The Development Bank of Ethiopia (DBE) is to float yet another auction for the Ayka Addis Textile Factory for a third time, despite its failure to renew its trade license.

The Bank's management has been in a pickle after failing to restart the plant operations or sell the asset to a third party over lack of a renewed trade license and unpaid taxes.

"The company is in trouble because of unpaid taxes and issues related to renewing trade licenses," Taye Jiru, head of the project rehabilitation and recovery directorate at the DBE, confirmed to Fortune.

DBE, however, continues to cover payroll for over 4,300 of Ayka's employees. The attempt by Ethio Capital Investment S.C., established by the DBE to manage and administer the assets of foreclosed companies, to restart operations bore no fruit.

This is a major setback for the Bank under reform, whose executives are determined to bring down the non-performing loans (NPL) ratio, which once hit almost 40pc. Loan defaults by companies like Ayka Addis take the major share of the sick loans. At the end of the last fiscal year, DBE's non-performing loans reached 26pc, showing a decline of eight percentage points. The Bank's managment attribute this to the recovery of unpaid loans and adopting a stringent credit policy.

The DBE took possession of Ayka Addis in late 2018 after the company failed to pay back two billion Birr in loans taken before it started operations in 2010.

Ayka Addis was established in June 2006 by three Turkish shareholders and an authorised capital of one billion Birr, of which 679 million Br has been paid. During the establishment, the owners borrowed 813 million Br from the DBE. The factory exported its products to Germany, Spain, the United States, Japan, France and Canada, generating 400 million dollars in its eight years of operation.

Ethiopia earned a total of 140 million dollars from the export of textiles over the last fiscal year, accounting for less than four percent of total export revenues.