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Erudite AfricaCenter of Excellence
← Financial Modeling and Company Valuation

Scenarios, inflation, FX and the Ethiopian cost of capital

Module 04 / 5 · 70 min

Build flexible scenario-driven models in birr and USD, keep inflation, exchange rates and WACC consistent after the 2024 float, and defend an Ethiopian cost of capital.

In this module you will learn to

  • Add scenario switches, data tables and circularity controls, and audit a model systematically
  • Model in nominal or real terms and in birr or USD with consistent inflation and FX assumptions
  • Build exchange rate paths under the market-based regime and reflect FXD/01/2024 conversion and repatriation rules
  • Estimate a defensible Ethiopian cost of equity and WACC with country risk, currency, size and illiquidity premiums

Built on

  • Erudite Africa training module: Ethiopian Context, topic 3.a Financial Modeling and Company Valuation, Levels 1 and 2 and the Level 3 outline (October 2026)
  • Erudite Africa Training Module: Ethiopian Context, programme overview and regulatory register (October 2026)
  • Income Tax Proclamation No. 979/2016 as amended by Proclamation No. 1395/2025; Value Added Tax Proclamation No. 1341/2024; Financial Reporting Proclamation No. 847/2014 (status to confirm)
  • NBE directives as listed in the lessons: FXD/01/2024, FXD/04/2026, SBB/95/2025, SBB/78/2021 (reported); NBE Monetary Policy Committee release No. 7 (July 2026)
  • ECMA public offer directive (reported as No. 1030/2024) and the ESX Rulebook (December 2024)
  • The FAST modeling standard and IFRS (IAS 16, IAS 29, IFRS 16) as general professional references

Examples and companies are fictional. Bank practices are shown as typical Ethiopian practice, not as any one bank's policy. Always apply your own institution's approved policy and the current NBE directives.