The African Development Bank Group (AfDB) on the 8th of August approved a transaction guarantee facility of $40 million to Dashen Bank, one of the biggest private financial institutions in Ethiopia.
The facility is primarily tailored to facilitate Dashen Bank’s trade services across Ethiopia and beyond. It will provide small and medium-sized enterprises (SMEs) and local companies access to trade finance, which empowers them to actively engage in regional and global trade. AfDB expects the facility to contribute to the establishment of the African Continental Free Trade Area by supporting intra-African trade.
AfDB will offer confirming banks a guarantee of up to 100%, mitigating the non-payment risks associated with trade finance instruments offered by Dashen Bank. Following the approval, AfDB leaders emphasized the bank’s mission to support trade in Africa.
“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,” Nnenna Nwabufo, the AfDB’s Director General for East Africa, said.
Dashen is one of Ethiopia leading private banks, operating over 850 branches. In the 2022/23 financial year, the bank’s profit rose by 31.9 percent.
The approval of the trade finance facility came after Dashen Bank fulfilled all due diligence requirements of the AfDB. Responding to the development, Dashen Bank’s CEO Asfaw Alemu expressed their commitment to support Ethiopia’s SMEs in productive economic sectors.
In May 2024, the African Development Bank Group launched a 10-year strategy that outlines the vision of a continent that is inclusive, integrated, prosperous, and resilient. The provision of the transaction guarantee facility aligns with the 2024-2033 strategy by enabling local banks to operate in low-income countries across the continent and spur economic growth.
