ADDIS ABABA – Awash Bank, one of the biggest private commercial banks in Ethiopia in terms of capital, signed a loan agreement with nine private commercial microfinance institutions (MFIs) – Vision Fund, Nisir, Kendil, Metemamen, Meklit, Dynamic, Wasasa, Harbu, and Peace MFI to unlock access to finance for micro, small, and medium enterprises (MSMEs) in Ethiopia.
The ETB 1.5 billion agreement is facilitated through the BRIDGES Program, which is part of the Mastercard Foundation’s Young Africa Works strategy in Ethiopia and is being implemented in partnership with First Consult.
This agreement is part of the ETB 5.5 billion the Bank has committed to disburse over the next three years on flexible terms and conditions such as low-interest rates, relaxed repayment terms and flexible collateral options, including clean loans (no collateral) as part of its commitment to serve young entrepreneurs and MSMEs in Ethiopia and which is expected to benefit over 110,000 MSMEs and support close to 220,000 jobs.
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In one of its interventions, the BRIDGES program works to support partner banks and MFIs to establish and operationalize wholesale credit facilities in which MFIs use loans from banks to lend to MSMEs using movable property as collateral. BRIDGES has facilitated the linkages process of banks to MFIs by conducting thorough due diligence of private commercial MFIs on, among other things, their risk category, debt absorption capacity, governance structure, experience in financing against movable collateral, and branch network. BRIDGES also provides technical support to MFIs in their loan utilization efforts, monitoring whether they have lent the loan against movable collateral and providing other technical support, such as financial product development and portfolio management training for the effective utilization of the fund from banks.
Established in 1995, Awash Bank is the first private bank in Ethiopia to exceed a billion-birr profit mark (in 2019) in the history of Ethiopian private banking industry. The banks total assets reached Birr 173 billion with over 730 branches found across the country.
Source: First Consult