Monday, June 17, 2024
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Zemen Bank partners with IFC to boost Ethiopian trade finance

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By our staff reporter

Zemen Bank secured a USD 30 million trade financing facility arrangement with the International Finance Corporation (IFC), the private sector arm of the World Bank.

The agreement serves as a guarantee for import-export trade facilitated by Zemen Bank, one of Ethiopia’s leading financial institutions. Amid concerns about foreign currency shortages and payment delays by certain local banks, this initiative aims to instill confidence in foreign commercial partners.

Dereje Zebene, CEO of Zemen Bank, acknowledged the challenges faced in managing foreign commerce, particularly during the period of unrest in northern Ethiopia, which was resolved with a peace agreement in November 2022. He reassured stakeholders that the situation is improving and emphasized the bank’s prudent approach to foreign currency management.

Speaking to Capital, Dereje emphasized the bank’s commitment to supporting its international clients with ample resources, addressing concerns about import and export transactions. He underscored that the recent agreement with IFC would further strengthen trust among trading partners and provide additional assurance to those doing business with the bank.

Under the agreement, Zemen Bank has joined IFC’s Global Trade Finance Program (GTFP) and gained access to a trade financing facility to facilitate Ethiopian imports and exports. The USD 30 million trade finance facility guarantee from IFC will bolster Zemen Bank’s trade finance operations and facilitate the establishment of new trade alliances for Ethiopian companies.

During the signing ceremony on Thursday, February 22, Dereje highlighted the program’s potential to significantly increase trade financing for import-export businesses, particularly during periods of global economic instability.

The initiative is part of IFC’s broader Africa Trade and Supply Chain Finance Program, aimed at promoting regional commerce in Africa and reducing the continent’s reliance on imports. Additionally, IFC will provide advisory services to Zemen Bank to enhance its credit and risk management and support small and medium-sized enterprise (SME) lending activities.

Madalo Minofu, IFC Country Manager for Ethiopia, expressed optimism about the partnership, stating that it would strengthen Ethiopia’s ability to finance essential trade and facilitate new trading partnerships for the country.

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