What drives Ethiopians' spending frenzy during holidays?
. . .
Holidays are beyond commemorating events in Ethiopia; they’re also a cause to celebrate life. They provide a temporary break from the demands of everyday life, offering space for joy, connection, and reflection. For that reason, it seems, Ethiopian holidays are a show of extravagance and lavishness.
Although precise data may be limited, there is clear observational evidence that holiday seasons in Ethiopia stimulate a noticeable surge in economic activity. Consumer spending rises significantly as people prioritize celebration over savings, setting aside their financial restraint. This behavioral shift fuels increased demand across various sectors, especially in food, clothing, transportation, and hospitality, contributing to a seasonal boost in commerce.
This spending frenzy doesn’t segregate across economic lines. Almost all Ethiopians from all economic backgrounds splurge significantly during the holiday. The typical reasons cited are of course, the culture. For many, the holiday season is a time to uphold social expectations, honor family and religious customs, and momentarily elevate one’s standard of living, even if it means financial strain. But culture alone doesn’t offer a satisfactory explanation, as the issue goes deeper than that. So, what drives Ethiopia’s holiday spending frenzy?
“Treat Yourself”
Most of Ethiopia’s major holidays (Christmas, Easter, and Ramadan) come after a long season of fasting. Because of this, many Ethiopians seem to take on a “work hard, play hard” mindset when it comes to celebrating. Even though there aren’t many official studies to prove it, it’s easy to see that people tend to spend more money during these holidays. After weeks or even months of self-denial, many feel the need to celebrate in a big way by buying food, clothes, and preparing for large gatherings with family and friends.
The Usual Suspect
Another reason why Ethiopians spend a lot on holidays is that they have no other choice. Prices of consumer goods, especially food items, rise unpredictably. For most Ethiopians, it’s difficult to set a budget and shop accordingly because prices fluctuate almost daily. One can observe news reports over the years to see how inflation has impacted the holidays. Let’s take the price of eggs as an example. A report from 2022 showed that egg prices during Christmas of that year were nine birr. For the Ethiopian New Year of 2017, egg prices rose to 18 birr. That’s a 100% increase in just two years. There is limited evidence to suggest that household incomes in Ethiopia have increased at a pace comparable to the rising cost of holiday-related expenses. As a result, the financial burden of celebrating holidays appears to grow each year, placing increased pressure on individuals and families to meet cultural expectations despite stagnant or modest income growth.
A Grain (or Two) of Salt
As with most things in Ethiopia, the lack of comprehensive and publicly available data limits our broader understanding. Everything we’ve discussed so far is based on noticeable events we all see. While these may give us an idea, the full picture is missing. As noted by economist Zelalem Teamir, despite holiday seasons being significant economic events in Ethiopia, reliable market data is severely lacking. Apart from denying us a broader understanding of the market, this hurts consumers as well. Without proper market knowledge, consumers could be exposed to price-gouging merchants. Service providers also stand to gain from this, as they will get insights into consumer behavior and spending habits. But it’s overall disappointing to see that one of Ethiopia’s most economically active seasons has little to no documentation.
So far, neither rising prices nor stagnant wages have deterred Ethiopians from celebrating holidays with enthusiasm and generosity. Despite increasing financial pressures, the cultural importance of holiday festivities continues to outweigh economic concerns for many. If current patterns persist, this resilient spirit of celebration is likely to remain unchanged for the foreseeable future.
