Ethiopia’s Smallest Notes Are Dying

The 10-birr and 5-birr notes are disappearing from Ethiopia’s economy, not through policy but through neglect. Taxi drivers in Addis Ababa increasingly refuse them. Shopkeepers and kiosk owners across the capital say they can no longer make change for basic purchases, some turning customers away or extending informal credit rather than transact in torn, taped-together bills. What is happening to small denomination cash is not new, but it has reached a breaking point the National Bank of Ethiopia (NBE) has yet to address publicly.

The irony is that the NBE saw this coming. When it overhauled Ethiopia’s currency in September 2020, replacing the 10, 50 and 100 birr notes and introducing a 200 birr bill, it deliberately left the 5 birr note untouched, saying at the time it would soon be converted into a coin, a format that survives years of handling far better than paper. Six years on, no coin has appeared, and the note it was meant to replace has all but disintegrated in circulation.

That leaves an open question the central bank has not answered: is the silence deliberate, a quiet nudge toward digital payments where physical currency friction no longer matters, or is it simple cost avoidance, since minting and distributing new low-value currency is expensive relative to what it is worth? Ethiopia spent roughly 3.7 billion birr printing the 2020 currency series. A coin run for the 5 birr note would add to that bill at a moment when the NBE is already managing currency and foreign exchange pressures. Without an official explanation, both readings are equally plausible, and that ambiguity itself is a policy failure.

The digital alternative is not the clean substitute it is often presented as. Under Telebirr’s current published tariff, peer-to-peer transfers carry a fee at every level, starting at 1 birr for transfers under 100 birr and rising through further bands to 8 birr for transfers up to 75,000 birr. Cash-out withdrawals are charged from as little as 25 to 50 birr, at 1.2 birr per transaction. There is no free tier. For a daily commuter or trader making several small transactions a day, that per-transaction charge compounds into a cost a flat cash transaction never carried.

The deeper problem is who digital finance still doesn’t reach. By the NBE’s own figures, roughly six in ten men and two in three women using mobile money lack basic digital-financial skills, and usage runs 24 percentage points lower in rural areas than urban ones. Much of that gap is not about willingness but access: many users rely on basic feature phones rather than smartphones, leaving USSD, Ethiopia’s menu-driven, no-internet banking channel, as their only option, and USSD sessions are routinely disrupted by poor network coverage outside major towns. Where smartphone apps are usable, data costs eat into balances that are often small to begin with. And the NBE’s own digital payments strategy names rising fraud and security threats as one of the sector’s most pressing unresolved risks, a real deterrent for users with no recourse if a transaction goes wrong and little institutional support to fall back on.

What should change

The NBE owes the public a clear statement on the 5 birr coin timeline and the rationale for the delay. Commercial banks and digital wallets should publish transparent, comparable fee schedules, and consider waived or capped fees on very small transactions rather than passing the highest relative cost onto the lowest-income users. Expanding reliable USSD access and rural network coverage matters as much as app design, since most of the unbanked will meet digital finance through a feature phone, not a smartphone. Fraud protection and dispute resolution need to be visible and trusted, not an afterthought, and literacy campaigns should run through radio, agents, and community networks rather than assume app fluency.

The opportunity is real: digital rails cost far less to sustain than a cash economy that keeps having to print itself back into usability. But that transition only works if it is deliberate, transparent, and built for the people currently locked out of it, not one that arrives by default because the alternative was left to rot.