The African Development Bank’s (AfDB) Board of Directors has approved a $40 million transaction guarantee facility to support Dashen Bank’s trade financing activities in Ethiopia. The aim is to improve the financial assistance that small and medium-sized businesses (SMEs) and regional companies engaged in import and export operations can access.
The new facility is set to provide up to 100% guarantee coverage for non-payment risks linked with Dashen Bank’s Letters of Credit and comparable trade finance instruments. This project is designed to boost intra-African commerce and help achieve the goals of the African Continental Free Commerce Area (AfCFTA).
Following the approval, the African Development Bank’s Director-General for East Africa, Nnenna Nwabufo, said that “supporting trade in Africa is a key priority at the African Development Bank. 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.”
Reacting to news about the approval, the CEO of Dashen Bank, Asfaw Alemu, said that the approval came after fulfilling the “stringent due diligence requirements of the African Development Bank.”
The CEO expressed delight, saying that the much-needed guarantee facility will be instrumental in expanding the bank’s trade services across the region and beyond.
“The best practices learnt through our engagement and the due diligence exercise passed with the continent’s premier development financier have been invaluable in the pursuit of Dashen Bank’s strategic aspirations to be a best-in-class bank in Africa. We look forward to further strengthening our partnership and benefiting more from the resources and extensive capabilities of the African Development Bank and its partners as we endeavour to support Ethiopia’s thriving small and medium enterprises in productive economic sectors, including agriculture and manufacturing,” he added.
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