Sunday, May 26, 2024
BusinessEurope to invest big in Ethiopia

Europe to invest big in Ethiopia

EIB to avail 12 billion birr in loan


European Investment Bank (EIB) is said to inject close to 12 billion birr in finances to local firms in a largest ever financing program designed by the bank to Ethiopia.

The financing which will be made for a number of projects are on pipeline and are expected to be realized in the coming year.

Unlike previous trends which the bank often gave loans for public projects, this time around the bank has also given much emphasis to private sector projects.

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In the coming one year, our loan portfolio will be diversified in terms of clients as well as sectors, Christopher Litt, head of EIB to Ethiopia and African Union, told The Reporter.

Just two months ago Pim van Ballekom, the vice president of the EIB paid a two day official visit to Ethiopia. During his visit, Ballekom signed 76 million dollars concessional loan agreement with Ethiopian government.

The financing is a part of 276 million dollars concessional loan agreement to support small and Medium Enterprises (SMEs) through the newly launched lease financing scheme carried out under the auspices of the Development Bank of Ethiopia.

The remaining 200 million dollars was provided by the World Bank Group.

This engagement of the EIB was the largest ever in Ethiopia although the bank established its presence in the country some 40 years back.

“We want to play a major role in Ethiopia,” said Litt. We are now processing a loan which is more than what we have done so far, as far as Ethiopia is concerned.”

Those projects are now in different stages where the bank is assessing each and every aspect of the respective projects, he said.

Among those projects on pipeline, ten million dollars loan is directed to a private company called Cepheus Growth Capital Fund, which is expected to be approved by the board of directors of the Bank on September 19, 2107.

The fund, which is looking to raise a total of 40 million dollars at first close, will raise it to 100 million dollars in the final close.

The fund was founded in 2016 by Kassy Kebede and Berhane Demissie, both Ethiopian-born businessmen. The company is also joined by Helaway Tadesse, a former vice president of Zemen Bank S.C.

In addition, the Bank is also looking at a 200 million dollar loan request for the construction of phase two of the Mekelle and Dire Dawa industrial parks as well a third agro processing park in Southern Region.

“The loan request for the parks is still under prefeasibility study,” said Litt.

Moreover, the Bank will also involve in financing 30 to 50 million dollars to Leather Industrial Park in Modjo.

The leather industry park is expected to bring together 12 scattered leather factories in Modjo as well as few plants from Addis Ababa. The park will employ an advanced water treatment technology.

The Bank is also looking to finance private ventures such as M-Birr and new malt factory.

“The malt factor is something that we expect will have a wide positive impact,” Litt told The Reporter.

As far as renewable energy generation is concerned, the bank will disbursed a total of 150 million dollars for Corbetti Geothermal and Methara Solar Projects. From this, 50 million dollars will goes to Methara.

Five international energy firms are already bidding to construct a 100MW solar energy power plant. It includes global firms in solar energy generation- Fotowatio Renewable Ventures B.V. (FRV), Meridiam-Solairedirect Consortium, Enel Green Power S.p.A., The Building Energy S.P.A. Consortium, and CCE Oasis Technology Corporation.

The loan will support the companies which manage to grab the project.

Since 1976, the bank had pledged a total of 400 million Euros to Ethiopia for expenditures in infrastructure projects such as energy, water and communications. It has provided more than 22 billion euro for investments in Africa over the past five years.




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