Development Bank of Ethiopia (DBE) has been given the green light from the central bank to establish an enterprise that will undertake assets management. Unlike other permits, for this one the bank had to secure permits from the Ministry of Trade and National Bank of Ethiopia.

The new enterprise that will be under 99.9 percent ownership of DBE is said to called Ethiopian Capital and Investment PLC and have a capital of 10 million Birr. The move was in response to the bank’s legal and institutional limitation to administer factories and companies, which were confiscated from borrowers because of failed loan.

According to The Reporter, as of June 2016 DBE’s total outstanding loan was 31.63 billion Birr. Out of this loan disbursed to the agriculture sector was 6.17 billion Birr while loan given to businesses in the manufacturing sector was 21.35 billion Birr. 795.4 million Birr was given to businesses in mining and energy. The rest was given for financial services, staff loans and other services.

Because of their number and the fact that they are scattered, DBE was facing problems to administer and look after the performance of factories it confiscated from borrowers.

The newly established company will now be able to deal with different issues including asset management, tax and settle payments to third parties. It will also buy raw materials on behalf of companies it will watch over.

Among other companies, Ethiopian Capital will now be administering defaulted textile companies including ELSE Addis PLC, Dire Dawa Textile and few more flower farms.

It is to be recalled that ELSE Addis’ owners got out of Ethiopia without paying 1 billion Birr from loan, tax and payments from purchase of raw materials such as cotton.

Source: The Reporter