Importers of agricultural machineries and inputs are eligible to access loans from external lenders, following a directive amendment by the National Bank of Ethiopia (NBE).
The amended directive, which came effective as of September 07, 2022, also gives similar privileges for importers of liquefied petroleum gas (LPG Gas) to enable them access supplier’s credit and loan from lenders outside the country.
The importers joined the list of eligible businesses with similar access. This includes exporters, manufacturers and foreign investors. Borrowers cannot take a loan that is more than 40 percent of their registered capital, with the same rule applying to all eligible businesses.
Since the permit was previously for manufacturers only, importers of agricultural machineries and inputs were not eligible for the access. Under the directive, businesses that import the items can supply to manufacturers or end users, according to Yenehasab Tadesse, director for Foreign Exchange Monitoring & Reserve Management at the central bank.
“Importers of LPG gas (cylinder gas) supply the products to different sectors such as hospitals and hotels. There is high demand for these products,” Yenehasab said.
Foreign credit eligible businesses will have to submit an application letter, a valid importing business license in their special sector, and a pro-forma invoice of a minimum one year credit period for the supplier’s credit, should they require the service.
The central bank will then approve the request for both and register the business once the application letter, external loan approval letter, and arrangements of loan provisions (whether the loan is in cash or kind), is presented. Neither the government nor local banks provide guarantee for the loans, the directive states.
Repayment also gets approved by the national bank once conditions including submission of repayment schedule with principal, interest and other charges are met.
The directive states that machinery importers are those specifically licensed to import machineries such as tractors, harvesting machines, combiners, irrigation pumps, water pumps as well as their spare parts. Importers of agricultural inputs are licensed to import fertilizes, seeds, pesticide, chemicals, animal feeds, and animal hybrids.
“The motive behind the decision is to support the manufacturing and agricultural sectors so that they can source the foreign currency themselves from abroad due to the shortage in the country,” Yenehasab said.