomes exposure, financial controls become coercion, and outages become evidence of malice rather than technical failure. Adoption turns into resistance.
In such environments, even well-designed technology becomes politically radioactive. Ethiopia cannot build a resilient digital state without building "digital peace": predictable governance, credible protections enforced even under political pressure, and institutions trusted to act fairly regardless of who holds power. This is the true stress test. Digital systems do not fail in calm conditions; they fail under conflict, uncertainty, and political pressure--conditions Ethiopia is already experiencing.
The challenge, as conflict scholars such as Paul Collier note, is that rebuilding legitimacy is far harder than rebuilding infrastructure. Without restoring trust alongside platforms, Ethiopia risks constructing digital systems that function technically but collapse politically when tested.
Sequencing Over Speed: Ethiopia's digital future hangs on priorities
If Ethiopia's digital transformation is to hold under stress rather than fragment, success depends on sequencing, not ambition. Some reforms are load-bearing: without them, everything built on top becomes fragile regardless of technical quality. Prioritization is therefore strategic, not bureaucratic.
Power continuity for critical digital services must come first. This is not about headline generation capacity, but operational redundancy that keeps systems running when the grid fails--which it will. Payment switches, ID verification systems, government portals, and telecom backbones must remain live under outage conditions through built-in redundancy, backup power at critical nodes, decentralized continuity planning, and treating electricity as a security asset rather than a utility.
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Next is trust architecture for foundational digital infrastructure, especially identity and payments. Closing the usage gap will not come from marketing or temporary incentives, but from consumer protection with real penalties, accessible dispute resolution, transparent reporting on failures and remediation, and reliability that makes digital dependence rational rather than coerced.
A decisive signal of seriousness would be the creation of an independent Digital Resilience Authority with audit powers over critical public and private digital infrastructure--able to enforce baseline controls, coordinate incident response, and report publicly. Not another advisory body, but a legally empowered institution with resources, technical expertise, and a mandate that survives political cycles.
Finally, cybersecurity must become institutional culture, not IT hygiene. Resilience requires clear accountability, role-based access control, regular audits and drills, secure procurement, vendor risk management, and a professional civil service capable of governing platforms--not merely procuring them.
These are not exhaustive reforms; they are prerequisites. Build them first, and digital transformation becomes durable. Treat them as optional refinements, and the Ethiopian paradox deepens: rapid digitization alongside weak adoption, fragile systems, and eroding trust.
The Choice Before 2030: Digital legitimacy or digital brittleness
By 2030, Ethiopia will have made a choice. One path leads to digital legitimacy: systems that are reliable under stress, contestable through accessible remedies, inclusive by design, and governed by institutions that demonstrate competence and restraint. In that future, digital transformation becomes a platform for shared prosperity, not an Addis-centric winner-take-all system, because foundations--power reliability, equitable connectivity, coordination capacity, cybersecurity discipline, and trust institutions--are strong enough to bear universal dependence.
The other path leads to digital brittleness: impressive dashboards, large enrollment statistics, and expanding services coexisting with deep public skepticism, strategic non-adoption, and parallel analog "insurance" systems. In that future, adoption becomes partially coerced by making analog alternatives scarce rather than earned through demonstrated value. Every failure confirms distrust. The gap between official narratives and lived experience widens into cynicism and illegitimacy.
The difference is not fundamentally about whether Ethiopia uses blockchain or traditional databases, open source or proprietary solutions, in-house build or procurement. It is about whether Ethiopia treats digitization as an engineering project requiring foundations, redundancy, stress testing, honest capacity limits, and accountable governance--or as a branding exercise measured by launches and enrollment counts.
Ethiopia's digital future is not predetermined. The country has advantages: scale, ambition, a growing ecosystem, and real momentum in finance and telecom. It has articulated a vision that at least gestures toward foundations. What remains unclear--and what will determine the outcome--is whether leadership will do the unglamorous work of building what cannot be photographed: power resilience, rural access, institutional capacity, cybersecurity culture, and trust in institutions that constrain power as much as they enable it.
A digital state is not built when services go online. It is built when services stay online under stress, when errors can be contested and remedied, when institutions coordinate instead of duplicating and competing, when inclusion is designed rather than assumed, and when trust is treated as infrastructure that requires investment and maintenance.
If Ethiopia strengthens foundations, the bridge holds. Adoption becomes genuine. The digital state becomes a platform for shared prosperity. If it does not, the paradox deepens: more platforms but less legitimacy, more accounts but less inclusion, and more digitization but more distrust.
Conclusion: Ethiopia as test case for digital development
The world is watching Ethiopia not only for humanitarian or geopolitical reasons, but also because it is a test case for digital development across the Global South. Ethiopia is confronting a central question: can a digital state be built faster than the institutional capacity required to govern it safely, and can infrastructure scale before the social contract that gives it legitimacy?
These are not uniquely Ethiopian challenges. Many countries face the same tension between speed and foundation, ambition and capacity. Ethiopia's trajectory matters because it shows both sides of the experiment: rapid infrastructure rollout and user registration alongside lagging usage, widening trust gaps, visible governance strain, and persistent conflict. This pattern--acceleration without consolidation--is increasingly common in fast-digitizing states, and Ethiopia will help determine whether it is a temporary phase or a structural failure of sequencing and governance.
In tightly coupled systems, uncertainty equals risk: operational risk that erodes trust, strategic risk that undermines investment and legitimacy, and political risk that cascades during crises. The systems that fail are rarely those never built, but those built too fast on untested foundations.
Ethiopia still has a narrowing window to shift from speed to solidity, from expansion to trust-building. That choice is being made now--by action or by default--and by 2030 the outcome will be clear: digital legitimacy built to endure, or digital brittleness exposed under stress. AS
Editor's Note: Dr. Abebe Diro is an Assistant Professor of Cybersecurity at RMIT University and a distinguished researcher specializing in AI-driven solutions for cybersecurity, including prevention, detection, and response. He holds a PhD in Cybersecurity from La Trobe University. Abebe can be reached at yoursabebe@gmail.com
