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Profile – Development Bank of Ethiopia

The Development Bank of Ethiopia (DBE) is a specialized development finance institution, operating since 1909 under various names.

The Development Bank of Ethiopia is mandated with the pro­vision of development credit to pri­ority projects. I.e.: Commercial Agriculture projects; Agro-processing industries; Manufacturing and extractive industries; and Lease Financing Service for Small and Medium Enterprises.

The Development Bank of Ethiopia is supervised by the Public Financial Enterprises Agency (PEFA) and a Board of Management (BoM) consisting of seven senior government officials administers the Bank. The PEFA and BoM are responsible for issuing major policies of the Bank, approval of its strategic and operational plans as well as the close and regular monitoring of the Bank’s operations.

The top Executive Management Committee (EMC), which consists of the President and Six Vice Presidents, is responsible for the overall operations of the Bank.

The President acts as an official representative of the Bank, chairs the Executive Management Committee (EMC) and is ex-offico member of the Board of Management.

The day-to-day operational activities of the Bank is entrusted to fifty two management officers at the headquarter and branch offices.

The bank is headquartered in Addis Ababa with 13 district offices and 110 branches across the country. As of June 30, 2016, the paid-up capital of the Bank stood at birr 7.5 billion. Whereas the total number of employees was 2,059.

Photo - Board members and Executives of Development Bank of Ethiopia (DBE)
Photo – Board members and Executives of Development Bank of Ethiopia (DBE)

The Board of Management (BoM)

1/ Shiferraw Shigute – Board Chairperson

(Appointed on Dec. 2016)

Photo - Shiferraw Shigute, Board Chairperson of Development Bank of Ethiopia
Photo – Shiferraw Shigute

2/ Sileshi Lemma – Board Member  

(Appointed in 2008-2009)

Photo - Sileshi Lemma, Board Member of Development Bank of Ethiopia
Photo – Sileshi Lemma

3/ Wendu Legesse – Board Member

(Appointed on Dec. 2016)

Photo - Wendu Legesse, Board Member of Development Bank of Ethiopia
Photo – Wendu Legesse

4/ Tewodros Gebregziabher – Board Member

(Appointed on Dec. 2016)

Photo - Tewodros Gebregziabher, Board Member of Development Bank of Ethiopia
Photo – Tewodros Gebregziabher

5/ Desalegn Ambaw – Board Member

(Appointed on Dec. 2016)

Photo - Desalegn Ambaw, Board Member of Development Bank of Ethiopia
Photo – Desalegn Ambaw

6/ Wasihun Abate – Board Member

(Appointed in 2008-2009)

Photo - Wasihun Abate, Board Member of Development Bank of Ethiopia
Photo – Wasihun Abate

7/ Alem WoldeGerima – Board Member

(Appointed in 2008-2009)

Photo - Alem WoldeGerima, Board Member of Development Bank of Ethiopia
Photo -Alem WoldeGerima

The Executive Management Committee (EMC)

1/ Getahun Nana – President

Appointed on November 30, 2016.

Previous post: Vice Governor for Financial Institutions Supervision at the National Bank of Ethiopia.

Photo - Getahun Nana - President of Development Bank of Ethiopia
Photo – Getahun Nana

2/ Hadush Gebregziabiher – VP Corporate Services

Appointed on May 2, 2017.

Previous post: Director of Mekele District at DBE.

Photo - Hadush Gebregziabiher, VP Corporate Services of Development Bank of Ethiopia
Photo – Hadush Gebregziabiher

3/ Haileyesus Bekelle – VP Credit Management

Appointed on May 2, 2017.

Previous post: VP, Advisor to the President and acting VP of Corporate Services at DBE.

Photo - Haileyesus Bekelle, VP Credit Management of Development Bank of Ethiopia
Photo – Haileyesus Bekelle

4/ Getachew Waqi – VP Project Financing

Appointed on May 2, 2017.

Previous post: Director of Branch Operation Directorate at DBE.

Photo - Getachew Waqi, VP Project Financing of Development Bank of Ethiopia
Photo – Getachew Waqi

5/ Teshome Aelmayehu – VP Lease Financing

Appointed in Dec(?) 2016.

Previous post: Manager of Strategic Planning and Development Effectiveness Process at DBE.

Photo - Teshome Aelmayehu, VP Lease Financing of Development Bank of Ethiopia
Photo – Teshome Aelmayehu

6/ Endalkachew Mihretu – VP Finance and Banking

Appointed on May 2, 2017.

Previous post: Director of International Banking at Bunna International Bank.

Photo - Endalkachew Mihretu, VP Finance and Banking of Development Bank of Ethiopia
Photo – Endalkachew Mihretu

Senior Management Members

(In office at least since March 2017)

1/ Tsige Genet, Director, Customer Relationship Management Directorate I

2/ Zebideru Debebe (f), A/Director, Customer Relationship Management Directorate II

3/ Yilma Abebe, Director, Internal Audit Directorate

4/ Taye Jiru, Director, Project Rehabilitation and Loan Recovery Directorate

5/ Taddesse Tolcha, Project Appraisal Directorate I

6/ Genet Yirgu (f), Director, Project Appraisal Directorate II

7/ Gacho Wara, Director, Compliance and Risk Management Directorate

8/ Meseret Tilahun (f), Chairperson, Loan Approval Team I

9/ Tekle Zewde, Chairperson, Loan Approval Team II

10/ Workashe Chema, Director, Strategic Planning and Change Management Directorate

11/ Getnet Temechew, Director, Legal Affairs Directorate

12/ Markos AklileBirhan, Director, Human Resource Management Directorate

13/ Hailu Misganaw, A/Director, Corporate Promotion and Communication Directorate

14/ Dereje Daba, Director, Equipment Supply and Follow-up Directorate

15/ Gedion Mekonnen, Director, Lease Financing Follow-Up Directorate

16/ (  ), Director, Branch Operation Directorate

17/ Hunengaw Zegeye, Director, Project Data Management Directorate

18/ Tsehay Taye, Director, Project Follow-Up and Loan Collection Directorate I

19/ Bekabil Berhanu, Director, Project Follow-Up and Loan Collection Directorate II

20/ Tsegaye Negussie, Director, Project Evaluation and Loan Portfolio Management

21/ Samson Getachew, Director, Information Technology Services Directorate

22/ Tirfu Adhanom, Director, Finance and Accounts Management Directorate

23/ Yohannes Belachew, Director, International Banking Service Directorate

24/ Getachew Seyoum, Director, Property and Facility Management Directorate

25/ Frew Kassa, Director, Corporate Bond Management Directorate

26/ Berhanu Taye Tola, Director, Research and Business Development Directorate

27/ Worku Fekade, Manager, Ethics and Compliant Management Office

28/ Dr. Behailu Kassaye, Director, Special Fund Administration and RUFIP Directorate

29/ Abiyot Daida, Director, Engineering Service Directorate

30/ Kifle Haileyesus, Assistant to the President (Director Level)

31/ Ebba Regassa, Executive Assistant

32/ Getahun Checkol, Executive Assistant

33/ Wondesen Bazabeh, Executive Assistant

34/ Jemal Seid, Director, Hawasa District

35/ Sisay Biru, Director, Jimma District

36/ Atsbeha Abay, Director, Adama District

37/ Gebremedihin Hadera, Director, Addis Ababa District

38/ Aberu Asmamaw (f), Director, Bahir Dar District

39/ (   ), Director, Mekele District

40/ Kindyihun Bele, Director, Gondar Distric

41/ Tibebu Bezuneh, Director, Wolayita Sodo District

42/ Melese Maruta, Director, Butajira District

43/ Kedir Beshir, Director, Dessie District

44/ Hailu Fitta, Director, Diredawa District

45/ Eba Benti, Director, Nekemte District

46/ Teramaj Tesfaye, Director, Gambella District


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Ethiopia: Development Bank purges top management

The Development Bank of Ethiopia (DBE) has got new Board chair, President and multiple VPs since the beginning of the year.

The Development Bank of Ethiopia (DBE) replaced four of its five vice presidents on May 2. 

The VPs that lost their positions are Almaz Tilahun, vice president of finance and banking management, Teka Yibrah, vice president of corporate services, Dereje Awgichew, vice president of project financing and Tadesse Hatiya, vice president of credit management.

However, one of the VPs, Teshome Alemayehu, is spared and stays as vice president of Lease Finance and Branch Operations.

The new president of the DBE, Getahun Nana, has replaced the four with Endalkachew Mihretu, Getachew Waqe, Hadush Gebreegziabher, and Haileyesus Bekele.

Image - Logo of Development Bank of Ethiopia (DBE)
Image – Logo of Development Bank of Ethiopia (DBE)

Endalkachew Mihretu was director of International Banking at Bunna International Bank while Getachew Waqe, Hadush Gebreegziabher, and Haileyesus Bekele were director of Branches Operation and Coordination, Mek’ele District Manager and VP of Corporate Office of the DBE, respectively.

The new VP assignments have to be approved by the National Bank of Ethiopia.

The new president of the DBE, Getahun Nana, who was previously the Deputy Governor of the National Bank of Ethiopia, took office at the end of December replacing the long-serving President, Issayas Bahre.

At the time, the Board of the Bank also got a new chairman, Minister Shiferaw Shigute, who is also the Coordinator of the Democracy Building Affairs Coordination Center, a new unit of the Prime Minister’s Office. Hailemeskel Bekele, who was the president of the former Construction and Business Bank, was assigned as Advisor and Vice President for the DBE.


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Ethiopia: Sprinting towards the top three

(Kelechi Anyanwu & Olisemeka Obeche from MoFED)

Admired for having registered fast and impressive growth for the last six years, the government has braced up for the challenges of sustaining the country’s enviable economic growth record. To ensure that the Sub-Saharan Africa’s fifth largest economy continues to post remarkable growth rates, at worst, 11 percent every year and, at best, to double by the year 2015, and leap from the fifth to the third largest economy on the continent, as well as transform the Horn of Africa nation into a middle income country, government launched the five-year Growth and Transformation Plan (GTP). As implementation of the ambitious Plan takes centre stage, there is new optimism among a majority of Ethiopians.

Shaping the economic future

Ethiopia is transforming itself economically. In the coming years, the country could change for the better. The country’s economic achievements over the last seven years have set the momentum for accelerated economic development. The progress made in creating a stable economic environment and in particular the ease in the provision of land and capital, the tax incentives given for capital gains and the guarantee of security in FDIs have made Ethiopia one of the most attractive investment destinations among the newly emerging countries in the world.

The significant paradigm shift in economic policy since 2003 and the importance given to an integrated agricultural development, the emphasis on small enterprises in value addition and the massive infrastructure development in road and power have helped Ethiopia to sustain an average growth of 11 percent for six successive years.

Still growth focused, the Ethiopian government has incorporated bold plans in its GTP to double the overall economy’s production, adding up into something close to a trillion birr, while the industrial sector is expected to take over the role of leading it. Energy, road, railway, telecom and water supply are set to furnish the country with an infrastructure facility never seen before in the country’s history.

In 15 years, the authorities see the Ethiopian economy transformed to the point of becoming the third biggest in Sub-Saharan Africa, just behind South Africa and Nigeria with a GDP of about $500 billion.

To achieve this growth, the government agrees that it needs to focus on the winning sectors which have the greatest potential for contributing to the growth of the economy and one of these sectors is agriculture.

Close watchers were not surprised when the World Bank’s Global Economic Prospects 2011 Report described Ethiopia as the second ‘fast-growing country’ in Sub-Saharan Africa (SSA) in 2010. Unlike other fast-growing Sub-Saharan African economies, where growth has been heavily supported by the minerals sector, Ethiopia’s robust growth over the past couple of years, including its nine percent increase in GDP in 2010, has been driven by the service sector which grew by 14.5 percent, investment (10.2 percent) and agriculture (six percent).

For Ato Sufian Ahmed, Minister of Finance and Economic Development, “the country’s rapid and sustained economic growth and social development is a reflection of committed political leadership, and pro-poor and transformational policies. Moreso, the economy is driven by planned and coordinated development interventions by the public sector, conducive investment climate for the private sector, among others”.

He adds that the World Bank’s scorecard perfectly captures Ethiopia’s economic transformation from poverty to prosperity and efforts are on to sustain the growth momentum witnessed during the period of the Plan for Accelerated and Sustained Development to End Poverty (PASDEP, 2004/05 – 2009/2010).

Agriculture… an anchor for growth

government assumes that agriculture will continue to be one of the anchors for the Ethiopian economy’s steady climb to rank amongst the top three economies in Africa since it is the area that Ethiopia will have both competitive and comparative advantages. There will continue to be the basic farming but the authorities’ GTP looks to focus the more on the agro-industry in order to move up the value chain. For example, Ethiopia produces oranges but the groceries in Addis Ababa are filled with packaged orange juice imported from the Middle East like the United Arab Emirates (UAE), Egypt and Saudi Arabia. Chances are the raw materials came from Ethiopia. The country probably has to sell an entire 100 kilos bag of oranges to match the value of the imported one litre juice.

In this light, government plans to move up the value added chain whereby the packaged juice can actually be exported. The authorities are forecasting that agriculture will continue to be the basic foundation for the Ethiopian economy for the next 15 years while at the same time non-agro industrialization will expand.

Even though agriculture production is expected to double, the government’s ambitious five-year plan envisages the sector’s contribution to GDP to decrease as the input from the industrial sector increases in line with the government’s economic strategy — the Agricultural Development-Led Industrialisation (ADLI).

Ato Sufian, who notes that the country’s economic prospect within the coming years is rosy, says: “We believe that through the development of agriculture and the creation of capacity, Ethiopia’s economy will transform from an agricultural-led economy to an industrial-led one.”

The agricultural output upon which the country’s economy overwhelmingly relies is expected to be doubled by 2015 by encouraging investment and large-scale farming. What is more? Ethiopia may not need any food aid within five years, thanks to the ambitious development plan that targets a heady average economic growth of 14.9 percent over the period. About 10 percent of the population relied on emergency food aid last year. But Prime Minister Meles Zenawi says “in the future, we will feed ourselves and we will be able to manage our own forms of social security. I don’t think that is possible. I think it is quite achievable over the next five years”.

There is no doubt that achieving self-sufficiency in food production and increasing agricultural proceeds for export occupies top priority in the agenda of the Ethiopian government. Ethiopia, Africa’s second-most populous nation after Nigeria, is the continent’s biggest coffee producer and the world’s fourth largest exporter of the sesame.

The growth recorded in the agricultural sector in the past five years is expected to be strengthened during the GTP period focusing on three thematic areas. These include small-farm holders, pastoralists and agro-pastoralists, and large scale agriculture.

An Agricultural Transformation Office has been created by the government to increase agricultural productivity and transform the sector. Interestingly, development partners such as the US are channeling US$2 million into the project yearly. The funding is expected to boost food security, and accelerate as well as expand the growth of Ethiopia’s agricultural sector as a prime mover of the country’s economic and social transformation.

And because most of the agriculture projects in Ethiopia are weather-dependent in a region given to long spells of droughts, efforts are under way to irrigate over 20,000 hectares (49,421 acres) of land to help transform farming in the country’s drought-threatened areas in the northwestern region as studies are being conducted on the potential for an additional 97,000 hectares to be irrigated.

Hayalsew Yilma, programme coordinator at the Water and Energy Ministry, says funding for Ethiopia’s five-year growth plan to increase the amount of irrigated land five-fold to about 10,000 hectares by mid-2015 is also receiving the blessings of donor agencies. Prospects also look good following plans by the World Bank to provide an additional $60 million of funding for irrigation projects in the Nile Basin, which has about 2.2 million hectares of Ethiopia’s 3.7 million hectares of irrigable land last June.

The Washington-based lender has provided $100 million since 2008 to support the Nile Basin Irrigation and Drainage Project, and government sees an additional funding from the World Bank as a welcome development towards boosting food security in the drought-prone nation. A United Nations report estimates that about three million Ethiopians currently receive emergency assistance and another 7.8 million get food or cash under an aid programme to support them, a development H.E. Meles Zenawi himself vowed to end by 2015 on the day he launched the Growth and Transformation Plan.

Still cheery news from the agriculture sector. The country has recorded an unprecedented growth in the export of textiles and garments, amidst growing output in agricultural and allied products. In the 2010/11 fiscal year, Ethiopia is expected to earn $62.2 million from the sector’s exports, which is the highest in the country’s history. The earnings are projected to hit $85 million in the 2011/12 period due to increase in investment in the sector. According to government’s GTP, the textile sector is expected to grow 20 percent by the end of the 2014/15 fiscal year, and generate at least a billion dollars in exports.

To make this a reality, government and other stakeholders in the textile industry are working with Swiss consultant firm Gherzi to undertake a benchmark study to solve the sector’s problems and move towards international standards.

“The company (Gherzi) will start to support and boost the capacity of 16 other textile and garment industries. Many foreign companies are now in the process of entering the sector. So we should meet our target,” says Fekadu Ethiopia, a corporate communication expert at the country’s Textile Industry Development Institute (TIDI).

Currently, over 80 textile and garment industries are producing traditionally hand-woven products and modern designs for export.

Upward march towards MDGs

many Sub-Saharan African countries are off-track to achieve the Millennium Development Goals (MDGs), but there have been pockets of success: Ethiopia is set to be recognized as one of the few expected countries to realize the United Nations-sponsored MDG availing access to primary and universal education to all by the consummation of the Growth and Transformation Plan period by 2015. School enrolment in Ethiopia has increased by more than 500 percent since 1994. This follows the sustained commitment of government to reform the sector.

The government set out to improve the education sector when it came to power after the civil war, recognizing rural poverty was not only a key driver in conflict and inequality, but was also holding the country back and perpetuating the cycle of poverty as well as ensuring children had access to school was key to these broader development goals. The government developed education reform plans and gradually upped its education spending from eight percent of the total budget in 1985 to 23 percent in 2009, with donor education aid also rising.

The increased funds went towards abolishing school fees, constructing and improving schools, and hiring and training teachers, among other activities. Key to meeting MDG 2 (achieving universal primary education) was a move in 1991 to devolve power to regions and districts to run their own schools; and shifting the language of instruction to local languages. In 1994, just three million pupils in Ethiopia attended primary school; by 2008 15.5 million did so, while secondary school attendance increased five fold.

Local authorities involved parent-teacher associations in rehabilitating and reviving schools. Lots of the investments made created access to households to send their children to school for the first time. Even the country’s development partners are impressed. Thanks to Spain, scholarship opportunities are being given to some 20 Ethiopian students each year to support the effort the Meles Zenawi-led government is making to maintain quality of education.

Ethiopia is also on track to achieve gender parity in primary school enrolment by 2015. Though there are still gender disparity at this level of schooling, it is narrowing considerably. And government is tackling the wider disparity at higher levels of the Ethiopian educational system. The linear projections to gender parity in secondary and tertiary levels by the United Nations Development Programme (UNDP) (2010) indicate a possible divergence from the path to the Goal in 2015, thus the focus government is giving to it.

Ethiopia has equally made significant progress in reducing child mortality over the past decade. The government envisioned a reduction in the number of deaths of children under the age of five from 123 to 85 per 1 000 live births and the infant mortality rate from 77 to 45 per 1 000 live births in 2010. According to the UNDP, in 2009/10, under-five mortality and infant mortality rates decreased to 101 and 45 per 1 000 live births, respectively. Ethiopia is one of the countries with the highest maternal mortality ratio (MMR) in the world, which in 2005 was 871 per 100 000 live births. MMR in 1990 was 1 040 per 100 000 live births. The health sector development programme (HSDP III) had the target of reducing this to 600 per 100 000 live births by 2009/10. According to government’s sources, the maternal mortality rate is projected to fall to 267 per 100 000 by 2014/15. The number for 2010 according to government reports is 600/100 000 MMR.

Government has also made a reasonable impact in rolling back malaria which is still the greatest health menace in Africa today. This is achieved through the dissemination of information regarding the disease and the provision and use of insecticide-treated nets since 2006. According to a Federal Ministry of Health (MOH) report, malaria was the leading cause of morbidity and mortality in the country in 2005/06. The assessment of the implementation of PASDEP indicates that the household level Insecticide Treated Net (ITN) coverage rate in malaria-prone areas increased from 3.5% in 2005 to 100% in 2009/10.

In general, the progress towards achieving the MDGs has been encouraging. The government has made enormous progress in the provision of social services such as education, health and infrastructure by investing in both physical and human capital formation and allocating a large share of its budget, to the tune of over 60 percent, to pro-poor spending. The share of total spending on poverty-targeted sectors (both recurrent and capital from all sources) increased from about 42.0 percent of total expenditure in 2002/03 to over 64.1 percent by the end of 2007/08. This has resulted in significant strides towards meeting the MDGs and in human development generally in 2010/11.

Infrastructure…key to turning the growth levers

ethiopia, keen to attract foreign investment in agriculture and mineral exploration, passed a US$5.7 billion budget this year that targets infrastructure development to maintain annual growth rates of about 10 percent. Few years ago, Ethiopia’s surface and transport infrastructure was exceedingly poor and underdeveloped. The country had the lowest road density in the world, and only 13.3 percent of all roads were paved.

And there were few interconnecting links between nearby regions and large parts of the country were isolated and dependent upon pack animals for transportation. The main highway route was from Addis Ababa to the port of Djibouti, which Ethiopia uses extensively since it is a landlocked country without ports and harbours of its own. The only train network consisted of the 681-kilometres long segment of the century-old Addis Ababa-Djibouti railroad.

But today, the story is different. The government attaches due attention to infrastructure development, which would serve as a basis for the accomplishment of the GTP. That is because expansion of infrastructure ensures market access for producers. Ethiopia has expended considerable effort to repair and maintain the railroad lines. Moreover, with the help of various donors, including the World Bank, the European Union (EU), and the African Development Bank (AfDB), the government has implemented a US$3.9 billion Road Sector Development Plan designed to expand the road network. In 1994, 80 percent of Ethiopia’s population had to travel five hours on average to get to urban centres. Huge government investment on infrastructure has now enabled more than half of the country’s population to touch down at urban centres in less than three hours.

A large amount of the authorities’ development spending will go to roads. Ethiopia has spent $3.6 billion on roads over the last decade. Road building expenditure rose to 17.4 billion birr from 12 billion birr in 2010/11. Construction of 2,395 kilometres of railway lines is also in the pipeline.

The Ethiopian economy has grown by an annual average of 11.18 percent over the last four years on improved infrastructure and government is striving to attract foreign investors in agriculture, mineral exploration and hydropower. To achieve the goals of the Growth and Transformation Plan, energy has a central role to play. The supply of power is essential to register developments in the industrial sector for example.

Without abundant power and systems of large-scale centralized generation, it is not possible to start industrial decentralization. Taking this into consideration the government envisages a significant increase in electricity generation capacity, completing the power projects currently under construction and building new ones to increase the distribution of power to rural towns and kebeles on a large scale.

The GTP predicts a huge expansion of infrastructure, with the country’s power production set to increase from 2,000 megawatts to 10,000MW. Government plans to spend US$12 billion over 25 years on realising its ambition of becoming a power exporter on a continent where shortages are common and cost industry dear. And the authorities are matching words with action.

“We have gathered here today at the largest of our rivers to witness the launch of this great project. It is rightly called the Millennium Dam. It is the largest dam we could build at any point along the Nile, or indeed any other river. More importantly the project takes the pride of place, representing an incomparable addition to our national plan for expanding power production. It will not only raise our own power-generating capacity and meet our domestic needs, but also allow us to export to neighbouring countries and mobilize the resources so necessary for the realization of objectives for our rapid development endeavours, efforts which are already yielding promising results.”

With these words, Prime Minister Meles officially marked the commencement of the construction of the Millennium Hydro-electric Nile Dam. The country’s power plan allows for the generation of between 6,000MW and 8,000MW in the coming five years. Of this total, the Millennium Dam alone will have the capacity to produce 5,250 MW to assist government in reaching its goal of making Ethiopia a net exporter of power in Africa. The multibillion-dollar grand Millennium Dam and a hydroelectric power plant will span a section of the Blue Nile River in the country’s Benishangul-Gumuz region. When completed in 2015, the $4.7 billion dam will be the largest hydroelectric power plant in Africa and could supply more than 5,000 megawatts of electricity for itself and its neighbours, including South Sudan.

During the next five years, the government plans to quadruple power production capacity to 8,000 and even 10,000 MW and large investment are already being made. This would also allow for increasing electricity supply from the current 41 percent coverage to 75 percent of the population. In addition to new electric power plants now under construction, the government is working to connect various power supply stations to the national grid. One example of this is the inauguration of the 490 kilometres Beles-Bahr Dar-Debre Markos-Sululta extra high-voltage power transmission line and substation project with a 400 kilo volt capacity.

Inaugurating the transmission line at Sululta, Deputy Prime Minister and Foreign Affairs Minister Ato Hailemariam Desalegn says the project is one of the major government objectives being executed during the five-year Growth and Transformation Plan. Its completion would allow for efficient service for investors engaged in the industrial sector. Overall, Ethiopia is continuing to work hard to address the demands of electric power in the country and aims to achieve universal coverage by 2015. The Gilgel Gibe III Dam is part of this comprehensive clean-energy expansion to meet the country’s growing demand for energy and export.

Against all odds…Optimism reigns

the International Monetary Fund’s forecast in late May that Ethiopia’s economic expansion may slow next fiscal year (July 2012) amid rising inflation, restrictions on private-bank lending and a “difficult” business environment caused some stir in Addis Ababa. The reason is not far-fetched: the six percent growth rate predicted by IMF analysts for Ethiopia was below the official projection of 11.4 percent for the period. But the Ethiopian government insists that the projected growth rate is still achievable.

While analyzing plans to fast-track Ethiopia’s economy growth under the Growth and Transformation Plan, Finance Minister Ato Sufian Ahmed told The African Economy that efforts are in top gear to ensure that the programme does not suffer backward momentum.

“The Plan intends to sustain this growth momentum as we implement the same stable policies and strategies at macroeconomic and sectoral levels. Our prudent monetary and fiscal policy is also expected to ensure that inflation remains at single digit. We are also focused on strengthening the tax collection and administration systems to up domestic revenue substantially,” he declares.

“The overarching objective of the Plan is to aggressively lay the foundation for transformation of the Ethiopian economy. The goals of the Plan go beyond achieving the MDGs targets. So, our development objectives are in the short-term to sustain the current performance level of the economy and in the next five years, attain an even higher performance of economic growth rate of 14.9 per cent,” Ato Sufian adds.

Tackling inflation

reining in inflation, which hovers over 30 percent, is at the heart of government’s policy. Inflation still remains a challenge for Ethiopia’s economy. According to Ato Bekalu Zeleke Ewnetu, President/CEO, Commercial Bank of Ethiopia (CBE), the main challenge facing banks and businesses is inflation. However, he notes, “the government has taken a number of measures to bring the inflation to a single digit. Part of these measures is that the government has pledged not to borrow from the National Bank of Ethiopia and to go into importation of food items that are in critical short supply. It is hoped that these measures will reduce inflation to a single digit”.

Ethiopia’s year-on-year inflation rate slowed slightly to 7.3 percent in June from 7.4 percent in May this year, although food prices continued to rise. And government abolished lending caps on lenders after inflation in the country slowed. The restrictions imposed in January 2009 to curb inflation that peaked at 64.2 percent in July 2008 were removed on April 4 this year. The inflation rate fell to 16.5 percent in February, a level that is not a cause for concern. Little wonder the IMF hailed the Horn of Africa nation for successfully implementing policies to curb inflation.

For Yohannes Ayalew, deputy governor of monetary stability at the National Bank of Ethiopia, “generally we are confident we have put in place monetary and fiscal measures to control inflation. The central bank has used measures that include requiring banks to keep 15 percent of deposits in reserve and restricting money supply growth to nine percent as its main monetary policy tools, In addition, the national budget deficit has been reduced to 1.5 percent of gross domestic product, curbing government spending”.

Lifeline for the Private Sector…banking support

the importance government attaches to boosting the private sector is clear. The authorities believe the private sector is the engine room for growth and employment generation. Government envisions a vibrant private sector with full capacity that competes both in the domestic and foreign markets, big companies that subcontract medium and small companies and closely work with multinational companies and firms that can conduct their own research and closely work with academia in the area of basic research.

The authorities are giving prime attention to micro and small-scale enterprises during the coming five years as these enterprises created 75 per cent of all job opportunities. Moreso, micro and small-scale enterprises laid the foundation for the industrial sector in the country.

Government’s commitment to develop the private sector is clearly captured in the Sustainable Development and Poverty Reduction Programme (SDPRP) for 2002-05 and the Plan for Accelerated and Sustained Development to End Poverty (PASDEP) for 2006-10, as well as the new Growth and Transformation Plan (2010/11-2014/15).

To grow the private sector, government is creating conducive business environment for businesses to thrive. It has passed a competition law; it is setting up a public-private partnership forum and attempting to control inflation. And businesses have been benefitting.

According to Ato Esayas Bahre, President of Development Bank of Ethiopia (DBE), “the country’s favourable environment for private investment has led to huge growth in the bank’s financing. In line with this the bank’s loan portfolio has now reached Birr 11.98 billion growing from Birr 2.97 billion in 2001 and showing a fourth fold growth of monumental achievements. This clearly shows the growth in the role played by the Bank in the development endeavour of the nation”.

The favourable business environment has also seen the Commercial Bank of Ethiopia (CBE) growing its market share, hitting more than 70 per cent due to its ability to finance huge credit disbursement.

And for the Ethiopian Shipping Lines, it has seen its activities go up with the growth of the economy. Ato Ambachew Abraha, Managing Director, Ethiopian Shipping Lines, says “within the existing shipping industry and depending on the country’s economy, the company will extend the entire transport and logistic chain, with ultimate goal of building competitive advantage by minimizing transportation costs to the Ethiopian exporters and importers.”

More so, the tempo of activities in the financial sector is already telling the tale that government’s growth plan is truly accelerating in top gear. Banks are rolling out innovative products to have a slice of the market.

According to Ato Haileyesus Bekele, President, Construction and Business Bank, the “CBB is in the process of automating all of its services through the use of an up-to-date and art of the day banking applications in which the provision of all e-banking services will become a reality in the very near future. Such innovative products will enable our customers to secure different banking services at their door step without going to our branch banks”.

For Wegagen Bank, it has introduced a payment card service that enables its clients get 24/7 banking services. “With Agar VISA Card, the bank’s debit card product line, one can perform multiple banking operations at ATMs and POS terminals network,” explains Ato Araya G/Egzabher, President of Wegagen Bank.

And take for example the relationship between Ethiopia’s collection of banks and its increasingly burgeoning private sector, which has been flourishing so much of late. The private sector is the banking sector’s number one customer. In the past decade and more, both have been growing side by side. The number of business interactions between the two has also been increasing. The private sector accounts for about 85 percent of the total investment licensed. Additionally, the majority of investment ventures in all Ethiopian industries are in the private sector.

And the banks have seen similar success, or to some degree, dominance. Ninety-two percent of all of the assets in the financial industry is in the hands of only about 15 banks. Those assets represent close to 34 percent of Ethiopia’s gross domestic product.

Until recently, however, banks got most of their business from the public sector, since it was pretty much the only game in town. Starting around 2003, private enterprises began securing a large number of loans and currently take in 61 percent of all the loans that are dispersed.

Ato Teklewold Atnafu, Governor, National Bank of Ethiopia, is brimming with confidence that the central bank would deliver on its key targets as well as supervise the sector towards realising the GTP and sustaining the ongoing speedy economic growth. The Construction and Business Bank is one of several businesses which is thriving, thanks to the improving business environment for the private sector and banking.

The role of the banking sector in this development drive cannot be overemphasized. This is why the government is paying special attention to the growth of the sector. To this end, it is understood government is set to deepen financial sector reform and come up with new financial innovations such as venture capital, capital market and investment banking.


businesses are settling for Ethiopia as their destination. The country is one of Africa’s largest potential markets, with a population of about 80 million. Chinese shoe factories are finding Ethiopia attractive. They are eyeing investing in Ethiopia. Hu Han Zangur, a shoe factory producing 15 million pairs of shoes a year, which is looking for markets in Africa, is set to open shop in Ethiopia. New Gmy Company, which has already started building its six million dollar shoe factory, plans to manufacture one million pair of shoes a year and also to raise this to 5-6 million in three years time.

Dutch investors too are interested in the country’s poultry and meat sectors. When a Dutch trade delegation consisting of 16 members arrived in Ethiopia early this year, investment opportunities for commercial livestock breeding, production and processing of meat, milk and eggs, and establishing useful business contact were of highest importance for the visiting companies.


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The Last Ethiopian year (2004) in Review – A Week in the Horn

The Ethiopian year 2004 (2011-2012) has given us much to reflect on not least the death of Prime Minister Meles Zenawi on August 20th. A visionary leader, he dedicated his entire life to the fight against the brutal military Derg regime and then to the battle to lift the people of Ethiopia out of poverty. He also led his country into a new chapter of development, peace, and democracy and will be remembered as a champion of the cause of Africa in international fora. All Ethiopia mourned him and his loss will be deeply felt for many years.

Others who died this year included Abune Paulos, the Patriarch of the Ethiopia Orthodox Tewahedo Church; artist Maitre Afework Tekle, Ethiopia’s greatest artist; the iconic singer, Asnakech Worku; and writer Sebhat Gebre-Egziabiher, all of whom have left their mark on Ethiopia’s culture and history.

There has been no change this year in relations with Eritrea. In January five tourists were killed, two wounded and four others kidnapped and eventually released, in an attack orchestrated by Eritrea near Erta Ale in the Afar Regional State. Ethiopia responded in a carefully calculated, proportional attack on three Eritrean military bases where training for the cross-border attack had taken place. It was the first such action for more than a decade. The government reiterated that it was always ready to hold dialogue to resolve any disputes, but it would continue to respond proportionally to any more attacks from Eritrea.

Ethiopia’s fiscal year ended in June. The economy was marked by a growth rate of 11.4% despite external sector shocks, though the overall macroeconomic environment remained subject to a substantial inflation rate. Efforts to cut this brought it down to 20 percent by the end of the year. An International Monetary Fund (IMF) delegation visiting in June, said the major causes were monetary expansion, international prices, uncompetitive markets and a surge in domestic demand. At the beginning of the year, the 2nd year of the five year Growth and Transformation Plan, the Ministry of Finance and Economic Development (MoFED) allocated some 117 billion birr to various programs, up from 72 billion birr the year before. By the end of the year the Gilgel Gibe III Dam was 62% complete and 7% of the Grand Ethiopian Renaissance Dam had been built.

The Development Bank of Ethiopia, which had agreed to let seven Micro Finance Institutions sell bonds, surpassed its target of selling bonds by 44% in the first nine months of the fiscal year. The minimum paid-up capital for a new entrant bank has also been raised to 500 million birr after staying 75 million for many years.

In a bid to implement an effective multimodal transport system, the Ethiopian Shipping & Logistics Services Enterprise (ESLSE), an amalgamation of Ethiopian Shipping Lines (ESL), Ethiopian Maritime Transit Services (EMTS) and Dry Port Service Enterprise (DPSE) was set in September, 2011. It aimed to streamline shipments from Djibouti Port to avoid warehouse fees in foreign currency and the confiscation of imported goods.

On August 17th, the first Ethiopian Boeing Dreamliner landed at Addis Ababa Bole International Airport. Ethiopian was the first African airline and the third in the world to operate the jetliner. Earlier it joined the Star Alliance Group, an elite group of airlines, which offers more than 21,555 daily flights to 1,356 airports in 193 countries. It was thethird African carrier to do so. In June 2012, the Ethiopian Civil Aviation Authority announced that it had prepared the country’s first Air Transport Policy which will allow foreign investors to own up to a 40% stake in domestic airlines.

In November, the Ethiopian Ministry of Mines announced that it had suspended issuing minerals exploration licenses in order to deal with a backlog of applications. In January 2012, the Ethiopian Ministry of Mines and South West Energy (SWE), the first Ethiopian oil and gas company, signed a petroleum development and Production Sharing Agreement (PSA) to allow the company to prospect for oil and gas reserves in the Gambella basin, near the Sudanese border.

In June BPH Billiton, the largest mining company in the world, announced it was pulling out of its Dalol potash project in the Afar Regional State for operational business reasons, though other companies, including Alana Potash have continued to expand their operations there. In July, the Ministry of Mines announced that it had revoked the petroleum production license it granted to the Chinese oil and gas company, PetroTrans. Earlier in the year Derba MIDROC Cement, a major cement factory, started production. It has an installed capacity of 2.5 million tons of cement per year and quickly had an impact on cement prices.

This year the Ethiopian Electric Power Corporation (EEPCo) inaugurated the Ethio-Djibouti power transmission project, and projects for power transmission with Sudan and Kenya have also been signed. The Corporation announced in June that it was revising its 25-year power sector master plan, aiming to raise power generation to 37,000MW by the end of the plan.

Addis Ababa hosted a number of important conferences during the year. The International Conference on Aids and STIs in Africa (ICASA) was held in December. The World Economic Forum for Africa in May attracted a host of international businesspersons and politicians including Bill Gates and the Nigerian billionaire, Akilo Dangote, together with the president of Walmart, Doug McMillon. Ethiopia also hosted the AU Summit in January as usual. The main AU agenda was the advancement of regional economic integration of the continent. The plan to have continental free trade area up and running by the year 2017 was discussed. Ethiopia also hosted the July Summit as well after Malawi pulled out. The new Chinese-built and funded AU Conference center was inaugurated this year.

Ethiopia and Kenya have signed a memorandum of understanding to form the Ethio-Kenya Corridor Development Commission. The African Development Fund has approved loans to Kenya and Ethiopia to link Addis Ababa, Moyale, Nairobi and Mombasa by 2016. This is part of the trans-African highway project to promote trade and regional integration through highway infrastructure development.

The Ethiopian Railway Corporation (ERC) signed a USD 1.7 billion contract agreement with Turkish company Yapi Merkezi Construction Industry Inc. to construct 389km of the Awash–woldia/Hara Gebeya Railway Project. It is expected to complete the project within 42 months.

The London 2012 Olympics, which was held from July 27 to August 12, provided Ethiopia with three gold medals: for the women’s marathon winner, Teki Gelana; for the women’s 5,000 Meseret Defar; and womens’s 10,000 meters, Tiruenesh Dibaba. Overall Ethiopia collected three gold, one silver, and two bronze medals, ranking 24th in the world.


*Originally published on A Week in the Horn – Sept. 14, 2012 issue, titled “2004 in review”.

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World Bank approves $200 mil for Ethiopia’s electricity network

The Board of Executive Directors of the World Bank approved a US$200 million credit to Ethiopia, according to the press release from the Bank. The aim of the credit is stated as:

“…to support GoE’s [Government of Ethiopia] efforts of reinforcing the country’s electricity network by upgrading and extending the grid in order to improve the overall service delivery of the Ethiopian electricity network. In addition, the project will help to increase access by intensifying connections to existing households and villages in the areas already connected by the grid while at the same time, enhancing connectivity in new areas.

The project will also help to develop markets for renewable energy and energy efficient products such as, stand-alone solar home systems, solar lanterns, improved cook-stoves, biogas, compact fluorescent lamps, etc.”

It is to be recalled that the anti-Gibe III dam campaigner, International Rivers, recently objected funds for Ethiopia’s power grid on the ground that it amount to financing the dam through the backdoor. About a week ago, International Rivers claimed that, “on June 21, the World Bank is expected to submit to its Board of Directors a credit of $684 million for a 1,000-kilometer-long transmission line from Ethiopia to Kenya. Strong evidence links this transmission line to the Gibe III Dam”.

It seems the currently approved 200 million is aimed at expanding only the domestic electricity network, but it should assists the construction of transmission lines to neighbor countries by freeing up the government budget that would have been allocated for domestic works.

[See: Gibe III dam to be operational next year; World Bank ponders credit]

Read below the Press Statement from World Bank.


Electricity Program Expands Access to Energy for Ethiopians with Support from the World Bank

May 29, 2012

WASHINGTON, May 29, 2012 – The Board of Executive Directors of the World Bank today approved a US$200 million credit from the International Development Association (IDA*) to the Government of Ethiopia (GoE) to increase rural coverage and to provide access to affordable, modern, cost-effective electricity services to its citizens.

Over the past 5 years, GoE has made some commendable strides in improving access to electricity. As a result, over 41% of rural towns and villages have been connected to the grid and an additional 2 million consumers have access to electricity.  However, per-capita consumption of electricity in Ethiopia remains relatively low at about 200 kWh per year.

The Electricity Network Reinforcement and Expansion Project (ENREP) aims to support GoEs’ efforts of reinforcing the country’s electricity network by upgrading and extending the grid in order to improve the overall service delivery of the Ethiopian electricity network. In addition, the project will help to increase access by intensifying connections to existing households and villages in the areas already connected by the grid while at the same time, enhancing connectivity in new areas.

The project will also help to develop markets for renewable energy and energy efficient products such as, stand-alone solar home systems, solar lanterns, improved cook-stoves, biogas, compact fluorescent lamps, etc.

“The project will provide desperately needed power to not only those who are already connected to the grid, it will also provide modern energy services for poor households in the proximity to the  grid who cannot afford a grid connection. This means that for the first time, children in those areas will be able to do their homework and read at homes lit by light bulbs” said, Guang Z. Chen Country Director for Ethiopia

The project will provide a comprehensive technical assistance and capacity building for Ethiopian Electric and Power Corporation (EEPCO), the Development Bank of Ethiopia (DBE) as well as the Ministry of Water and Energy (MoWE).  EEPCO will reinforce its transmission and distribution network infrastructure and DBE will widen its market presence extending access to finance to private sector enterprises and micro finance institutions while MoWE will assist with off-grid market development activities.

“The private sector in Ethiopia will get financial support through this project to import, supply and distribute renewable energy and energy efficient products in rural Ethiopia.  This project will help create a demand driven vibrant market and shall promote solar home systems, solar lanterns, biogas plants, etc. in addition to conventional grid network development  The project targets to benefit about 385,000 Ethiopians.” said Raihan Elahi, Task team leader for the project.

* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing loans (called “credits”) and grants for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 81 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since its inception, IDA has supported activities in 108 countries. Annual commitments have increased steadily and averaged about $15 billion over the last three years, with about 50 percent of commitments going to Africa.

Source: World Bank website.


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Ethiopian Dev’t Bank issues 50 Birr Bonds for Renaissance Dam

(April 12, 2012 – ENA) – The Development Bank of Ethiopia (DBE) said it has prepared 50 Birr bond in an intention to enable citizens buy bonds for the construction of the Grand Ethiopian Renaissance Dam.

While signing franchise agreement with seven financial institutions here on Thursday, DBE President Esayas Bahire said Commercial Bank of Ethiopia has been selling bonds via its 500 branches.

However, he said, the bond selling was limited to towns. But now preparation has been finalized to reach out the rural community.

To this end, he said the agreement helps enhance accessibility of bonds via these institutions that could reach out the greater public.

He said the bank has reduced the price of a bond from 500 Birr to 50 Birr in view of enhancing the participation of the rural community.

According to him, the bank is striving to solicit 50 percent of the finance used for the construction of the dam.

Omo, Dire, Harar , Benishangul Gumuz Micro Finance institutions, Amhara and Dedebit Credit and Saving Institutions and Oromia Saving and Credit Share Company are among the signatories.

Amhara and Credit and Saving Institution (ACSI) representative Zigju Esubalew on his part said ACSI has registered successful results in deepening the culture of saving in various alternatives.

He said sale of bonds is underway in 230 branches of the institution.

Dedebit Saving and Credit Institution Human resource Manager, Shishay Amare on his part said his institution has finalized preparation to sell bonds through 133 branches.

Source: Ethiopian News Agency (ENA)


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Gov’t converts donated salary into bond | Ethiopia

Highlight: Gov’t decides to convert salary contributions into a saving bond. Amount raised from Civil Servants estimated about 2 Billion Birr.

The one month salary contribution pledged by Civil Servants and other salaried citizens for the Renaissance dam(aka Millennium dam) is to be converted into bond purchase, the National Council of the Grand Renaissance Dam project decided on Monday.

The Council passed the decision in its extraordinary session held on Monday,Ethiopian government treasury bond which was chaired by its Secretary who also Secretary of the Council, Bereket Simon, Government communication Affairs Minister.

The decision is said to be taken in consideration of ‘the public’s economic challenges’ – as prices hike by 38.1 in June compared to the same month last year.

It is to be recalled that public and private sector employees fledged to donate an equivalent of a month’s salary in a spread of 12 months – i.e, July 2011-June 2012, to finance the Renaissance dam project. It would be equivalent to an 8.4%a voluntary tax for 8 months. This in addition to the treasury bonds issued for the same end. Investors and cooperatives had been pledging to buy bonds, in addition to their pledge to donate.

Though there is no official data on the actual amount raised so far, my estimation shows the government raised about 2 Billion Birr from Civil Servants alone. It is expected the Ministry of Finance will be withheld the amount pledged by Civil Servant when it disburses the budget of the new financial year that begins this month.

Civil Servants and employees made the pledges in the meeting they held ion their respective working places across the country since April. However, they were asked to confirm their decision by signing a pledge paper on individual basis on June. A move to address the criticism on the procedures and after the Deputy Prime Minister said in May that government agencies are instructed to ensure the voluntary nature of the process. [Please read my commentary: Collectivism: Raising funds for Renaissance dam]

The decision to convert the donations into bond purchase is only logical if the process is also meant to foster a culture of saving, as the 5-year Growth and Transformation Plan states. It will also enhance the fairness of the fund raising process between employed citizens and businessmen, as the latter are unlikely to donate 8.4% of their annual income.

It is expected the bond will be issued at individual level, though the news from Ethiopian TV didn’t indicate that.

The Ethiopian Government Saving Bond is officially on sale starting March 12, 2011. Though it was issued initially at Birr 500, 1000, 3000,5000, 10,000, 50,000 and 100,000 denominations, the Development Bank of Ethiopia(DBE) latter lower the minimum denomination to  Birr 50.

The interest rate on the government saving bond with the maturity period of 1-5 years is 5.5% per annum and for more than 6 years maturity period the interest rate per annum is 6%. Interest  earned from the bond is tax free. It can be traded in secondary market and or can be used as a collateral and may be transferred to a third party, according to the explanations of the Bank’s website.