Business Finance Guide

Table of Contents
Introduction 5
Business Financing 5
Financial Institutions in Ethiopia 6
1. Development Bank of Ethiopia 7
2. Commercial Bank of Ethiopia 11
3. Awash International Bank 13
4. Dashen Bank 15
5. NIB International Bank 16
6. Bank of Abyssinia 18
7. Wegagen Bank 19
8. Zemen Bank 21
9. Cooperative Bank of Oromia 23
10. United Bank 27
11. Oromia International Bank 28
12. Addis International Bank 31
13. Enat Bank 32
14. Abay Bank 33
15. Berhan International Bank 35
16. Buna International Bank 36
17. Lion International Bank 37
Background
The Addis Ababa Chamber of Commerce & Sectoral Associations
(AACCSA) has been established, by the General Notice Number 90/
1947, in April 1947 as an autonomous, non-governmental, non-politi-
cal and non-profit organization to act on behalf of its members.
The chamber re-establishment with the Proclamation Number
341/2003, further provides the legal framework for the establishment
of Chambers of Commerce and Sectoral Associations.
AACCSA is voluntary membership organization with more than 15,000

members in various sectors of business companies. It is mandated to
promote and advise trade and investment, disseminating business
information, consulting government and members on economic
development and business issues, establishing friendly relationship
with similar chambers in other countries, and exchanging information
as well as engaging in arbitration in times of disputes among
members.
It is the oldest, largest and strongest Chamber in Ethiopia, which
represents a wide spectrum of businesses constituting for more than
60% of businesses operating in the country. Being a member of the
World Chambers Federation, AACCSA also has a prominent place
in the international network of chambers.
Vision
“To be a world class chamber enabling members to be internation-
ally competitive”.
Mission
“To promote trade and investment by providing demand driven
service to its members and by advocating for favorable business
environment based on international best practices”.
Values
• Teamwork
• Fairness
• Credibility
• Business orientation
• Accountability
• Transparency
Business Finance Guide
Introduction
Access to business finance play very import role for any

business startup and growth. Finance is a good indicator of the
health of the company overall, it also holds an important role in
Introduction
managing business growth.
The finance journey is continuous; there may never be an arrival

point. Businesses need to make sure there is the finance to
back their growth plans. Being able to access the right type of
finance at the right time allows businesses to invest, grow and
create jobs. A good understanding of the options available is
an essential starting point and enables businesses to select the
type of finance that is right for their circumstances and plans.
This business guide has prepared by Addis Ababa Chamber of
Business Financing
Commerce & Sectoral Association (AACCSA), sets out finance
considerations and options for businesses at various stages,
providing advice and uses as sources of information to help
business start, grow and prosper.
Business Financing
The most common type of finacing business in Ethiopia is bank

loan. But recently private equity financing starting to grow to
finance business.
Financial Institutions
Bank Loan: banks are an important source of finance. Banks

may lend finance over long periods of time possibly up to 20
years. Bank debt financing is cash borrowed from banks at a
fixed rate of interest and with a predetermined maturity date.
For business, using bank loans might be relatively easy but
the cost of servicing the loan can be high. If interest rates rise
then it can add to a business costs and this has to be taken
into account in the planning stage before loan is taken out.
Equity Financing: It is exchanging a portion of the ownership

of the business for a financial investment in the business. The
5
ownership stake resulting from an equity investment allows
the investor to share in the company’s proﬁts. Equity involves
a periodic or permanent investment in a company and is not
repaid by the company at a later date.
Project Finance
Financial Institutions in Ethiopia
In Ethiopia the financial sectors in general and the banking

subsector in particular is one of the protected sector. Currently,
there are eighteen banks; two public and sixteen private banks.
The sector is regulated and supervised by the National Bank

of Ethiopia (NBE), which sets the rules for the operations of the
banks and oversees their performance.
Equity Contribution
Finance
Lease Finance
Project
6
1. Development Bank of Ethiopia
Project Finance
The Development Bank of Ethiopia (DBE) was established
in 1909. The bank,with its head office in Addis Ababa,has 95
branch and 12 district offices strategically located throughout
the country.The regional offices has the authority to appraise,
grant and disburse loans up to a certain earmarked limit.The
paid up capital of the bank is 7.5 billion. In general the bank
provides two types of financing. Project Finance and Lease
Finance.
Project Finance
√√It is a medium or long-term loan financed for the
Equity Contribution
establishment of a new project and/or the expansion
of an existing business, all of which must be justified
by a project feasibility study and/or a business plan.
The project loans as a package may embody working
capital finance.
Economic Sectors of Project Finance

√√Commercial agriculture,
√√Agro-processing industries,
√√Manufacturing Industries and
√√Mining or extractive industries.
Long Term Loan

Lease Finance
√√Used for the purposes of project construction and

capital goods aquization and
√√Maximum length is 20 years including grace period and
additional loans or rescheduling.
Medium Term Loan

√√Used for building construction and acquisition of
machinery, equipment, furniture and vehicles and
√√A loan repayable time is 3-5 years including grace
period.
7
Working Capital Loan
√√It provides for DBE customers only,
√√Financed by commercial banks through a tri-partite
agreement entered into DBE, commercial banks and
Project Finance
borrowers and
√√The Commercial Bank of Ethiopia is used only as a last
resort in cases where the customers can not get the loan
from any other commercial bank.
Special Line Credit

√√It is export credit to be used for raw material purchase
and
√√The customers are required to secure sales contracts
from buyers in the international market.
Input Financing for Pharmaceutical Industries

Equity Contribution
√√The purpose of the loan is for the procurement of

pharmaceutical raw materials and
√√Tripartite agreements among DBE, customer and the
Pharmaceuticals Fund and Supply Agency need to be
signed.
Equity Contribution
√√New projects
»»Domestic investors: 75% : 25% and
»»Foreign investors: 50% : 50%
√√Expansion projects:
»»For both investors 60% : 40% and
Lease Finance
»»Domestic investors engaged in export business with

backward forward linkage: 70% : 30%
√√Additional loans (for projects under implementation with

justified reasons such as cost over run)
»»Domestic investors 75% from bank: 25%from investor
and
»»Foreign investors 50% from bank:50% from investor
8
Joint Venture
√√If 51% or more of the investment owned by domestic
company considered as domestic investor,
Economic Sectors
√√If 51% or more of investement owned by foreign
company considered as foreign investor and
√√In-kind contributions accepted by the bank are
equipment, machinery, leased land, vehicles and
buildings that are used or to be used for the sole purpose
of the project to be financed by DBE.
Interest Rate
√√First Grade Exporters = 9%; If export sales accounts 80%
Types of Loan
or more,
√√Second Grade Exporters = 9.5% ; If export sales
accounts b/n 60% and 80% or more,
√√Import substitution industries = 9.5%,
√√Others = 10% and
√√Non-priority industries = 12%
Single Borrower Limit

√√Single borrower limit of the bank is Birr 1.875 billion, i.e.
25% of the bank’s paid up capital.
Interest Rate
Co-Financing for Mega Projects

√√The co-financing can be with National Financial
Institutions; i.e. Commercial Bank of Ethiopia (CBE) or
International Financial Institutions such as World Bank
and African Development Bank (WB, AfDB) and
√√The purpose is to minimize risk, to overcome occasional
liquidity problems and to maintain the exposure limit.
Requirement
Collateral
Loan Buy Out

√√The bank may buy-out loans extended by other local
banks and
√√It should be viable/ on-going concerns and priority
sector project loans.
9
Lease Finance
√√It is in kind finance applied for purchase of new
machineries based on enterprises needs for new and
Economic Sectors
expansion projects,
√√The enterprises should be graduating from micro and
small level to middium level,
√√They should have six or more employees with total
capital of Birr 500,000 to Birr 7.5 million and
√√The bank leases machinery which costs a minimum of 1
million and a maximum of 30 million birr.
Economic Sectors of Lease Finance

Types of Loan
√√Agro-processing industries,
√√Manufacturing industries,
√√Tour industries,
√√Construction industries and
√√Mining and quarries.
Equity Contribution
√√The loan-equity ratio is 80% from bank -20% from investor,
√√The investor can contribute 10% in cash and 10% in kind,
√√The bank shall not entertain requests for refinancing
Interest Rate
of already purchased as well as second hand capital

goods/machineries and
√√Until the disbursement of last payment the owner of the
machinery is the bank.
Interest Rate
√√Lease finance interest rate is 9% .
Collateral Requirements
Requirement
Collateral
√√The financial viability of the project itself,

√√First-degree collateral security for all loans,
√√Projects operating on rented premises are required
to present additional collateral outside the project
amounting for 100% of the loan and
√√Additional collateral outside the project will not be
required, if the premises are rented from government
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organs and written undertakings are obtained from the
government organ to enable the bank to transfer the
renting right to a third party in case of default.
Economic Sectors
2. Commercial Bank of Ethiopia
Commercial Bank of Ethiopia (CBE) is established in 1942 to

undertake commercial banking activities. It operates with its
head office in Addis Ababa and more than 1123 branches
stretched across the country. It also opened four branches in
South Sudan and has been in the business since June 2009.
Types of Loan
Economic Sectors
√√Commercial farming, agro-Processing ,
√√Manufacturing, hotel & tourism ,
√√Building, construction and transport sectors and
√√International trade.
Types of Loan
The different types of loans granted by the bank are:
Interest Rate
Short Term Loan

√√A short term loan is used for working capital needs and/
or meet other short-term financial constraints and
√√It granted for a maximum period of 3 years and
the repayment can be in lump sum or in periodic
installments.
Medium Term Loan

√√Is used for acquisition or leasing of fixed business assets,
Requirement
establishment of new projects and expansion of an

Collateral
existing business and

√√It has a maturity period longer than 3 years and not
exceeding a maximum period of 7 years.
Long Term Loan

√√Helps to finance long term investements and
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√√It has a maturity period longer than 7 years but not
Economic Sectors
Overdraft
√√It is a form of credit facility by which business are allowed
to draw cash beyond the deposits of their current
accounts for the day to day operational needs of
business and
√√The facility is availed to customers up to a maximum
period of 1 year and it can be renewed every year
based on the request of customers.
Types of Loan
Merchandise Loan Facility

√√It is a short term credit facility extended to customers
against merchandise or its documentary evidence and
√√The loan facility is extended to customers for a maximum
period of 1 year and its maximum advance rate is 80% of
the amount of the merchandise.
Pre-Shipment Export Credit Facility

√√It is used for purchase of raw material, processing,
warehousing, packing, transporting the finished goods to
Interest Rate
export shipment,
√√It required to present receipts of export proceeds at least
USD 300,000 or equivalent currencies, or engaged in
viable business at least for two years or offer collateral,
√√The advance rate ranges from 70% to 90% depending
on type of goods to be exported and
√√The loan is availed to the maximum of 1 year.
Revolving Export Credit Facility

Requirement
√√It is an advance paymenet extended to exporters upon

Collateral
presentation of acceptable export documents except

bill of loading,
√√The maximum advance rate is up to 80% of the value of
the export document and
√√The facility is availed to the maximum of 1 year.
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Special Truck Loan Financing
√√It is a term loan granted to coffee and /or sesame
exporters mainly to overcome problems of transportation
Economic Sectors
service prevailed in the export business,
√√Exporters must have at least earned USD 4 million or
equivalent of other currencies during the last twelve
months and
√√The vehicle has to be a dry cargo truck and trailer with
minimum loading capacity of 300 quintals.
Equity Contribution
√√New projects required to contribute at least 30% of the
Types of Loan
total project cost.
Interest Rate
√√For export business 7.5% and
√√Non export business 9.5%.
√√Viability of the project it self for manufacturing and
agricultural projects and
√√Acceptable security valued from 75% up to 100% of the
Interest Rate
total project cost.
3. Awash International Bank
Awash International Bank (AIB) Share Company was established

in 1994 with the main objective of serving as a commercial
bank. The bank’s head office is located in Addis Ababa and it
has more than 223 branches throughout the country.
Requirement
Collateral
Economic Sectors
√√Commercial agriculture,
√√Manufacturing Industry,
√√Service,
√√Construction,
√√Transportation,
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√√Domestic trade,
√√Import and export trade and
√√Mining resource development.
Economic Sectors
Types of Loan
Short Term Loan

√√A short term loan is granted for a maximum period of 1
year,
Medium Term Loan

Types of Loan
√√This type of loan is a loan repayable within 3-5 years.
Long Term Loan

√√The maximum length fixed for long term loan is 10 years
with an additional 2 & 1/2 years grace period.
Other Loans
The bank extends other loans such as :
√√Overdraft,
√√Merchandise loan facility,
Rate
Interest Rate
√√Exporters credit facility which includes,

√√Special export overdraft,
Interest
√√Advance against export Bills,

√√Post shipment advance against export bills and
√√Letter of credit and letter of guarantee.
Equity Contribution
√√All prospective borrowers for investment projects are
required to contribute at least 30% of the total project
Requirement
Collateral
cost.
Interest Rate
√√The interest rate of the bank ranges from 8%-16%
depending on the economic sector, maturity period and
type of collateral.
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√√Buildings (residential/commercial),
√√Machinery, equipment and vehicles,
Economic Sectors
√√Merchandise goods,
√√Agricultural products on site,
√√Hotels, hospitals, schools, guesthouses and other related
enterprises,
√√Share certificate of financial institutions (banks,
insurances) and
√√Guarantees from foreign banks and federal & regional
governments.
4. Dashen Bank
Types of Loan
Dashen Bank Share Company was established in 1995 to
undertake commercial banking activities. Its head office is in
Addis Ababa and it has more than 174 branches across the
country.
Economic Sectors
√√Agriculture, manufacturing,
Interest Rate
√√International trade (Import & Export),
√√Domestic trade and services and
√√Construction, transport and real estate.
Types of Loan
Short Term Loan

√√A short term loan is granted for a maximum period of 1
Requirement
year.
Collateral
Medium Term Loan

√√A medium term loan has a maturity period of a minimum
2 years and not exceeding a maximum period of 5
years.
15
Long Term Loan
√√A long-term loan has a maturity period of more than 5
years and not exceeding a maximum period of 10 years.
Economic Sectors
Other Loans
√√Overdrafts, merchandise loans,
√√Letter of credit facility,
√√Advance on import bills,
√√Revolving over draft (for export bills),
√√Trade bills discounted,
√√Export credit guarantee scheme and
√√Letter of guarantee (Advance, Performance and bid
bonds).
Types of Loan
Equity Contribution
√√Equity contribution is minimum 30% and maximum 65% of
the total project cost and
√√The contribution varies depending on the type of project
and economic sector to be financed.
Interest Rate
√√The interest rate of the bank depends on the type of the
Interest Rate
loan, economic sector and term structure.
√√The financial viability of the project itself,
√√For working capital the collateral ranges from 100%-200%
of the project cost based on customer’s risk grade.
5. NIB International Bank

Requirement
Collateral
Nib International Bank Share Company was established in 1999

to undertake commercial banking services. It operates through
its head office in Addis Ababa and with its 124 branches spread
throughout the country.
16
Economic Sectors
√√Agriculture, manufacturing, import & export,
√√Domestic Trade and Service,
Economic Sectors
√√Building and construction,
√√Transport,Hotels and tourism and
√√Mining, power and water.
Types of Loan
The type of loans extended by the NIB bank are :
Short Term Loan

√√A short term loan is granted for a maximum period of 1&
Types of Loan
1/2 years.
Medium Term Loan

√√A medium term loan has a maturity period of 5 years.
Long Term Loan

√√Which is used for project financing and has a maturity
period of more than 5 years.
Overdraft Interest Rate

√√Overdraft facilities are availed for the various sectors
financed by the bank and the facility is renewable every
six months.
Merchandise Loan
√√It is provided by the bank against physical pledge of
merchandise good and
√√It is reneweable every six months depending on the
nature of business.
Requirement
Collateral
Letter of Credit Facility

√√The Bank approves letter of credit at appropriate
margins depending on the credit worthiness of
customers, the nature and marketability of products to
be imported and
√√The credit facility can be either for one time or revolving
(i.e. for a specified period of time – usually one year).
17
√√Letter of credit, export documents, warehouse receipt,
Economic Sectors
√√Cash or deposit collateral,

√√Bank guarantees, treasury bills and government bonds,
federal government guarantee and
√√Business mortgage, vehicles, building or house.
6. Bank of Abyssinia
Bank of Abyssinia was established in 1996. It’s head office is in

Addis Ababa and has more than 170 branches throughout the
Types of Loan
country.
Economic Sectors
√√Import and export,
√√Domestic trade & services,
√√Manufacturing/Industry,
√√Construction, transport and
√√Agriculture.
Types of Loan
Interest Rate
The different types of loans granted for business by the bank

are:
√√Term loans and project finance loans,
√√Overdraft loan, merchandise loans, advance against
export bill, advance against export Letter of Credit,
√√Advance gainst export sales contract, pre-shipment
export advance against DBE’s guarantee,
√√Import letter of credit facility, import L/C settlement loan
√√warehouse receipt loan and partial financing.
Requirement
Collateral
Equity Contribution
√√All prospective borrowers from the bank are required to
contribute minimum 30% of the total project cost.
√√The bank accepts movable &/or immovable properties
as well as valide documents as collateral.
18
7. Wegagen Bank
Economic Sectors
Wegagen Bank Share Company was established in 1997. The
bank with its head office in addis Ababa has more than 134
branches throught the country.
Economic Sectors
√√Manufacturing Industry,
√√Import & export,
√√Construction, hotel & tourism and
Types of Loan
√√Transport and domestic trade.
Types of Loan
The detail loan types granted by the bank are:
Project Financing
√√The maximum maturity period is 15 years.
Asset Financing
√√The maximum loan life is 5 years.
Interest Rate
Working Capital Financing

√√It is granted for a maximum period of 1 year.
Overdraft Facility (Overdrawal)

√√It required at least one-year customer relationship with
the Bank and collateral in the form of building.
Merchandise Loan
Requirement
Collateral
√√It is granted for fast-moving and non-perishable items &

√√Required to present ownership documents & standard
store located in towns where bank’s branch exists.
Pre-shipment export credit facility

√√Pre-shipment facility against sales contract,
√√Pre-shipment facility against Letter of Credit and
19
√√At least one-year experience in the export business with
proven management capability and excellent financial
management.
Economic Sectors
Advance Against Export Bills

√√It required to present satisfactory export documents in
compliance with the terms and conditions of the Export
Letter of Credit and
√√Proven customer track record.
Letter of Credit Settlement

√√Granted for applicats not having other long outstanding
import letter of credit document.
Types of Loan
Import Letter of Credit Facility

√√The applicant has to settle at least one non-revolving
L/C facility amicably up on advice at any banks and
√√The Bank finances only those import letters of credit
opened at its end.
Warehouse Receipt Financing

√√Applicant should present complete electronic Goods
Interest Rate
Received Note from Ethiopian Commodity Exchange.
Agricultural Equipment Loan

√√Equity contribute should be at least 50% of the cost of
agricultural equipment or
√√With additional collateral the equity contribution shall
be lowered to 30% in proportionate to the value of the
collateral.
Project Financing
Requirement
Collateral
√√The applicant should raise 30% of the project cost but

not from debt financing. This can be in the form of
construction or capital investment.
Syndicate Financing
√√It is group financers pulling their financial resource
together in pre-specified proportion for medium or long
term investment.
20
Equity Contribution
√√The equity contribution is 30% of total project cost.
Economic Sectors
Interest Rate
√√For export pre-shipment facilities the minimum interest
rate is 8.8% and
√√For loans granted for more than 5 years its maximum
interest rate is 17.5%.
√√Movable and immovable assets/properties,
√√Cash and cash equivalents (government bonds and
treasury bills included),
Types of Loan
√√Share certificates,
√√Bank guarantees (both local and foreign),
√√Deposit accounts with Wegagen Bank,
√√Cash surrender value of life insurance,
√√Personal guarantee and corporate guarantee and
√√Valid import/export documents and export credit
guarantee.
8. Zemen Bank Interest Rate
Zemen Bank Share Company was established in Addis Ababa

in 2008. The Bank’s principal activity is commercial banking.
The head office of the Bank is in Addis Ababa, and has two
Branches, four corporate units and five Kiosks.
Economic Sectors
√√Export, import, building and construction,
√√Manufacturing, domestic trade,
Requirement
Collateral
√√Transport and communication,

√√Agriculture, hotel and tourism,
√√Financial institutions,
√√Mines, power, and water resource.
Loan Types
21
Short-Term Loan
√√The maximum length of short-term loan is 2 years.
Medium Term Loan
Economic Sectors
√√A Medium term loan is a loan which has a maturity

period of longer than two years but not exceeding a
maximum period of 5 years.
Long Term Loan

√√A Long-Term Loan is a loan with a maturity period longer
than 5 years.
Project Finance
Types of Loan
√√The Bank extends loans to customers who have

attractive and profitable projects for establishing new
projects or acquiring existing ones.
Merchandise Loans
√√Merchandise loans shall have tenure of three months
for each advance, unless the approving committee
extends the maturity date of each advance.
Letter of Guarantee
Interest Rate
√√The bank extends Letter of Guarantee for those who

can provide certificates of performance and payments
of past work or supply performance and with proven
record in maintaining adequate credit history.
Construction Loans
√√These are loans granted to customers who are
engaged in construction activities other than real estate
development and
Requirement
√√The maximum loan limit is 50% of the total construction

Collateral
cost.
Real Estate Loans

√√The Bank extends loans to real estate developers for the
construction of new commercial or industrial buildings,
renovation and acquisition of real estate property with
10% duration time.
22
Loans for Machinery and Equipments
√√The Bank may extend loans for acquiring new or used
machinery and equipment and
Economic Sectors
√√30% to 50% equity contribution required for new and
used machinery purchase.
Equity Contribution
√√The minimum equity contribution is 30% of the total cost.
9. Cooperative Bank of Oromia
Types of Loan
Cooperative Bank of Oromia Share Company is established
in 2004 with the objective to engage in commercial banking
service. It operates with its head office in Addis Ababa and
more than 164 branches stretched across the country.
Economic Sectors
√√Agriculture, domestic trade and services,
√√International trade (export and import),
√√Manufacturing, building and construction.
Interest Rate
Types of Loan
Short Term Loan

√√The maximum length of time the bank advances short
term loan is 1 year.
Medium Term Loan

√√A medium term loan is a loan which has a maturity
Requirement
period of longer than 1 year but not exceeding a

Collateral
maximum period of 5 years.
Long Term Loan

√√A long term loan is a loan with a maturity period longer
than 5 years but not exceeding a maximum period of 10
years.
23
Overdraft
√√Interest is charged on the overdraft facilities on an
outstanding balance on a daily basis and
Economic Sectors
√√Overdraft facility shall be backed by immovable fixed

collateral-buildings (residential or business premises)
or other strong securities, such as cash deposits, bank
guarantees and government securities.
Overdrawal
√√Overdrawal may be allowed for a maximum period
of two months and may be approved only once in a
twelve-month period,
Types of Loan
√√The overdrawal amount should not exceed 25% of the

existing overdraft facility limit or Birr 2.5 million whichever
is lower and
√√An overdrawal shall be availed with or without collateral
depending upon amount of the request and the
adequacy of the already offered collateral for the
existing credit facility.
Merchandise Loan
√√The bank provides such loan against submission of
Interest Rate
the merchandise or documentary evidence up to a

maximum 70% of advance rate and
√√Each advance shall be settled within 90 days except for
the merchandise loan facility against export standard
coffee that is 180 days.
Import Letter of Credit Facility

√√Depending on the marketability of the import goods for
a period of 1 year bank availe credit worth 20% against
Requirement
valid import documents and

Collateral
√√The Bank may extend irrevocable one-time and/or

revolving Import letter of credit facilities.
Pre-Shipment Export Credit Facility

√√The Bank may avail the facility with or without DBE
guarantee and
24
√√If the facility is availed against the DBE guarantee,
the eligibility, amount, tenure and other criteria of the
pre-shipment export loan shall be set as per the pertinent
Economic Sectors
NBE directive.
Revolving Export Credit Facility

√√The amount of revolving export credit facility loan to be
advanced to the customer up to a maximum of 90%
depending on the financial strength and track record of
the customer.
Letter of Guarantee Facility
Types of Loan
√√The bank may extend a one-time or renewable letter of
guarantee facilities.
Import Letter of Credit Settlement Loan

√√It is granted to existing high value customers of the bank
having credit risk grade 1 or 2 who encounter temporary
cash flow problem to settle the net- margin held on the
import L/C document value,
√√The bank shall finance only import letter of credits
opened at its end and
Interest Rate
√√The bank grants the loan with or without collateral
depending on the nature of the goods imported and
the credit risk grade of the customer.
Agricultural Term Loan

√√The bank extends agricultural input and agricultural
machinery investment loan.
Construction Machinery Loan

Requirement
√√It is a term loan for the purchase of new construction

Collateral
machinery and
√√The minimum equity contribution for grade 1 or 2
applicants is 50% of the value of the machinery to be
bought, whereas for a grade 3 applicant,it is 60%.
25
Partial Financing
√√Partial Financing is a financing scheme whereby the
bank covers a portion of the auction price of foreclosed
Economic Sectors
and acquired properties presented for sale by the bank,

√√The repayment period for buildings/business
establishments, machinery and vehicles acquisition are
eight, four and three years respectively and
√√The applicant should be able to pay 50% minimum down
payment in cash immediately and offer the property
purchased as collateral.
Syndicate Loan
√√The purpose of syndicate loans is to finance medium
Types of Loan
or long-term investment ventures that demand a

large amount of funding together with other financers,
diversify risk and reduce liquidity problems.
Micro-Finance Institution’s Loan

√√A loan availed to the micro finance institutions mainly in
the form of term loans that are repayable within short to
medium terms.
Interest Rate
Consulting Firm Financing

√√Consulting firm financing is a form of term loan extended
for the purpose of working capital financing to business
professionals engaged in rendering professional
services such as Engineering, ICT, Law, Accounting,
Management, Architecture, Art, etc and
√√The applicant shall have a minimum of 2 year
experiences.
Idea Financing
Requirement
Collateral
√√Idea Financing is a term loan that is extended to

individuals/groups for the purpose of implementing
scientific studies, which has got recognition in invention
and innovation by the concerned government organ,
√√The Bank may extend the loan for a maximum period
of 7 years with one year grace period, if deemed
26
necessary and
√√The bank may not require equity contributions.
Economic Sectors
Equity contribution
√√The debt-equity ratio of- truck loan is 50%- 50% and
construction loan is a maximum of 30%-70% i.e. at least
70% contribution is required from the customer.
Interest Rate
√√Short term loan is 1 year, interest rate is 12%,
√√Medium term loan, from 1-3 years, interest rate 13% and
√√More than 3-5 years, interest rate 14% and long term loan
Types of Loan
from 5 years to 10 years, interest rate is 15%.
√√Premises, and buildings/houses,
√√Motor vehicles (vehicles whose date of manufacture
exceeds 10 years may not be considered as collateral).
10. United Bank

Interest Rate
United Bank was incorporated as a Share Company in 1998

with the purpose of providing commercial banking services. It
operates with its head office in Addis Ababa and more than
128 branches stretched across the country.
Economic Sectors
√√Agriculture, domestic trade and services,
√√Manufacturing and industry,
√√Export, import and
Requirement
√√Building and construction and transport.

Collateral
Types of Loan
The various types of loans granted by the bank are:
Short Term Loan

√√The maximum length of time the bank advances short
term loan is 1 year.
27
Medium Term Loan
√√A medium term Loan is a loan repayable within 2 to 5
years excluding any grace period.
Economic Sectors
Long Term Loan

√√The bank advances long term loan for a maximum
period of 10 years excluding any grace period and
√√The bank also extends credit for overdrafts,
merchandise loans, advance on export bills, pre-
shipment, letter of credit and letter of guarantee.
Equity Contribution
Types of Loan
√√A minimum equity contribution is 30% of the total project

cost.
Interest Rate
√√The bank interest rate ranges from 7.9% to 16.5%
depending on the economic sector financed and
maturity period.
√√Premises and buildings,
Interest Rate
√√vehicles and construction machinery,

√√cash, merchandise, local and
√√foreign bank garantees, share certificate and
√√business mortgages.
11. Oromia International Bank
Oromia International Bank S.C. was established in 2008 with

Requirement
Collateral
the objective to engage in banking service. It operates with

its head office in Addis Ababa. The bank has 178 branches
stretched across the country.
Economic Sectors
√√Agriculture, industries, domestic trade,
√√International trade (export & import),
28
√√transport & communication, hotel & tourism,
√√housing and construction,
√√mines, powers, water resources and
Economic Sectors
√√financial institutions.
Types of Loan
The bank extends the following types of loans:
Short Term Loan

√√The bank advances short term loan with a maturity
period of not exceeding 2 years, from the date of
disbursement.
Types of Loan
Medium Term Loan
√√A medium term loan has a maturity period of more than
2 years but not exceeding a maximum period of 5 years.
Long Term Loan

√√The bank advances long term loan for a period of longer
than 5 years, but not exceeding a maximum period of 10
years. Interest Rate
Overdraft Credit Facility

√√The bank grants such credit facility for a maximum
period of 12 months and
√√Renewable based on satisfactory utilization and business
prospect of the borrower.
Merchandise Loan
√√The bank avails one time merchandise loan and
renewable merchandise credit facility with maturity
Requirement
Collateral
period 9 months.
Letter of Credit Facility

√√The bank extends one time and revolving letter of credit
facility and
√√The minimum facility margin shall not be less 20% of the
document face-value.
29
Advance on Import Bills
√√The facility is given for a maximum period of 60 days and
√√The customer shall shall has the lowest credit risk rating.
Economic Sectors
Import Letter of Credit Settlement Loan

√√The facility is given for a maximum period of six months.
Pre-shipment Export Credit Facility

√√Pre-shipment export credit avails against export
contracts; not exceed 70 % of the valid sales contract.
√√ Pre-shipment export credit against export letter of credit
shall not be more than 90% of the L/C face value and
Types of Loan
√√Revolving export credit facility; maximum margin for the

facility shall be 90% of the face value of the document.
Advance on Export Bills

√√Export bills can be advanced for a period of sixty days
and
√√The maximum facility margin shall be 100 % of the
document value.
Letter of Guarantee
Interest Rate
√√The bank may extend it in the form of one time or

renewable letter of guarantee facilities.
Equity contribution
√√All prospective borrowers from the bank are required
to provide a minimum equity contribution of 40% of the
total project cost.
Interest Rate
Requirement
Collateral
√√The interest rate of the bank ranges from 8% to 16.5%

depending on the economic sector financed and
maturity period.
√√Premises, buildings and houses,
√√Vehicles and construction machinery,
30
√√Merchandise, business mortgage,
√√Bank garantees, negotiable instruments,
√√Export credit guarantee scheme Issued by the
Economic Sectors
Development Bank of Ethiopia, corporate guarantee,
personal guarantee& valid import/export documents.
12. Addis International Bank
Addis International Bank S.C. was established in 2011 with the

objective to engage in banking service. It operates with its
head office in Addis Ababa with its 32 branches across the
Types of Loan
country.
Economic Sectors
√√Agricultural production, manufacturing, transport,
√√International trade (export & import) and
√√Buildiing and construction.
Types of Loan
The bank extends the following loan types:
Interest Rate
Short Term Loan

√√The bank advances short term loan with a maturity
period of not exceeding 1 year.
Medium Term Loan

√√A medium term loan is a loan with a maturity period of
morethan 1 year but not exceeding a maximum period
of 5 years.
Requirement
Long Term Loan

Collateral
√√The bank advances long term loan for a period of

longer than 5 years, but not exceeding a maximum
period of 10 years and
√√The bank also extends credit for overdraft credit facility,
merchandise loans, pre- shipment, advance on import
and export bills, merchandize term loans.
31
Equity Contribution
√√All prospective borrowers from the bank are required
to provide a minimum equity contribution of 30% of the
Economic Sectors
total cost.
Interest Rate
√√The lending rate of the bank ranges from 8% to 16.75%
depending on the type of loan, maturity period of the
loan and the strength of collateral.
√√Premises, buildings, trucks, machineries,
Types of Loan
√√Construction equipment, merchandize,

√√Foreign bank guarantee, local bank guarantee,
√√Export guarantee, export commodity stock and
√√Export L/C for coffee, cash and shares.
13. Enat Bank
Enat Bank S.C. was established in 2011 to undertake commercial

banking activities. It operates with its head office in Addis
Interest Rate
Ababa. The bank has 14 branches across the country.
Economic Sectors
√√Agriculture, industry, construction,
√√Domestic trade and service and
√√Transportation, Export, Import, hotel & tourism.
Types of Loan
Requirement
Collateral
Short Term Loan

The bank advances short-term loan for a period of 1 year.
Medium Term Loan

√√The bank extends medium term loan for a period of 5
years.
32
Long Term Loan
√√The bank advances long term loan for a period of up to
10 years and
Economic Sectors
√√The bank also extends credit for overdraft credit facility,
excess drawing, pre-shipment export credit facility and
merchandise loans.
Equity Contribution
√√For project financing the minimum equity contribution is
30% of the project cost and
√√The minimum equity contribution of Enat Women
business financing schem is 5%.
Types of Loan
Interest Rate
√√The interest rate of the bank ranges from 8.5 % to
16.25%.
√√Premises, buildings and houses, motor vehicles,
√√Merchandise, construction machinery,
√√Agricultural machinery, factory machinery,
√√Foreign bank guarantee, deposits in the bank’s branch,
Interest Rate
√√Negotiable instruments, export credit guarantee and
√√Personal guarantee, corporate guarantee and valide
import/export documents.
14. Abay Bank
Abay Bank S.C. was established in 2010 to undertake

commercial banking activities. It operates with its head office
Requirement
in Addis Ababa and more than 106 branches stretched across

Collateral
the country.
Economic Sectors
√√Manufacturing, domestic trade and service,
√√International trade (export & import),
√√Transportation and communication, hotel & tourism,
√√Housing & construction, mines, power and water re-
source.
33
Types of Loan
The bank extends the following types of loans:
Economic Sectors
Short Term Loan

√√The bank advances short-term loan for a period of 1
year.
Medium Term Loan

√√A loan with a maturity period of more than 1 year but not
Long Term Loan

Types of Loan
√√The bank advances long term loan for a period of longer

than 5 years, but not exceeding a maximum period of 15
years.
Overdraft Facility
√√It is financed for a limited duration normally for six months
and in exceptional cases for one year and
√√Pre-shipment export credit facility and merchandise
loans.
Interest Rate
Equity Contribution
√√The equity contribution is at least 30% of the total project
cost.
Interest Rate
√√The bank interest rate ranges from 10.5% to 16%.
√√Cash, buildings and leased land,
Requirement
√√Trucks, machinery and equipment,

Collateral
√√Bank guarantees (foreign bank guarantee & local bank

guarantee),
√√Merchandise, warehouse receipt,
√√Share certificate - shares of banks and insurance
companies,
√√Corporate or personal guarantee and
√√Business entity and other collaterals.
34
15. Berhan International Bank
Economic Sectors
Berhan international bank S.C was established in 2008 with
the objective to engage in banking service. It operates with
its head office in Addis Ababa and more than 92 branches
stretched across the country.
Economic Sectors
√√Agriculture, export, import,
√√Manufacturing, domestic trade and service and
√√Construction, transport, and hotel & tourism.
Types of Loan
Types of Loan
Short Term Loan

√√The bank advances short-term loan for a maximum
period of 3 years.
Medium and Long Term Loan Interest Rate

√√These loans may be longer than 3 years, but not
Other types of Loan

√√Merchandise loans,pre-shipment export loan and
overdraft credit facility.
Equity Contribution
√√For new project 40% equity contribution,
Requirement
√√For acquisition of new assets (machineries, buildings,

Collateral
motor vehicles) 40%-50%.
Interest Rate
√√The bank sets its interest rate ranges from 8.5% to
16.75%.
√√Stock (merchandize), DBE’S guarantee,
35
√√Buildings, vehicles, machinery (only high duty- easly
immovable),
√√Foreign bank guarantees, financial assets and
Economic Sectors
√√Share certificates and other acceptable financial

instruments.
16. Buna International Bank
Buna international bank S.C was established in 2009 with the

objective to engage in commercial banking service. It operates
with its head office in Addis Ababa and more than 92 branches
stretched across the country as at March 23, 2016.
Types of Loan
Economic Sectors
√√Agriculture, domestic trade and service,
√√Building, housing & construction,
√√Manufacturing & industry, international trade (export,
import),
√√Transport & communication, health, hotel& tourism and
√√Mines, power, water resources, financial institutions.
Interest Rate
Types of Loan
√√The bank extends credit for term loans, merchandise
loans, pre-shipment, overdraft credit facilities, revolving
credit facilities and various types of guarantees.
Interest Rate
√√The Bank interest rate ranging from 8.5% to 14%
depending on the type of credit facility, maturity of the
facility and associated risk.
Requirement
Collateral
√√Buildings,vehicles, construction machineries,
√√Manufacturing machineries, share certificates,
√√Personal garantees as additional, merchandise other
than perishables and
√√Import and export documents.
36
17. Lion International Bank
Economic Sectors
Lion international bank S.C was established in 2006 with
the objective to engage in commercial banking service. It
operates with its head office in Addis Ababa and more than
110branches stretched across the country.
Economic Sectors
√√Agriculture, manufacturing ,
√√Domestic trade and service,
√√Import and Export, building, housing & construction,
Types of Loan
√√Transport, hotel& tourism, construction machinery and
dump truck
Types of Loan
The bank extends credit for
√√Term loans, merchandise loans,
√√Pre-shipment export credit facility,
√√Overdraft credit facilities, overdrawal,
√√Revolving credit facilities, import letter of credit facility,
Interest
InterestRate
√√Letter of guarantee facility,
√√Agricultural and construction machinery loan and
√√Partial financing, syndicate loan.
Rate
Equity contribution
√√The applicant is required to contribute at least 30% of
the total project cost.
Interest Rate
√√The interest rate ranges from 9.5% to 16%.
Requirement
Collateral
√√The minimum interst rate of 9.5% set for export term

loans.
37
√√Building and housing,
√√Motor vehicle,
Economic Sectors
√√Merchandise,
√√Construction machinery,
√√Agricultural machinery,
√√Forign bank guarantee,
√√Cash deposits and
√√Negotionable instruments.
Types of Loan
Interest Rate
Requirement
Requirement
Collateral
Collateral
38
List of Banks in Ethiopia with their addresses
Address
No Name of Banks
Tel Web Site
1 Development Bank of Ethiopia +251 115 511188 www.dbe.com.et
2 Commercial Bank of Ethiopia +251 115 538322 www.combanketh.com
3 Awash International Bank +251 115 570141 www.awashbank.com
4 Dashen Bank +251 114 661380 www.dashenbanksc.com
5 Bank of Abyssinia +251 115 156523 www.bankofabyssinia.et
6 Cooperative Bank of Oromia +251 115 159217 www.coopbankoromia.com.et
7 Wegagen Bank +251 115 523800 www.wegagenbank.com
8 United Bank +251 114 700377 www.hibretbank.com
9 Lion International Bank +251 116 626000 www.anbesabank.com
10 Nib International Bank +251 115 151958 www.nibbanksc.com
11 Zemen Bank +251 115 539042 www.zemenbank.com
12 Oromia International Bank +251 115 572113 www.orointbank.com
13 Bunna International Bank +251 111 554783 www.bunnabanksc.com
14 Berhan International Bank +251 116 185732 www.berhanbanksc.com
15 Abay Bank S.C +251 115 158782 www.abaybank.com.et
16 Addis International Bank S.C +251 115 540530 www.addisbanksc.com
17 Debub Global Bank S.C +251 115581258 www.debubglobalbank.com
18 Enat Bank S.C +251 115158278 www.enatbanksc.com
Source: National Bank of Ethiopia and public and private Commercial

Banks.
Note:
The material in this publication is provided for general information purpose
only. Financing business requirements are subject to change anytime.
Readers shall advise to consult their respective banks before making any
decision.

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Table of Contents

AACCSA is voluntary membership organization with more than 15,000

Access to business finance play very import role for any

The finance journey is continuous; there may never be an arrival

This business guide has prepared by Addis Ababa Chamber of

The most common type of finacing business in Ethiopia is bank

Bank Loan: banks are an important source of finance. Banks

Equity Financing: It is exchanging a portion of the ownership

Financial Institutions in Ethiopia

In Ethiopia the financial sectors in general and the banking

The sector is regulated and supervised by the National Bank

1. Development Bank of Ethiopia

Economic Sectors of Project Finance

Long Term Loan

√√Used for the purposes of project construction and

Medium Term Loan

Special Line Credit

Input Financing for Pharmaceutical Industries

√√The purpose of the loan is for the procurement of

»»Domestic investors engaged in export business with

√√Additional loans (for projects under implementation with

Single Borrower Limit

Co-Financing for Mega Projects

Loan Buy Out

Economic Sectors of Lease Finance

of already purchased as well as second hand capital

√√The financial viability of the project itself,

Commercial Bank of Ethiopia (CBE) is established in 1942 to

Short Term Loan

Medium Term Loan

establishment of new projects and expansion of an

existing business and

Long Term Loan

Merchandise Loan Facility

Pre-Shipment Export Credit Facility

Revolving Export Credit Facility

√√It is an advance paymenet extended to exporters upon

presentation of acceptable export documents except

total project cost.

3. Awash International Bank

Awash International Bank (AIB) Share Company was established

Short Term Loan

Medium Term Loan

√√This type of loan is a loan repayable within 3-5 years.

Long Term Loan

√√Exporters credit facility which includes,

√√Advance against export Bills,

Short Term Loan

Medium Term Loan

loan, economic sector and term structure.

5. NIB International Bank

Nib International Bank Share Company was established in 1999

Short Term Loan

Medium Term Loan

Long Term Loan

Overdraft Interest Rate

Letter of Credit Facility

√√Cash or deposit collateral,

Bank of Abyssinia was established in 1996. It’s head office is in

The different types of loans granted for business by the bank

Working Capital Financing

Overdraft Facility (Overdrawal)

√√It is granted for fast-moving and non-perishable items &

Pre-shipment export credit facility