In late 2025, the executive boardrooms of Ethiopia’s most promising digital financial startups transitioned overnight from celebrating record growth to managing an existential crisis. Armed federal officers, alongside teams from the Ministry of Revenues (MoR), the Ministry of Justice (MoJ), and the Federal Police, executed coordinated operations across Addis Ababa. Bank accounts were frozen, corporate servers seized, and high-profile executives, including the CEOs of leading Payment Gateway Operators (PGOs), were placed under arrest or held in pre-trial detention.
The state’s official narrative was explosive: a staggering 100 billion Birr (nearly USD1.8 billion) tax evasion scheme allegedly orchestrated through money laundering, illicit foreign exchange leaks, and clandestine hawala networks tied to online sports betting. Yet behind the dramatic headlines lay a far more systemic reality: a foundational, multi-billion-birr arithmetic transposition error committed by the central bank, combined with a tax authority that aggressively seized funds and refused to correct its course even after being officially notified. But even after the books evidenced that the fintechs owed the government a much smaller amount of tax, authorities siphoned off much larger figures from the bank accounts of Arifpay, Santimpay, Chapa and Kacha based on their earlier assumptions.
The firms took the case to court, and even appealed to the central bank governor and the Prime Minister to no avail. “What they did is literally killing these companies,” says Hirko Alemu, an attorney representing one of the fintechs caught up in the situation. He explains that the firm he represents owed tax obligations of between 20 and 30 million Birr.
“Instead, the government unilaterally siphoned 818 million Birr directly out of our bank accounts based on completely fictitious numbers. It is devastating, illegal, and targeted at an industry that is barely three years old,” said Hirko. The circumstances are even more bizarre considering that these fintechs were hailed as model taxpayers by the government over the past three years, before they became subject to cases involving tax evasion, money laundering, and other illicit activity.
As frozen accounts are systematically drained by tax authorities and state institutions engage in bureaucratic turf wars, Ethiopia’s fragile fintech ecosystem, once hailed …
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