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The African Development Bank (ADB) Group has approved a $40 million transaction guarantee facility for Dashen Bank, aimed at enhancing trade finance activities in Ethiopia.
Nnenna Nwabufo, Director General, East Africa, ADB, said, “This facility underscores our commitment to supporting trade in Africa. By partnering with Dashen Bank, we’re leveraging their extensive knowledge and network in Ethiopia to drive economic growth through improved trade finance capabilities.”
The collaboration aims to provide crucial support to small and medium-sized enterprises (SMEs) and facilitate import-export trade finance requirements for local corporates. It also aligns with the agenda of the African Continental Free Trade Area (AfCFTA) by promoting intra-Africa trade.
Key aspects of the facility include:
- Risk mitigation: Providing up to 100% guarantee to confirming banks against non-payment risks from Letters of Credit and similar trade finance instruments issued by Dashen Bank.
- SME support: Focusing on enhancing trade finance access for small and medium-sized enterprises.
- Intra-Africa trade: Promoting cross-border trade within the continent, supporting AfCFTA objectives.
- Economic sector development: Supporting key sectors such as agriculture and manufacturing.
- Regional expansion: Enabling Dashen Bank to expand its trade services across the region.
Asfaw Alemu, CEO of Dashen Bank, said, “This guarantee facility is instrumental in expanding our bank’s trade services. The engagement with ADB has not only secured this vital funding but has also equipped us with invaluable best practices to elevate our banking standards.”
The facility is expected to play a significant role in supporting local African banks, particularly in low-income countries and transition states, by mitigating risks associated with trade finance operations.
This partnership between ADB and Dashen Bank represents a strategic step towards strengthening Ethiopia’s position in regional and international trade, while simultaneously supporting the country’s economic development through enhanced SME capabilities and sector-specific growth.
