“The explosion occurred in a bar where about 20 people were watching satellite television,” said the eye witness, who wanted to remain anonymous. He had counted three bodies, he added.
The police declined to comment but said they were investigating the blast.
Ethiopia experiences sporadic attacks caused by explosive devices in hotels or buses which it usually blames on neighbouring Eritrea.
The Horn of Africa neighbours fought a two-year war in 2000 and are locked in a bitter impasse over their common border. They are also engaged in a proxy war in neighbouring Somalia.