AfDB and Dashen Bank sign US$40m trade finance facility

The African Development Bank (AfDB) and Dashen Bank have signed a US$40m trade finance transaction guarantee facility designed to support Ethiopia’s vital import and export sectors.

Under the agreement, the African Development Bank will provide guarantees of up to 100 per cent to confirming banks against non-payment risks associated with letters of credit and other trade finance instruments issued by Dashen Bank. The facility targets small and medium-sized enterprises (SMEs) and local corporates involved in the import of essential goods, aligning with broader efforts to deepen intra-African trade under the African Continental Free Trade Area.

Speaking at the signing ceremony in Addis Ababa, Dr. Léandre Bassole, the AfDB’s outgoing Deputy Director General for East Africa and former Ethiopia Country Manager, hailed the agreement as a “pivotal moment” in the Bank’s growing engagement with Ethiopia’s private sector.

“This facility marks a significant step in our partnership with Dashen Bank and will play a vital role in fostering inclusive, private sector-led economic growth in Ethiopia,” Dr. Bassole said.

Dashen Bank CEO, Asfaw Alemu, described the agreement as a landmark for the Ethiopian banking sector.
“This is a first-of-its-kind transaction for a private bank in Ethiopia,” he said. “Securing this facility is a testament to our strong governance, operational soundness, and strategic focus. It reflects a shared vision to unlock Africa’s full potential.”

Ahmed Attout, Director of the AfDB’s Financial Sector Development Department, emphasized that the transaction is part of a broader strategy to develop Ethiopia’s financial sector infrastructure.
“The Bank has been instrumental in supporting the foundation of Ethiopia’s capital markets, including work with authorities to establish the Ethiopian Capital Market Authority and the Ethiopian Securities Exchange,” Attout said.

He also pointed to other AfDB initiatives in Ethiopia, including the launch of Youth Entrepreneurship Investment Banks (YEIBs) to enhance youth access to finance and the expansion of digital financial services through an improved national payments gateway developed with local banks.

“This facility will help Ethiopian banks overcome persistent challenges in securing international credit lines and will support the importation of essential goods such as fertilizers, pharmaceuticals, solar panels, and agricultural machinery — critical inputs for the agriculture and manufacturing sectors,” Attout added.

Source: AfDB