Commercial bank-Ethiopia - Berhan International Bank (BIB) is the fourth commercial bank to sign an agreement with KfW, the development bank of Germany, for the purposes of supporting micro-and-small size business enterprises. The agreement comes under the framework of the German government's support to Ethiopia, provide lines of credit, and the project will be carried out by the CapitalLink Project. "The primary objective of the intervention is to encourage banks to lend as Micro Finance Institutions (MFI), and to contribute towards poverty alleviation and economic development in Ethiopia," Hajera Mohammed, fund manager of CapitalLink told Fortune.

BIB, established with a paid-up capital of 95.7 million Br in June 2009, is to sign an agreement on July 18, 2011, with KfW, allocating 6.3 million dollars, and an additional 2.1 million dollars for technical assistance to banks and MFIs.

"This agreement supports the development of Micro Finance Institutions (MFI) in Ethiopia, improvement corporate governance, reporting standards, and market orientation," Selamawit Fikru, programme assistance of CapitalLink, told Fortune.

Up until now, five banks have received training on the MFI industry and on how to assess MFI loan applications. Three of the banks have received a total of eight MFI loan applications, with a value of 67 million Br. In total, five loans with a value of 23 million Br have been approved by the banks.

Zemen Bank, Wegagen Bank, and Oromia International Bank, all had similar arrangements with KfW.

"The joint initiative between BIB and KfW serves poor families who would otherwise have no means of securing loans to fund sustainable projects," Hajera explained.

So far, there are 30 MFIs in the country serving over 2.4 million clients. These MFIs provide a range of financial services to the active poor in trade, agriculture, construction, consumption, manufacturing, and service sectors.

Hadra Ahmed

Addis Fortune/21/07/2011