The Ethiopian Capital Market Authority is working on establishing credit rating services to accredit the financial status of borrowers, aiming to foster confidence between creditors and debtors. Addis Chamber of Commerce, along with International Center for Risk Assessment (ICRA) which is located in UAE, have signed a memorandum of understanding to introduce credit rating services in Ethiopia.

Addis Chamber of Commerce recently discussed the importance of this service, emphasizing its role in evaluating individuals and entities engaged in various financial activities, including the capital market. Mrs. Mesenbet Shenkute, President of Addis Chamber of Commerce, highlighted its function as an information repository for loan seekers and its potential to mitigate risks associated with share transactions. Mr. Asfaw Alemu of Dashen Bank stressed the service's capacity to enhance the financial capabilities of businesses and build investor trust. On the other hand, the Accounting and Audit Board of Ethiopia views this as a boost to investment, providing clear business outlooks. The absence of such services has hindered Ethiopian businesses' competitiveness in obtaining finance.

The reestablishment of Ethiopia’s Capital Market Authority and Securities Exchange is expected to enhance the availability of financial sources and credit alternatives for businesses. Currently, Ethiopian financial institutions, such as Dashen Bank, assess borrowers' creditworthiness internally. However, the introduction of independent credit rating services is anticipated to improve the credibility of borrowers and simplify lending processes. Credit rating services are seen as crucial for attracting investments and facilitating business operations in Ethiopia's evolving economy. It is expected to improve credibility, reputation, and access to favorable credit terms for both creditors and borrowers.

Source: The Ethiopian Herald and Sheger FM 102.1