LEASING AND LENDING FOR SMES

Promoter – Financial Intermediary

DEVELOPMENT BANK OF ETHIOPIA

Location

• Ethiopia

Description

A loan to the Federal Democratic Republic of Ethiopia, acting through the Ministry of Finance and Economic Cooperation (MoFEC) of Ethiopia for onlending to small and medium-sized enterprises (SMEs). The loan will be part of a wider SME support scheme led by the World Bank and to be implemented by the Development Bank of Ethiopia (DBE). The scheme will provide sustainable access to finance and capacity-building to DBE, leasing companies, microfinance institutions, commercial banks and SMEs in Ethiopia.

Objectives

The project objective is to increase access to finance for eligible small and medium-sized enterprises in Ethiopia.

Comments

The EIB loan will finance two parallel windows: a leasing window and a lending window. Under the first window, DBE will act as a retailer of lease finance (through its regional branches) and as a wholesaler (through leasing companies); under the second window, DBE will exclusively act as a wholesaler (through microfinance institutions and commercial banks) for the provision of working capital to SMEs. It is expected that the leasing window will absorb 80% of the funding, or EUR 200m indicatively, while the remaining 20% will be allocated to lending.

Sector(s)

• Credit lines

Proposed EIB finance (Approximate amount)

EUR 70 million

Total cost (Approximate amount)

Not applicable.

Environmental aspects

Final beneficiaries will be requested to comply with applicable national regulations, including international conventions ratified by the host country, as well as EU standards. Where EU standards are more stringent than national standards, the higher EU standards are required, if practical and feasible.

Procurement

The Bank will require the promoter to ensure that the implementation of the project will be done in accordance with the Bank's Guide to Procurement.

Status

Signed - 18/05/2017