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Development Bank of Ethiopia

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Year of Establishment

1970

Current Operational Area (s)

The Development Bank of Ethiopia (DBE) operates almost all over the country. Some of the areas are:

• Oromiyaa Regional State: (Jimma, Asela, Gobba, Metu, Nazareth, Nekemtie, Woliso, Agaro, Ambo, Dembi Dollo, Fiche, Gelemso, Gimbi, Harrar, Shamboo, Ziway);

• Amhara Regional State: (Bahir Dar, Dessie, Debre Birhan, Debre Markos, Gondar);

• Southern Nations and Nationalities Peoples Regional State (SNNPRS): Awassa, Aleta Wondo, Dilla, Hosaena, Mizan Teferi, Wollaita Sodo, Yirgalem);

• Addis Ababa City Administration

Total Number clients served so far

16,000

Total Number of Branches Opened so far

DBE has 32 all over Ethiopia.

Future Expansion Plan

The DBE shall continue operating in the above major towns of the city. It uses mobile banks whenever it is necessary to go to some remote areas in the country.

Short-term Loan

Loan Term: This is a loan to be paid back within a year

Purpose of Loan:           

• Working capital loan

• Seasonal agricultural operations and marketing of crops like coffee, etc;

• Marketing and distribution of inputs like fertilizer, pesticides, etc.

Medium-term Loan

Loan Term: This is a loan to be paid back within one to five years

Purpose of the Loan:              

• For building construction, machinery, equipment, furniture and vehicles.

Long-term Loan

Loan Term: This is a loan to be paid back within five to fifteen years

Purpose of the Loan:              

• for building construction, machinery, equipment, furniture, vehicles and various project related infrastructure.

Economic Sectors Financed by the Bank

The Bank provides loans for financing the establishment and expansion of agricultural, agro-industrial, transport, and communication, mining and energy, education, health, hotel, tourism and other sectors of the economy.

Equity (capital) Contribution

For purpose of Comittement to the success of the project to be financed, the applicant shall be required to make a contribution towards the project cost. The level of borrower’s contribution shall not in any event be less than 30% of total project cost.

Loans to Second hand Machines]: the Bank does not normally finance the purchase of second hand items.

Loan terms and Conditions

(a) Interest Rate

Annual interest rate on loans  = 9.75%

Service charge = 0.75%

(b)  Loan term

• Minimum loan term  = 12 months

• Maximum loan term = 15 years

(c)  Loan Size

• Minimum loan size  = up to Birr 3 million

• Maximum loan size = ≥ Birr 3 million and the loan by the Bank shall at no time exceed 15% of its total capital with out prior approval of the National Bank of Ethiopia.

(d) Collateral Requirement

DBE requires that its loan be secured by a first-degree mortgage on fixed asset. This could be building, machinery and equipment or vehicle depending on the specific nature of the project.

In case pf projects located in rural areas (out side of municipality), the Bank requires 100% collateral outside of the project. However, for projects located in urban areas, 125% of the loan including fixed assets of the project is required.

(e)  Insurance

All fixed assets of a project as well as collateral are required to be covered by appropriate insurance policy with DBE as a co-beneficiary until the loan is fully settled.

(f) Repayment Schedule

Loan repayment period is determined taking into account the profitability and debt servicing capacity of the borrowing concern as well as the economic life of major investment items.

(g)  Maintenance of Financial Records

The borrower is required to keep sound and acceptable financial records.

(h)  Grace period

The Bank shall give its clients maximum grace period that involves the period up to the commencement of operation and the grace period shall not exceed three years.

(i)   Some of the Documents required from a borrower to establish a new Project

• Work permit from relevant organ of the Government (depending on the nature of the project);

• Title deed certificate of the plot of land required for the project, construction permit and bill of quantity approved by an appropriate Government authority for projects located in urban areas.

• Investment certificate for projects with estimated capital of over Birr 250,000.

• Pro forma invoice for machines, equipment, furniture, vehicles and other fixed assets as well as consumables to be purchased for the project.

• Certificate of the commercial register.

• Details of project implementation program (schedule) indicating major implantation activities with corresponding period of accomplishment.

Note:   Depending on the type of the project, applicants may be required to present documents other

than the ones mentioned above.

Loans to Legal Entities

Business organizations are required to submit the following additional documents:

• Copy of Memorandum of Association and Articles of Association;

• Copy of News paper in which its formation has been publicized;

• Legal personality certificate;

Steps involved in Loan Processing

1.Borrowers first contact the Clients’ Guidance and Advisory Desk (CGAD) of the

      loaning organs;

2.For detail discussion on loan application, the project idea, background, equity

   contribution, etc, the borrower is forwarded to the Loaning Department;

3.The Department may either accept or reject the application at prima facie

   consideration based on policy or technical grounds;

4.Appraisal work is carried out by the loaning division, checked by the General Manager, commented by the loan committee and forwarded to the Board of Management for approval.

Business Plan Presentation

Standardized business plan should be presented by borrowers to get loans from the DBE.

Financing Micro and Small Enterprise Sector Operators

The DBE has a plan to finance Micro and Small Enterprise operators through group loans, without physical collateral, but group liability.

  Plan to avail loan fund to Micro Finance Institutions (MFIs)

DBE is working on the possibility of financing MFIs, on a concessionary lending rate,  in collaboration with the International Fund for Agricultural Development (IFAD). 

(c) Savings Products

(d) Other Services

• Technical and Management Advisory Services.

Service Out-let

The services of the Bank are accessible through its branch offices and through cooperatives on-lending channels.

Frequency of revising loan policies

The Bank operates in pursuant to the overall economic policy and development strategy of the Federal Government.

Address

P.O.Box:  1900, Addis Ababa, Ethiopia

Telephone:  +251-1-511188/9

Fax:  +251-1-511606

E-mail:dbe@telecom.net.et

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