The European Investment Bank Group and Ethiopia’s Dashen Bank have agreed a €40 million financing package for small and medium-sized businesses in Ethiopia, with most of the money directed towards agriculture and with set portions ring-fenced for climate-related projects and women-led enterprises, said.
EIB Global, the group’s international development arm, will provide a €20 million long-term loan to Dashen Bank, with Dashen matching it to reach €40 million in total, the EU bank announced on Thursday.
It will on-lend the funding to Ethiopian SMEs — typically defined as smaller businesses — on terms including longer repayment periods than are commonly available in Ethiopia’s commercial market.
At least 70% of the financing is allocated to agriculture and related activities, including businesses working in coffee, pulses, horticulture and cereals.
Priority beneficiaries will include SMEs that export to Europe and other markets.
A minimum of 30% of the overall package is earmarked for climate action and environmental sustainability, and a further 30% for women’s economic empowerment.
The EIB said its financing is projected to support more than 34,000 full-time jobs through the businesses that receive funding.
“This partnership turns long-term finance into tangible opportunities for Ethiopian businesses,” EIB Vice-President Ambroise Fayolle stated.
Ethiopia’s banking sector and Dashen’s role
The agreement comes as Ethiopia updates its central bank framework and banking legislation and gradually opens the sector to foreign investment, the EIB said.
It added that private banks have been expanding digital services and products for SMEs, and have increasingly partnered with multilateral development banks and development finance institutions.
Dashen Bank is one of Ethiopia’s largest private commercial banks and has more than 900 branches nationwide.
The bank provides services including microenterprise and corporate banking, as well as digital and interest-free banking.
“We are committed to expanding access to finance for the businesses that drive Ethiopia’s economy,” Dashen Bank Chief Executive Officer Asfaw Alemu said.
EIB Global will also provide technical assistance to strengthen Dashen Bank’s environmental and social due diligence, climate-finance capabilities, and monitoring and reporting.
It said this support is funded by the EU under the ACP Trust Fund, EC Compartment, and that Dashen is enrolled in the EIB’s Greening Financial Systems programme, which works with Ethiopian financial institutions on climate risks and green lending.
