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Thematic Area:

SME Banking & Development

Duration:            

03/2023 - 09/2025

Client:                

Kfw/Development Bank of Ethiopia

Region:             

Africa

Country Coverage:           

Ethiopia

Project Overview

In April 2023, IAS kicked-off a new project in Ethiopia. On behalf of KfW our FS experts will work together with the Development Bank of Ethiopia (DBE) and private commercial banks to foster lending to small and medium-sized enterprises (SMEs). The programme provides support for the DBE in the management of the credit line and on lending funds to the banks on the one hand. On the other hand, the consultant team will support up to four local banks in setting up a SME Lending strategy, developing specific products for the SME clients as well as supporting the staff in all areas around credit analysis, risk management and marketing. As in Germany, SMEs have a great potential to play an important role in economic growth and providing employment but they are facing considerable constraints in accessing loans from financial institutions. Therefore, the German government provided a grant to Ethiopia to improve SMEs access to finance, which will be facilitated through our project.

people in Africa working together

From 2014-2019, Frankfurt School experts provided TA services to 16 PFIs such as commercial banks, finance companies, leasing companies and microfinance institutions from 14 African countries. This was done through a two-step approach consisting of (1) TA and Training Needs Assessment to determine the PFI’s status quo regarding SME Finance and define the focus areas of the TA, followed by (2) the implementation of TA in core areas.  

All PFIs needed TA for SME Finance, Risk Management, IT/MIS and business development services. The second most pertinent topics covered the overall improvement of SME operations and help to reduce the number of non-performing loans. Frankfurt School experts also provided more targeted TA to enhance SME lending operations and strategies, as well as to improve the Risk Management framework of PFIs and introduce an Environmental and Social Management System framework

Institutional support was rounded out by enhancing the PFI’s BDS services to SME clients, which led to an employment increase for more than 127 SMEs. Frankfurt School experts also designed and developed case studies focusing on some of the SME clients who were able to access finance from their respective financial institutions.