Friday, June 21, 2024
BusinessJapan extends USD 50 mln concessional loan for projects

Japan extends USD 50 mln concessional loan for projects

Resuming a yen loan agreement that was suspended for the last 43 years, the government of Japan made a move to extend a concessional loan worth USD 50 million to finance projects that would benefit women entrepreneurs.

On Friday, Shinichi Saida, ambassador of Japan to Ethiopia and Admassu Nebebe, state minister for finance and economic cooperation, and Kimiaki Jin, chief representative of Japan International Cooperation Agency (JICA) in Ethiopia, signed an exchange of notes and the loan agreement. The women entrepreneurs development project will run for two years, to be finalized by the end of 2019.

“This will be the first ODA concessional yen loan project in the last 43 years between Japan and Ethiopia, and the first ODA loan project for Japan to target women in Africa, with a view to enhancing women entrepreneurship activities,” Ambassador Saida said.

The project, in line with GTP II targets, is to be financed in partnership with the World Bank, the UK’s Department for International Development (DFID)-funded Private Enterprise Program for Ethiopia (PEPE), Global Affairs Canada (GAC), and the Italian Agency for Development Cooperation (AICS).

This project is expected to contribute towards increasing the earnings and employment of micro and small enterprises owned or partly owned by women entrepreneurs that operate in six major cities of the country. According to JICA, the fund will contribute to help improve businesses owned or managed by women via providing access to finance and entrepreneurial skills development.

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The Development Bank of Ethiopia (DBE)-administered USD 50 million loan will be made available to microfinance institutes, which in turn will be channeled to women entrepreneurs.

According to a statement the government of Japan released, the previous two projects to receive yen loans were for an underground water resource development and for the Addis Ababa Bole International Airport Terminal Expansion projects in 1973 and 1974, respectively.  With the overthrow of the Ethiopian monarchy in 1974, loan-based finances were terminated.  Until now, Japan has been providing official development assistance (ODA) on technical cooperation and grant aid basis.

However, recent developments made the government to change course, and resumed loan provisions for the first time in 43 years.

Back in 2015 (Japanese fiscal year), the country committed USD 20.5 billion in loans to countries it had signed cooperation agreements with.  For sub-Saharan Africa, USD 1.5 billion has been earmarked to enhance economic and social sectors that focus on infrastructural projects such as electricity, transport, water and health.

The Reporter has learnt that the repayment period of the loan extends to 40 years with a grace period of 10 years at an annual repayment interest rate of 0.01 percent.

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