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Development Bank Cuts Interest Rate on Lending to 7.5pc

Jun 11 , 2020

The Development Bank of Ethiopia (DBE) has slashed lending interest rates by four percentage points to 7.5pc for borrowers from hotel, poultry farming and processing and tour operation industries.

The state policy bank also cut its commercial lending rate for other sectors and industries to 8.5pc to support its clients during the Novel Coronaviours (COVID-19) pandemic, which poses challenges to businesses and the economy.

The Bank has been charging 11.5pc to 12pc interest on lending, depending on the type of project. In reducing the interest rates, the Bank will forgo 460 million Br in revenues, according to Haileyesus Bekele, president of the Bank, which currently has over 2,200 outstanding loans in its portfolio.

"Due to the pandemic, we couldn't collect 1.5 billion Br in loan repayments," he told Fortune.

DBE availed soft loans as working capital for industries engaged in export, including horticulture and textile companies. It also released a two-billion-Birr soft loan for consumer cooperative unions, helping them to buy basic food items from farmers and to distribute them to consumers. As of April, DBE, which has 49 billion Br in outstanding loans, has rescheduled loan repayment periods by three months to all of its borrowers.

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