USAID signs $16mn loan agreement with Ethiopian private banks

www.nazrett.com Home of Ethiopian News and Blog Breaking News APA-Addis Ababa (Ethiopia) The United States Agency for International Development (USAID) on Friday signed a $16 million loan agreement with two Ethiopian private banks. According to the agreement, the loan accord signed with Awash International Bank and Oromia Cooperative Bank will help strengthen the economic development of Ethiopia by enabling microfinance institutions and savings and credit cooperatives to offer more loans. “The agreement, worth $16 million in potential loans, reduces collateral requirements to beneficiaries by 50 percent. The program will benefit micro and small enterprises, which play a major role in creating jobs and generating income for Ethiopians in food deficit regions,” said USAID. “The microfinance institutions that will benefit from this agreement not only have the knowledge of local cultures and markets, but also have the presence and capacity to reach some of the most remote communities,” Said Thomas H. Staal, USAID Mission Director to Ethiopia. USAID expects the guarantee scheme to create a sustainable partnership between microfinance institutions and private commercial banks, thus increasing agricultural productivity, expanding staple food supply, and helping expand small scale business related to the trade and cottage industries. USAID’s Development Credit Authority (DCA) loan guarantee program allows USAID to fund projects that are financially viable through loan guarantees in sectors that meet sustainable development objectives. The first DCA Agreement in Ethiopia started in 1999 with Abyssinia Bank, supporting small and medium enterprises engaged in different agricultural activities. In 2004, DCA added Awash and Abyssinia Banks availing $18 million for agro-processing, livestock marketing and commercial horticultural activities. In 2008, a new agreement was made for a $17.2 million guarantee with Abyssinia and NIB Banks for Diaspora and women entrepreneurs.