Development Bank of Ethiopia — BrandWiki

Development Bank of Ethiopia

Overview

Development Bank of Ethiopia

native name	የኢትዮጵያ ልማት ባንክ
native name lang	am
founded	1909
hq location	Addis Ababa, Ethiopia
locations	100 branches, 24 Districts
key people	Tegegnwork Getu (Chairman of the Board) Yohannes Ayalew (President)
industry	Financial services
net income	ETB 373,520,416.00
num employees	2400

The Development Bank of Ethiopia (DBE) is a specialized state-owned development financial institution, which is supervised by the Public Financial Enterprises Agency in Ethiopia.

The Development Bank of Ethiopia was the first development finance institution in Ethiopia and as such it was designed to: "(a) assist in the development of industrial and agricultural production... (and) (b) foster the investment of private capital for productive purposes..."[1]

History

The goal of this bank is to promote economic development via financing commerce, industry, agriculture, and manufacturing. Each period of Ethiopian political history has used the bank for different purposes. Thus, the bank has changed its name several times:

Imperial era (1909−1974)

The bank was established in 1909 as the Societe Nationale d'Ethiopie Pour le Development de l'agriculture et de Commerce.[2] In 1945, the Agricultural Bank was established but was replaced by the Development Bank in 1951. In 1970, the bank was temporarily renamed to the Agricultural and Industrial Development Bank but was renamed back to the Development Bank of Ethiopia in 1994.

Loans granted by size, 1951 to September 1961

Composition of loans, 1951 to September 1961

The geographical distribution of projects financed by the Development Bank also indicates the uneven regional development of the country. Nearly 57 percent of the industrial projects financed by the bank were located in or around Addis Ababa. The larger cities in the three provinces of Shewa (excluding Addis Ababa), Harrar and Eritrea accounted for nearly 36 percent of industrial loans in number and absorbed over 50 percent of the total value of industrial loans. As regards agriculture, the three provinces of Kaffa, Illubabor, and Sidamo received slightly over 49 percent of the total value of agricultural loans and accounted for over 47 percent of the total number. These three provinces are in the coffee producing regions of Ethiopia.

The bank's policy of requiring collateral valued at 200 percent or more of the amount of the loan requested had adverse effects. The security requirement directed loans to the urban areas, where property values are high, and excluded loans to potentially productive areas where no title deeds exist or where communal ownership prevails. The Development Bank, as a tool for large-scale development, had not accomplished all of the objectives. One of the weaknesses of the bank was a passive attitude. It would have been more desirable if it had sought promising avenues of investment rather than to wait to be approached by applicants. Some 85 percent of the number of loans made by the bank were overdue. These include 97 percent of small agricultural loans (up to Eth$2,000), about 80 percent of the industrial of the industrial loans, nearly 78 percent of the coffee loans, and over 65 percent of the agricultural development loans. However, the 85 percent of outstanding loans overdue represented less than 27 percent of the total amount outstanding. The multiplicity of forms of land tenure, the prevalence of tenant cultivation, the absence of legally defined landlord-tenant relationships, and the lack of cadastral surveys and clearly defined certificates of ownership have restricted the bank's activities.

Composition of loans, 1951 to September 1961

The geographical distribution of projects financed by the Development Bank also indicates the uneven regional development of the country. Nearly 57 percent of the industrial projects financed by the bank were located in or around Addis Ababa. The larger cities in the three provinces of Shewa (excluding Addis Ababa), Harrar and Eritrea accounted for nearly 36 percent of industrial loans in number and absorbed over 50 percent of the total value of industrial loans. As regards agriculture, the three provinces of Kaffa, Illubabor, and Sidamo received slightly over 49 percent of the total value of agricultural loans and accounted for over 47 percent of the total number. These three provinces are in the coffee producing regions of Ethiopia.

The bank's policy of requiring collateral valued at 200 percent or more of the amount of the loan requested had adverse effects. The security requirement directed loans to the urban areas, where property values are high, and excluded loans to potentially productive areas where no title deeds exist or where communal ownership prevails. The Development Bank, as a tool for large-scale development, had not accomplished all of the objectives. One of the weaknesses of the bank was a passive attitude. It would have been more desirable if it had sought promising avenues of investment rather than to wait to be approached by applicants. Some 85 percent of the number of loans made by the bank were overdue. These include 97 percent of small agricultural loans (up to Eth$2,000), about 80 percent of the industrial of the industrial loans, nearly 78 percent of the coffee loans, and over 65 percent of the agricultural development loans. However, the 85 percent of outstanding loans overdue represented less than 27 percent of the total amount outstanding. The multiplicity of forms of land tenure, the prevalence of tenant cultivation, the absence of legally defined landlord-tenant relationships, and the lack of cadastral surveys and clearly defined certificates of ownership have restricted the bank's activities.