Development Bank of Ethiopia (DBE), the only policy bank in the country, announced Monday that the third round of Small and Medium Enterprises (SMEs) training has officially been launched on Monday.
At this round of the DBE and World Bank (WB) co-funded training, more than 34 thousand trainees will take part. The national level training will be executed across 20 cities and 65 training centers.
In the past two rounds, more than 5100 people were trained under the DBE and WB funded business development training.
Agriculture, manufacturing, and mining are the sectors which received lease financing loan provision from the WB.
Last year, the WB provided $200 million to lease financing of Ethiopia’s SMEs. However, DBE failed to announce the finance allocated for the current round.
“The training is an inclusive one,” said Yohannis Ayalew (PhD), President of DBE, adding, “There are even professors who will be part of the upcoming training”.
“We’ll support the leasing finances, which are not backed by the WB,” Yohannis said.
Yohannes said in a presser on Monday that the WB is expected to increase its loan provision after assessing the effectiveness of the program.
“If 20% of the trainees in this round entered into jobs, that would be a big success,” Yohannis said.
A survey by the WB on SMEs finance in Ethiopia finds that financing constraints of Ethiopian SMEs are one of the key obstacles to job creation and growth. Both demand-side and supply-side surveys clearly indicate the existence of a missing middle phenomenon whereby small enterprises are more credit constrained than either micro or medium/large enterprises.
In the current Ethiopian fiscal year, DBE has approved a loan of 14 billion Birr.
The Non-Performing Loan (NPL) at the state policy bank, DBE, ballooned to an alarming rate of 39.4 percent in 2018, which is the highest rate in the Bank’s history.
“We reduced the NPL rate to 26% in the last year,” as Yohannis puts it. “We’ve collected 3.6 billion Birr of NPLs”.
DBE also collected a loan repayment of 8 billion Birr in last year.
The state policy bank also has a plan to reduce the NPL amount to 14% and 10% in next year and after two years, respectively.