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The Development Bank of Ethiopia (DBE) is set to approve its largest dairy loan in its history. The 684 million birr loan request from Dutch Velocity Dairy Private Limited Company is for making milk and milk products.
Even though the Dutch are primary known for horticulture investment in Ethiopia, this is also the largest request an agricultural company has made. Tadesse Hatiya, Vice President of Credit Services at DBE said the project was fast tracked as per the DBE’s plan to expedite the loan requests. Previously it could take over six months for the loan to be approved.
DBE says it managed to make a decision after making the necessary assessment within 38 days. By the end of the five year Growth and Transformation Plan (GTP) the bank plans to reduce the days needed for evaluation before approval of the loan to 32 days.
DBE has given similar sized loans to other sectors. Recently a Turkish firm, Sahinler Ethiopia Textile Investment Private Limited Company, received 618 million birr to produce clothing, knitted items and other textiles in Adama, 99 Km south east of Addis Ababa.
In February, DBE provided one of its largest loans; 1.42 billion birr, to another Turkish company, Saygin B.M. Technology Group LLC, for the construction of a cable manufacturing plant, which it plans to construct on 15hct of land outside Sebeta town, 24Km west of Addis Ababa in Oromia special zone.
These loans are part of DBE’s plan to promote Ethiopia’s national development through finance and technical support to projects that the government has made a priority.
Tadesse said that as the projects more complex and the capacity of the DBE project assessors becomes stretched, they ask other experts from governmental institutions like the Textile Industry Development Institute (TIDI) or the Leather Industry Development Institute (LIDI) to consult with them.
“We’re breaking with the previously routine six month period it used to take to approve the loans by implementing best practices for loan requests, approval and disbursement,” Tadesse told Capital.
The bank, which is now more than a century old, has projected that by the year 2020 projects financed or assisted by it will have a one hundred percent success rate.
According to data obtained from the Timret Agro Industry Share Company, one of the local companies bidding to enter the dairy industry in Ethiopia, Ethiopia’s consumption level of dairy products is 19 liters milk per person per year. This is much lower than Africa’s average of 37.2 and lags behind the neighboring countries of Sudan and Kenya at 161 and 80 liters per person per year respectively.
Low level production of indigenous cattle is cited as a possible reason for this.