U.S. Program Supports Business Growth
Bank Loans Assists Small, Medium-Sized Companies

October 11, 2005
No. 45/05

Addis Ababa (U.S. Embassy) – Helping Ethiopia’s private sector businesses develop and expand is the goal of a program agreement signed on Tuesday, October 11 between the United States, through the U.S. Agency for International Development (USAID), and Ethiopia’s Dashen Bank.  The program is the third Development Credit Authority loan-guarantee program made possible by U.S. support, and it will allow Dashen Bank to make loans to small- and medium-sized enterprises in the services, manufacturing, and agriculture sectors nationwide. 

The signing ceremony was attended by U.S. Chargé, Ambassador Vicki Huddleston, and U.S. Embassy’s Acting Deputy Chief of Mission, Brian Moran. The agreement was signed by USAID’s Mission Director in Ethiopia, William Hammink, and by the President of Dashen Bank, Ato Lulseged Teferi.

The new program provides Dashen Bank with a 50% collateral substitute, guaranteed under the terms of the agreement up to a total of $10 million (over 86 million birr), for new small and medium borrowers. These loans are expected to leverage short- and medium-term credit estimated at an equivalent to Birr 86 million over five years and will especially help businesses led by women and those benefiting from the experience and expertise of entrepreneurs returning from overseas.  The program builds on the success of similar agreements, focusing on agribusiness and agricultural cooperatives, with the Bank of Abyssinia and Awash International Bank.  Combined, the three programs are making available loan guarantees of $28 million (over 241 million birr).

Development Credit programs are only a part of the wider U.S. support for promoting economic development in Ethiopia.  The United States supports Ethiopia’s Sustainable Development Poverty Reduction Program (SDPRP) by encouraging job creation through new private-sector-led economic growth initiatives, by partnering with Ethiopia and other donors to develop an integrated framework for trade-led poverty reduction, and by creating a strategy for increasing trade through policy reforms and trade and investment incentives.  U.S. and Ethiopian partners are also working together to find ways to increase Ethiopia’s participation in the African Growth and Opportunity Act, or AGOA, building on that program’s ability to provide duty-free access to U.S. markets.

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