July 24, 2026
By Staff Writer
NAIROBI, Kenya — A critical liquidity crisis in the Tigray region has triggered a thriving black market for cash, with informal brokers charging commissions as high as 25% to supply physical birr notes, according to a report by Wazema.
Residents attribute the cash drought to the freeze on federal subsidy allocations amid ongoing political and military tensions between the Tigray People’s Liberation Front (TPLF) and the central government. The resulting shortage has disrupted daily commerce, fueled illicit financial schemes, and constrained humanitarian operations across the region.
Bank Vaults Drained by Panic Runs
Compounded by internal political divisions within Tigray’s leadership, the federal funding freeze has left financial institutions unable to meet basic demands for physical currency. Fearing a return to the severe economic blockades of the 2021–2022 war, panic-stricken residents have conducted mass withdrawals. Reports indicate that continuous cash runs over the past three months have largely depleted bank vaults across the region.
In major urban centers such as Mekelle, Adigrat, Aksum, and Adwa, commercial banks regularly turn customers away or enforce drastic daily withdrawal limits. Even in relatively calmer towns such as Shire, Mai Tsebri, and Alamata, financial institutions have capped withdrawals at 1,000 birr per customer daily—frequently suspending disbursements altogether without advance notice.
Border Smuggling and Digital Exploitation
The acute shortage has created lucrative opportunities for black-market cash brokers operating along regional borders with Afar and Amhara. These brokers smuggle physical currency into Tigray and sell it at steep markups:
Small Transactions: Brokers charge commission fees ranging between 5% and 10%.
Large Transactions: For sums running into hundreds of thousands or millions of birr, premiums spike up to 25%.
To execute these transactions, buyers transfer funds digitally via mobile banking or direct account transfers, receiving discounted physical cash in return. Gold miners and regional traders—whose operations rely heavily on physical cash—bear the brunt of these exorbitant fees just to remain operational.
Humanitarian Aid Operations Disrupted
The cash shortage has also delivered a major blow to relief efforts across Tigray. Aid agencies that previously distributed direct cash assistance to vulnerable internally displaced persons (IDPs) have been forced to migrate to digital bank transfers.
However, this shift effectively excludes thousands of beneficiaries who lack formal bank accounts or digital literacy. Relief workers informed Wazema that even displaced individuals with accounts face grueling journeys to distant towns, often spending significant funds on transport only to find empty bank counters.
While urban traders have partially adapted to digital payments, rural communities—where cash remains the primary medium of exchange—face severe hardship. The persistent shortage has triggered accelerating local inflation as merchants struggle to make change and complete basic transactions.
With no public statement or formal relief plan yet issued by the federal government regarding subsidy disbursements, the financial divide continues to widen between those who can afford steep black-market premiums and those left completely cut off from liquidity.
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