Ethiopia: EIB Global partners with banks to unlock climate finance

• The technical assistance agreement will support Zemen Bank, Dashen Bank and Hibret Bank in increasing climate finance for Ethiopian enterprises.
• The operation, under the European Investment Bank’s Greening Financial Systems Programme, will strengthen the banks’ institutional capacity through tailored programs and technical support.
• The technical assistance program with Ethiopia is the third on the continent, with similar agreements in Kenya and Rwanda. Talks ongoing to offer the same in West Africa Monetary Union, Nigeria, Morocco, Egypt and Uganda.

The European Investment Bank’s development arm, EIB Global, has signed technical assistance agreements with Zemen Bank SC, Dashen Bank SC and Hibret Bank in Ethiopia that will support them in strengthening their ability to identify, assess, and manage climate-related risks, integrating them into their business strategies and daily operations. The banks will be better equipped to assess how climate change could impact their clients and encourage investments that strengthen their resilience against extreme weather events such as floods and droughts. In addition, banks’ capacities are strengthened to analyse impacts of changing international climate policies on businesses and export-dependent industries.

The collaboration will also assist the participating financial institutions in developing sustainable financing and advisory strategies to expand green lending, thus supporting Ethiopia to achieve a sustainable, net-zero economy by 2050, as outlined in its Long-Term Low Emission Development Strategy.

The announcement was made during a signing ceremony between EIB Global and the three local banks on the sidelines of the second edition of the Africa Climate Summit underway in Ethiopia’s capital, Addis Ababa.

The operation is the first of its kind in Ethiopia and is being implemented under the European Investment Bank’s Greening Financial Systems Programme, financed by the German government through the dedicated International Climate Initiative (IKI Fund) and closely coordinated with the NDC Partnership

The partnerships with Zemen, Dashen and Hibret come on the back of a recent Memorandum of Understanding (MoU) between EIB Global and National Bank of Ethiopia to strengthen their co-operation and support for Ethiopia’s green development objectives through technical and financial support. The GFS programme with National Bank of Ethiopia entails developing a national green taxonomy to guide sustainable investments. This aims to ensure that the country’s financial sector can effectively manage climate related risks and increase financing for green investments.

EIB Head of Representation to Ethiopia & the African Union, Leyla Traoré said, “Financial institutions play a critical role in addressing climate related risks and directing financial flows to zero carbon and climate resilient projects across various sectors of the economy. Our climate action goals are unwavering and through EIB Global’s partnership with Ethiopian banks, we aim to contribute to the building of a more climate resilient financial system and support the country achieve its Nationally Determined Contributions (NDCs) towards the Paris Agreement goals.”

Germany’s State Secretary at the Federal Ministry for the Environment, Climate Action, Nature Conservation and Nuclear Safety, Jochen Flasbarth said, “Transforming the global financial system and aligning financial flows with the goals of the Paris Agreement is critical to meeting the challenges of the 21st century. This includes addressing climate risk for the financial system and supporting sustainable, inclusive growth. Governments, regulators, central banks, and private finance all have a significant role to play in order to drive the transition and safeguard long-term financial stability. The International Climate Initiative (IKI) Germany is supporting initiatives such as the EIB’s Greening Financial Systems programme to help building climate aligned financial systems and shaping resilient, sustainable financial systems that serves the people.” 

Zemen Bank is a private commercial bank that began operations in 2008 and has 132 branches and over 1900 employees working across Ethiopia.

Commenting on the technical assistance agreement, Dereje Zebene, CEO of Zemen Bank, highlighted that the technical assistance will equip the Bank in achieving its strategic objectives of aligning its financing activities with climate resilience investments. “For Zemen, this is an important step towards ensuring compliance with national sustainability requirements and related disclosures as outlined in the newly announced Corporate Governance Directive, which includes several mandatory sustainability requirements.”

“This engagement will provide the bank the opportunity to understand the impact of climate risk and work towards green financing through diversification of its portfolio to include green products. It will also strengthen our efforts to support the sustainable development goals,” he added.

Hibret Bank was established in 1998 as the fifth private bank in Ethiopia and has currently 496 branches and over 5,600 permanent employees countrywide.

Hibret Bank’s Acting CEO, Mr. Negusu Gebre Egziabeher stated “Hibret Bank emphasises the importance of integrating Environmental, Social, and Governance (ESG) principles into its banking business not only for ethical reasons, but it also ultimately benefits the company’s long-term success. Hibret Bank has also initiated an ESG Policy in late 2022 as part of its endeavour for supporting sustainable projects and practices. The cooperation agreement with EIB is a demonstration to our Bank’s commitment to ESG and the principles of ethical banking. And we are grateful to EIB for the availed technical assistance on sustainable financing. We believe the technical assistance will give us a leverage to achieve our long-term goals as a Bank and support the sustainable growth of Ethiopia as a nation.” 

Dashen opened its doors in January 1996 and currently has 906 branches with 60% of them outside Addis Ababa. The bank also employs over 11,000 permanent staff. 

The CEO of Dashen Bank, Asfaw Alemu said, “We are delighted to partner with EIB Global on this important initiative. This initiative is a significant step in equipping the bank’s team with the knowledge and tools needed to identify, assess, and manage climate risks effectively, while also creating new opportunities to support sustainable development through green financing and thereby positively contributing to our people and planet. We are committed to reduction of own greenhouse gas emissions, enhancing engagement on inclusive financing for SMEs, Women, Youth and overall underserved parts of the community.”

Climate Financing Landscape in Ethiopia

Being one of Africa’s largest and fastest growing economy, Ethiopia has shown a strong commitment to being a middle-income country. It has established a policy landscape coupling economic growth with climate change action. Ethiopia’s ambitious climate targets are focused on ensuring low-carbon energy development, conservation of its vast forest reserves, and practicing climate smart agriculture, while mainstreaming adaptation and resilience as a key priority.

As outlined in the EIB Global’s Finance in Africa Report 2024, offering climate products to clients or issuing green bonds on financial markets remain the exception rather than the rule for banks in sub-Saharan Africa. This is contributing to a shortage of climate finance on the continent, making the region highly reliant on international sources. Climate-related financial flows to Africa represent only 12% of the annual climate financial flows the continent needs to implement nationally determined contributions and meet its 2030 climate goals. Multilateral development banks have a crucial role to play in supporting domestic market development and attracting domestic financing if Africa is to catalyse private climate financing and meet its climate finance needs.

Ethiopia's parliament recently passed a long-awaited legislation opening up the country's banking sector to foreign players. The government hopes it will attract foreign investment into the country that has set out ambitious climate targets.

The technical assistance program between EIB Global and Ethiopia is the third on the continent, with similar programmes ongoing with Central Bank of Kenya and the country’s commercial banks and another with Bank of Kigali in Rwanda. EIB Global is in the process of talks to extend the programme to other parts of Africa including West Africa Monetary Union, Nigeria, Morocco, Egypt and Uganda.

Background information

About the EIB:

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances investments that contribute to EU policy objectives.

EIB Global is the EIB Group's specialised arm devoted to increasing the impact of international partnerships and development finance, and a key partner in Global Gateway. We aim to support €100 billion of investment by the end of 2027, around one third of the overall target of this EU initiative. With Team Europe, EIB Global fosters strong, focused partnerships, alongside fellow development finance institutions and civil society. EIB Global brings the Group closer to people, companies and institutions through our offices around the world.

About the Greening Financial Systems TA Programme:

The EIB Greening Financial Systems TA Programme is funded by the International Climate Initiative (IKI) on behalf of the German Federal Ministry of Economic Affairs and Climate Action (“BMWK”).  The Programme is BMWK’s and EIB’s joint contribution to the work of the NDC Partnership specifically, the “Readiness support for greening central banks” initiative.   Since 2008, the IKI has supported over 1000 climate and biodiversity projects in approximately 150 partner countries with a total of almost €7.5 billion.

About Hibret Bank:

Hibret Bank is one of the pioneer private banks in Ethiopia. Hibret is founded with the underlying rationale that values diversity. The founding shareholders were enterprising Ethiopians from all walks of life that combined and committed their resources to establish the Bank. The name “Hibret” is an Amharic word for collaboration and synergy. The Bank was incorporated as a Share Company on 10 September 1998 GC. Over the years, Hibret Bank has built a reputation for providing innovative financial solutions to the Ethiopian Banking industry. Furthermore, the Bank’s transformational strategy 2030 is implemented to build a strong financial structure and a mutually benefiting “Eco-system” for customers, strategic partners and stakeholder. Currently, the Bank has a paid capital base of Ethiopian Birr (ETB) 8 billion, an asset size of ETB 107 billion and having its presence in all corners of the country while ensuring digital financial inclusion through innovative financial solutions.

About Zemen Bank SC:

Zemen Bank S.C., established in 2008, is an innovative financial service provider in Ethiopia that has distinguished itself through a unique business model and modern banking services. Its mission is to deliver unique financial experience, engaging work environment and sustainable value for all our stakeholders using empowered workforce and technology, in a socially responsible manner. Its vision is to become a home of distinctive financial solutions and service excellence.

Zemen Bank is known for its robust financial performance, commitment to technology, and customer-focused approach. Zemen Bank prioritizes innovation and efficiency in its services. This enabled it to contribute meaningfully to Ethiopia’s economic development and the evolving banking landscape.

About Dashen Bank:

Dashen Bank, opened doors for customer service in January 1996, has emerged as a leading private banking institution in Ethiopia, renowned for its commitment to delivering exceptional value. With a network of over 900 branches, the bank aims to expand its influence across Africa, aspiring to be recognized as the "Best in Class Bank in Africa." Dashen Bank has earned its reputation through strategic partnerships with top electronic payment brands and by being the first Ethiopian Bank to offer a comprehensive payment card service, partnering with AMEX, VISA, MasterCard, and Union Pay.

In addition to its conventional banking services, Dashen Bank provides a full suite of Shariah-compliant, interest-free banking solutions known as ‘Sharik’. These services are managed by a dedicated Shariah Advisory Committee, ensuring adherence to interest-free banking principles. Dashen Bank continues to innovate and enhance its offerings, positioning itself as a trusted financial partner for both individual and business customers in Ethiopia and beyond.