Zemen Bank Cuts Loan Interest Rate to Zero for Horticulture Industry

Executives at Zemen Bank took the banking industry by surprise, cutting interest on commercial loans for borrowers in the horticulture industry to zero. The new rate applies to loans and advances taken for the period between April 2, and June 30, 2020.

The horticulture industry has been the hardest hit due to the Novel Coronavirus (COVID-19), which impacted export freeze. It incurred 11 million dollars in losses in the last two weeks of March and faces the prospect of laying off up to 150,000 people.

This has affected Zemen Bank more than other commercial banks, since the share of this industry in its loans portfolio is higher from others, according to people close to the industry. Zemen Bank has 7.8 billion Br in outstanding loans, of which 6.5pc was advanced to companies in the horticulture industry.

In making the new adjustments, Zemen Bank may use the liquidity boost it received from the central bank last week. The administration of Prime Minister Abiy Ahmed has decided to release 15 billion Br in cash for commercial banks from the account the banks have paid for one year and three months to buy the mandatory 27pc bond that would have been paid back between April 2020 to June 2021.

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"We believe this will help the industry to recover and resume operations," Dereje Zebene, president of Zemen, said during a press conference held this morning at the Intercontinental Addis Hotel.

Dereje was accompanied by Zelalem Mesele, president of the Ethiopian Horticulture Producer Exporters' Association.

Zemen's move is a huge support for the industry, which is currently operating with only 10pc to 15pc of its capacity, said Zelalem.

"It'll help the companies to continue paying their employees and buy fertilisers and chemicals to resume operations," he told Fortune.

To lessen the burden on the exporters, the Bank has removed 75pc in commission fee exporters pay to extend the import period. It also committed the 25pc commission fees it collected, amounting to 800,000 Br, to the Ministry of Health to be used for an initiative to protect the safety of the professionals in the front line of the fight against the virus.

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The Bank also increased its one-time ATM cash withdrawal limit to 12,000 Br and entirely removed transaction fees paid on withdrawals.

The Bank has also contributed a five-million-Birr donation for the national fund that is mobilising financial and non-financial aid for the emergency preparedness of Coronavirus.

This story is edited to add a comment from Zelalem Mesele, president of the Ethiopian Horticulture Producer Exporters' Association and data about the bank's loan portfolio.

Tracking COVID-19

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468770

Total cases Reported In Ethiopia

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0

New cases Reported In Ethiopia

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42742

Active cases Reported In Ethiopia

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0

New Deaths Reported In Ethiopia

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7463

Total Deaths Reported In Ethiopia

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418563

Total Recovered Reported In Ethiopia

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87

Critical in Ethiopia

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Source: Coronavirus monitor API

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