Berhanu was born in Bishoftu, and attended Addis Ababa University where he participated in the student movement against the ruling Derg government in his freshman year. When the government acted against political dissidents in 1977, Berhanu with other radical student activists fled to Mount Asimba in northern Ethiopia. After a division within the Ethiopian People's Revolutionary Party (EPRP), he was detained for openly criticizing killings within the EPRP. After a few months, he was released by his captors and crossed into the Sudan where he lived for two years until he was granted political asylum in the United States.
He did his undergraduate degree in economics at the State University of New York at New Paltz and got his PhD in economics from the New School for Social Research, in New York City. During that time, he became one of the organizers of an annual conference on the "Horn of Africa" that debated and analyzed the political, social and economic conditions in the sub-region. For over five years, it served as a forum for intellectual dialogue among political leaders, policy analysts and researchers interested in developments in that part of Africa.
Having completed his PhD studies, he joined the faculty of economics at Bucknell University, where he became a lecturer in economics for three years. Later he founded Imbilta, a bi-monthly magazine focusing on economic, political, social and current affairs in Ethiopia and he was the founding chairman of Ethiopian Economic Association.