Development Bank of Ethiopia (DBE) disclosed it is set to launch a new banking service for Small and Micro Enterprises (SMEs) that are growing to medium as well as large enterprise categories.

President of the Bank, Esayas Bahre, explained the service is going to be launched in order to fill the financial gap medium and large enterprises that just transformed from SMEs are facing. The service is going to be given in a new banking window.

The President furthered micro finances only serve the enterprises as long as they are in the SMEs categories. Once they graduate to medium and large enterprises they will not longer eligible to get finance from their benefactors making them vulnerable for finance shortage.

In related development, DBE is planning to make significant changes to its collateral requirements when financing a project. According to Esayas, DBE requires to see 30 percent of a project in liquidity before approving the loan request. On the other hand, the new scheme that is being suggested, according to The Reporter, will allow projects to present the 30 percent in physical asset in place of cash for instance. Illustrating it, the newspaper noted, if 30 percent of the project is completed the borrower can present it as the initial 30 percent that is required to disperse the 70 percent.

The stringent project financing requirement will only come to effect after it gets blessing from the National Bank of Ethiopia (NBE). Esayas commented on this saying, “We just amended the condition of 30 percent upfront payment to include physical project asset but the rest of the loan procedure remain the same”.

During the Public-Private Dialogue Forum (PPDF) the above two points were once the private sector complained about usually.

Eyob Abte, Secretary-General of the PPDF, said that the changes made by DBE are timely and important. He further appreciated the moves by DBE.

Source: The Reporter