African Development Bank Approves USD 40 million Trade Finance Transaction Guarantee Facility to Dashen Bank.
(Addis Ababa, 09 August 2024) – The Board of Directors of the African Development Bank Group has approved a USD 40 million trade finance transaction guarantee facility to Dashen Bank to support Ethiopia’s Financial Sector Leveraging Dashen’s strategic footprint in Ethiopia. This instrument will provide support to Small and Medium Sized Enterprises (SMEs) and local corporates, to facilitate their import and export trade finance requirements. The facility will also support intra-Africa trade, thus directly contributing to the successful implementation of the AfCFTA agenda.
The Bank will provide a guarantee to Confirming Banks for the non-payment risk arising from the confirmation of letters of credit and similar trade finance instruments issued by Dashen.
A lack of adequate credit lines from international confirming banks has hampered Ethiopian Banks’ ability to support its clients. The facility will support the importation of critical inputs such as fertilizer, pharmaceuticals, solar energy panels, farm machinery and other intermediate goods needed by Ethiopia to revive its agriculture and manufacturing sectors.
The Director General for East Africa, Nnenna Nwabufo, commented “Supporting Trade in Africa is a key priority at AfDB. Trade finance is an important driver of economic growth and is critical for cross-border trade, particularly in emerging markets. We are delighted to work with Dashen, a strong partner with extensive knowledge and network in Ethiopia, on a shared ambition to support the region’s Trade.”
Stringent regulatory and capital requirements and Know Your Customer compliance enforcement have caused many global banks to reduce their correspondent banking relationships in Africa, while some are exiting the market altogether. There is therefore an urgent need for financing to reenergize Africa’s trade, which requires more participation of institutions like the African Development Bank.
Asfaw Alemu, CEO of Dashen Bank, stated “After fulfilling the rigours due diligence requirements of AfDB, we are so delighted that AfDB has approved us a trade finance transaction guarantee facility of USD 40 Million. This is a much needed guarantee facility, which will be instrumental in entertaining our Bank’s trade services across the region and beyond. Moreover, the best practices learned through our engagement and the due diligence exercise passed with the continent’s premier development financier has been invaluable in pursuit of Dashen Bank’s strategic aspirations to be best in class bank in Africa.
He also added that, “We look forward to further strengthen our partnership and seek to benefit more from the resources and extensive capabilities of AfDB and its partners as we endeavor to support Ethiopia’s thriving small and medium enterprises in productive economic sectors including agricultural and manufacturing sectors.”
(Addis Ababa, 09 August 2024) – The Board of Directors of the African Development Bank Group has approved a USD 40 million trade finance transaction guarantee facility to Dashen Bank to support Ethiopia’s Financial Sector Leveraging Dashen’s strategic footprint in Ethiopia. This instrument will provide support to Small and Medium Sized Enterprises (SMEs) and local corporates, to facilitate their import and export trade finance requirements. The facility will also support intra-Africa trade, thus directly contributing to the successful implementation of the AfCFTA agenda.
The Bank will provide a guarantee to Confirming Banks for the non-payment risk arising from the confirmation of letters of credit and similar trade finance instruments issued by Dashen.
A lack of adequate credit lines from international confirming banks has hampered Ethiopian Banks’ ability to support its clients. The facility will support the importation of critical inputs such as fertilizer, pharmaceuticals, solar energy panels, farm machinery and other intermediate goods needed by Ethiopia to revive its agriculture and manufacturing sectors.
The Director General for East Africa, Nnenna Nwabufo, commented “Supporting Trade in Africa is a key priority at AfDB. Trade finance is an important driver of economic growth and is critical for cross-border trade, particularly in emerging markets. We are delighted to work with Dashen, a strong partner with extensive knowledge and network in Ethiopia, on a shared ambition to support the region’s Trade.”
Stringent regulatory and capital requirements and Know Your Customer compliance enforcement have caused many global banks to reduce their correspondent banking relationships in Africa, while some are exiting the market altogether. There is therefore an urgent need for financing to reenergize Africa’s trade, which requires more participation of institutions like the African Development Bank.
Asfaw Alemu, CEO of Dashen Bank, stated “After fulfilling the rigours due diligence requirements of AfDB, we are so delighted that AfDB has approved us a trade finance transaction guarantee facility of USD 40 Million. This is a much needed guarantee facility, which will be instrumental in entertaining our Bank’s trade services across the region and beyond. Moreover, the best practices learned through our engagement and the due diligence exercise passed with the continent’s premier development financier has been invaluable in pursuit of Dashen Bank’s strategic aspirations to be best in class bank in Africa.
He also added that, “We look forward to further strengthen our partnership and seek to benefit more from the resources and extensive capabilities of AfDB and its partners as we endeavor to support Ethiopia’s thriving small and medium enterprises in productive economic sectors including agricultural and manufacturing sectors.”