
Jul 3 , 2025
The African Development Bank’s (AfDB) board approved today a 50 million dollars trade finance transaction guarantee for Awash Bank, the biggest private lender by paid-up capital.
The facility transfers up to 100pc of the non-payment risk on Awash-issued letters of credit to the multilateral lender, slashing the cash-collateral demands that have squeezed Ethiopian banks during a persistent foreign-exchange drought. By easing those balance-sheet strains, Awash Bank can redirect scarce dollars toward domestic manufacturers and agri-processors that have struggled to source inputs ranging from fertilizer to spare parts.
“Trade finance is an important driver of economic growth and is critical for cross-border trade, particularly in emerging markets,” said Lamin Drammeh, AfDB’s head of trade finance, calling Awash Bank “a strong partner with extensive knowledge and network in Ethiopia.”
Awash Bank, operating 947 branches and serving roughly 6.8 million customers, already boasts the industry’s fattest profits and the largest paid-up capital among private lenders.
According to Tsehay Shiferaw, Awash Bank's president, the guarantee “will ease the burden of arranging cash collateral” and broaden the Bank’s capacity to serve exporters and importers alike.
The deal trains new firepower on Ethiopia’s 3.9 billion dollars SME financing gap, one of Africa’s widest, World Bank figures show. Only about 11pc of small firms nationwide have access to working-capital loans, less than half the Sub-Saharan average.
The deal also expands a continent-wide effort to shrink an African trade-finance shortfall estimated by the IFC at 90 billion to 120 billion dollars annually. Last September the Bank extended a 70 million euro package to Morocco’s Bank of Africa, a combination of risk-participation and credit line, forecast to generate roughly 300 million euro in trade over three and half years.
Analysts say the Ethiopian facility could translate into more than 350 million dollars in new trade flows over its four-year tenor, given the high turnover of short-dated LCs. The guarantee also dovetails with the African Continental Free Trade Area’s (AfCFTA) push for deeper intra-regional commerce, where ready access to foreign exchange remains a bottleneck.
AfDB will levy risk-based fees on each guaranteed LC, while Awash expects a lift in fee income and improved liquidity ratios. Still, bankers warn that Ethiopia’s regulators, preparing to open the banking sector to foreign entrants, should ensure that prudential rules keep pace with the expanding appetite for trade-credit insurance the new backstop is likely to stoke.
Radar | Aug 03,2019
Radar | Jan 21,2023
Radar | Jan 01,2024
Fortune News | Aug 03,2019
Radar | Aug 17,2019
My Opinion | 131580 Views | Aug 14,2021
My Opinion | 127936 Views | Aug 21,2021
My Opinion | 125911 Views | Sep 10,2021
My Opinion | 123535 Views | Aug 07,2021
Jun 28 , 2025
Meseret Damtie, the assertive auditor general, has never been shy about naming names...
Jun 21 , 2025
A well-worn adage says, “Budget is not destiny, but it is direction.” Examining t...
Jun 14 , 2025
Yet again, the Horn of Africa is bracing for trouble. A region already frayed by wars...
Jun 7 , 2025
Few promises shine brighter in Addis Abeba than the pledge of a roof for every family...