DBE cease loan provision for private firms

The state owned Development Bank of Ethiopia (DBE) is said to have suspended loan provision to the private sector engaged in non-export oriented investments.
The bank that has been supporting both state and private developmental projects for the last 100 years, has now stopped providing medium and long term loans for private investment projects due to lack of sufficient finance.
DBE is considered as one of the financial backbones for governmental and private projects in the five year Growth and Transformation plan.
According to sources at DBE, the bank suspended replying to loan requests from private investments following a recommendation from the board of the bank, and will now only finance mega government projects that consume billions of birr. There are currently several private investments including newly formed share companies that have applied for a loan several months back, but most of them did not get final approval. “Even though we raised 30 percent of the total investment project as per the bank’s requirement we have not seen a dime from the bank for several months,” said one loan applicant on conditions of anonymity.
Previously the bank has been approving loans for private investments mostly developmental projects like manufacturing industry, agro industry and agricultural investments through its credit service department that evaluates project proposals and approve the loan request if they meet the criteria. “But now it is not undertaking the evaluation for loan approval, after the bank suspended approving loan provision,” sources explained.
For the current budget year the Ethiopian government approved 138 billion birr, out of which 13.6 billion birr is expected to be secured from local banks through loan. Recently, the Ministry of Finance and Economic Development disclosed that the government will borrow from local banks to meet the gap.
Birhanu Taye, manager of business promotion and communication process of DBE, declined to comment and said that the bank has no financial shortage. He told Capital that the bank is working as usual. “If any borrower come fulfilling the requirement the bank will allot the finance,” he said.
Currently the bank is also undertaking bond sales for the Grand Renaissance Dam that is being constructed on Abay (Nile) River with a capacity of generating 6,000 MW.

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