Development Bank of Ethiopia said its Non-Performing Loan (NPL) ratio during the past fiscal year was 40 percent. In the 2013/14 fiscal year, the ratio was only 9.9 percent. According to Haileyesus Bekelle, president of the bank, the rise of the NPL ratio is attributable to the ineffectiveness of rain dependent commercial farming projects. In addition to the commercial farming projects ineffectiveness, the president said, the rise is also attributable to hard currency shortage, inadequate power supply, unrests that occurred in some parts of the country over the past few years and ineffectiveness of mega projects financed by the bank.

The president said the bank was planning to reduce the ratio to 15% percent adding “the NPL problem is temporary for it will soon be alleviated when financed projects return to regular performance.” According to the president, the bank would take measures such as building institutional capacity including human resource, introducing up to date technology and managing alternative ways of scaling up capital.

Out of the 471 commercial agriculture projects which the bank financed, only 177 projects are in good shape while the 298 partially maintain requirements.

Development Bank of Ethiopia operates as a finance institution in Ethiopia. The company offers current accounts, time deposits, safety deposits, and demand deposits. Its loan portfolio comprises agricultural, industrial, fertilizer, and other business loans. The bank also offers medium and long term loans for investment projects, which are engaged in agriculture, agro-processing, and manufacturing industries.

Source: Ethiopian News Agency and Bloomberg