The Development Bank of Ethiopia started inspecting individuals and its employees related with Non-Performing Loan /NPL/ of the bank.
Highly Corrupted government officials and employees of the bank contributed for the nonperforming loan of the bank to reach 16 billion birr according to Haileyesus Bekele President of the Bank.
The president further said that one of the main reasons for the increasing of the NPL is because of the less assessment on debtors, weak pre condition to get loan, giving false information to get loan by sabotaging with the employees of the bank.
Hence, the bank has taken measures on five employees, according to Teshome Almayehu, Vice President Lease Financing of the bank. Currently five employees are behind bars and the bank is investigating 71 projects which are not paying back there debt.
The bank’s NPL stood at 34 percent in the first half of the current fiscal year. In last fiscal year 2017/18, nonperforming loan ratio was at 40 percent.
Shortage of foreign currency, termination of agricultural loan and political unrest around the country were point out as reasons of the rising ratio of NPL in the last fiscal years.
Rain fed agriculture investment and failure of rain fed commercial farms in some regions of the country is also one big player for the rapidly growing non-performing loan. As one of these reasons the bank has banned to give loan for rain fed agriculture starting from 2017.
“Some of the companies have thousands of workers and has been generating foreign exchange to the country,” argues Haileyesus, but currently most of the companies failed to operate competitively even as proper as they should be; they are facing marketing problems.
To resolve these in the current fiscal year the state owned bank established one branch and ratify 10 million birr annual budget to administer and manage some companies failed to attract buyers including the Turkish company, Ayka Addis.
According to Teshome, most of the companies failed to attract buyers because of their high price.
The state owned development financial institution is supervised by the Public Financial Enterprises Agency and supports developmental projects on mainly agricultural, industrial, manufacturing and foster the investment of private capital for productive purpose. One of the mandates of the bank is the provision of development credit to viable priority projects along with technical support through mobilizing resources from domestic and foreign sources.
Priority area projects financed by the Bank include commercial agriculture, agro-processing, manufacturing and extractive industries. DBE also extends a special line of credit for borrowers that operate in the textile, garment and leather and leather product industries. As an additional special line, the Bank offers credit for the procurement of raw materials in the pharmaceutical industry and to companies that supply products to corporate government entities.