Rural Electrification Projects where DBE is acting as a Trust

Agent
1. Background

The Ethiopian government is implementing a rural based development

strategy with the expectation of rapid and equitable development of all its
peoples. This strategy is multidimensional and integrated where inputs;
processes and outputs in the rural socio-economic are treated in totality.
The strategy recognizes that energy is one of the critical inputs for
enhancing economic productivity and also building the human capital
through the provision of critical social services including potable water,
health and education. Expanding modern energy services, particularly
electricity, in rural areas will accelerate the economic and social development
process.
The government has formulated a national rural electrification strategy
where both the public electricity service company (EEPCO) and the private
and non-government sector will be involved in extending services to the
rural population. Implementation of the public sector rural electrification
program is already in progress and hundreds of rural towns will be the
beneficiaries of this program in the coming five years.

The second private-led rural electrification strategy focuses on electrification

of rural areas not to be covered by EEPCO's system expansion plan for the
next ten years. This strategy will be implemented through a newly
established Rural Electrification Fund (REF), the resources of which will be
made available to viable projects and eligible private and non-government
project promoters on a loan basis.
The Rural Electrification Fund is administered under the ministry of water
and energy by Alternative Energy Technoogy Dissimination Director (AETD),
which serves as the Rural Electrification Fund Administrator. A Rural
Electrification Board (REB) directs the activities of the Directorate.
The Directorate will provide loan and technical assistance to eligible rural
electrification Project Promoters. The Directorate will disburse, track and
collect the loan finance to the Project Promoters through an intermediary
finance institution or Trust Agent.
The Development Bank of Ethiopia (Trust Agent) is the financial intermediary
between the Rural Electrification Fund and Project Promoters. The
Development
Bank
of
Ethiopia
disburses
funds
during
project
implementation and later recovers loans in line with the loan agreement
agreed upon by the Directorate and the Project Promoters.

Scope of Service for the Development Bank of Ethiopia

(Trust Agent)
The Development Bank of Ethiopia, as the financial intermediary between
the Directorate and the Project Promoters, has been providing the following
services.

Evaluate the creditworthiness of Promoters Project

Prepare a disbursement and repayment schedule for each

project

Release funds to Project

disbursement schedule

Conduct independent supervision to ascertain that projects

are implemented as per agreed upon schedule and cost

Promoters

according

to

 Recover loans according to the loan agreement

Conduct periodic loan repayment follow-up

Conduct periodic reviews of the financial performance of

projects

Communicate regularly with Project Promoters regarding

their financial status

The technologies that are expected to be covered under the

program include:

Bio Gas Plants

o
Small Scale Wind Energy

o
Solar Home System

o
Solar Lanterns

o
West to energy

o
Improved cook stoves

Banking Service

Print

Ser.
No.
1
1.1

Type of Document and Other Conditions required (Loan Processing

Stage)
Opening Current Account (C/A)

Individual

Ser.
No.

1.2

Type of Document and Other Conditions required (Loan Processing

Stage)

A memo from Loaning Department requesting Finance and

Banking Department to open Current Account for a Customer;

The Memo should further clearly indicate the name of person

operating the Current Account;

If the Current Account is operated by a representative, the

legitimate representative should forward a photocopy of power of
attorney, supported by Legal Services;

The person who operates the Current Account should show a

valid card for verification;

Name of person who operates the Current Account, including the

representatives, should not appear on delinquent list (for improper
use of Current Account with other Banks, if any) as regularly
circulated by the Supervision Department of NBE;

The customer should fill out a Current Account opening form and
gives specimen signature on two cards;

A minimum initial balance of Birr 250= (two hundred fifty) for

opening Current Account;

Organizations (Private of Public Associations)

A memo from Loaning Department requesting Finance and

Banking Department to open Current Account for a customer;

The memo should further clearly indicate the name of person(s)

operating the Current Account for and behalf of the legal entity;

The legal entity should submit photocopy of memorandum of

association and article of association each;

Ser.
No.

1.3

Type of Document and Other Conditions required (Loan Processing

Stage)

If definite specifications are not stipulated for the power of the

person(s) operating the Current Account in the memorandum of
association and/or article of association, a copy of letter/minute of
authorization for the said person (s) allowing him/her (them) to
operate Current Account, supported by the resolution of the General
Assembly;

If the General Manager delegates the power of operating Current

Account to somebody else (according to his/her power and
responsibilities set forth in the memorandum of association), the
authorized representative should submit a photocopy of power of
attorney supported by Legal Services;

The person (s) who operates the Current Account should show a
valid ID Card for verification;

The name of the shareholders as well as the person (s) who

operate (s) the Current Account, including the representative should
not appear on delinquent list (for improper use of Current Account
with other Banks, if any) as regularly circulated by the Supervision
Department of NBE,

The person (s) operating Current Account should fill out a

Current Account opening form and give specimen signatures on two
cards each;

A minimum initial balance of Birr 250= for opening Current

Account

Issuance of Check Book Requisition

The customer should fill out a check requisitions from and submit to the
counter clerk, while at the same time either making cash payment or
instructing the Bank to debit his/her account for the cost of check book,
depending on the number of check leaves, as follows:-

Ser.
No.

Type of Document and Other Conditions required (Loan Processing

Stage)

Birr 10 for a 25 leaf check book;

Birr 20 for a 50 leaf check book;

Disbursement by CPO

The customer should show a valid identification card

If the customer desires to take the CPO to the supplier, the customer will
provide their identification card and obtain the CPO. The identification card
will be returned when the customer provides the receipt from the supplier.

If the supplier is receiving the CPO directly, the supplier will be provided
with the CPO when they provide a receipt

Checklist for Import by Letter of Credit and CAD

A.Import -Letters of Credit (L/C)

I.Required Documents
The following documents are required for opening L/C:

a) Two copies of correct, legible and valid pro forma invoices showing clearly
full description of goods, including :

Suppliers name and address,

Quantity ,

grade,

Ser.
No.

Type of Document and Other Conditions required (Loan Processing

Stage)

quality,

volume,

measurement,

weight,

brand name, etc;

Mode of shipment, i.e., sea, air, etc;

FOB and freight costs separately;

Unit and total price (including currency of transaction) of the

goods at a named place of delivery;

Terms of payment, i.e., L/C, CAD, T.T., etc;

Price validity date;

Port of loading and destination;

Origin of goods;

Manufacturers name, if the supplier is different;

Delivery terms, i.e., FOB, C& F, etc;

Ser.
No.

Type of Document and Other Conditions required (Loan Processing

Stage)

Delivery time;

If the payment term is L/C, the pro forma invoice should

clearly indicate whether it is an irrevocable confirmed one or

irrevocable unconfirmed one;
a) Two photocopies of valid (and renewed) investment permit or foreign
trade license or industry license, whichever is applicable;
b)

Two photocopies of insurance certificate plus debit note from licensed local insurance
company, evidencing adequate insurance cover (usually CIF plus 10%), with DBE cobeneficiary;

c)

If the goods are not shipped by the Ethiopian carrier (in particular the Ethiopian Shipping
Lines) due to the fact that it has no scheduled voyage/flight on the date of loading , the
importer should produce a waiver of written proof evidence for shipment by a foreign vessel;

d) Duly completed (typed), signed and sealed application form for letter of
credit in two copies (available from Finance & Banking Department at
Banking Division free of charge);
e) Foreign exchange application for import duly completed (typed), signed
and sealed in five copies (which can be obtained at cash counter upon
payment of 2 Birr per set);
f) Certificate, supporting documents, approval letter or stamp on pro
forma invoice (whichever is applicable) from:

Ministry of Health if the import of goods are

medicine and other

related medical equipment;

Ministry of Agriculture for import of insecticides , pesticides,

and

veterinary medicines;

Quality and Standard Authority for import of goods such as food items,

Ser.
No.

Type of Document and Other Conditions required (Loan Processing

Stage)
matches, nails, galvanized corrugated steel sheets, scales, etc;

Road Transport Authority to import vehicles;

II. Other Requirements

a) Request for release of disbursement lodged with the Loaning Department
and/or customers own deposit for 100% value of the pro forma value
calculated in Birr.
b) The client has to cover the following commissions and charges for L/C upfront from his own source:

Exchange commission to NBE

1.5% of value of L/C

Opening commission

0.6% of value of L/C

Service charge

0.65% of value of L/C

Confirmation commission

0.5% of value of L/C

(If the L/C is an irrevocable confirmed one)

SWIFT charge

Birr 300

B Import by Cash against Documents (CAD) at Sight Basis

I. Required Documents
I.I First Step: At the Time of Approval of Purchase Order

a) The customer should lodge an application for importing goods by

C.A.D. or a memo request from the Loaning Department;
b) In addition, a customer has to present a purchase order, prepared in

Ser.
No.

Type of Document and Other Conditions required (Loan Processing

Stage)

a manner acceptable to DBE, in three copies to be approved by DBE

for 90 days maximum
I.I Second Step: At the Time of Processing Import Applications Upon Arrival
of Shipping Documents

Foreign exchange application for import duly completed (typed),

signed and sealed in five copies (which can be obtained at cash
counter upon payment of 2 Birr per set);

II. Other Requirements (At the Time of Processing Import

Applications)
a) Request for release of disbursement lodged with Loaning Department or
customers own deposit for 100% value of the goods shipped, based on
the final commercial invoice, calculated in Birr;
b) The client has to cover the following charges for CAD up-front from his own
source:

Exchange commission to NBE

1.5% of value of goods

Service charge

1.25% of value of goods

SWIFT charge

The Grand Ethiopian Renaissance

Print

1. Bond

Birr 40

What is Bond?
Bond is a debt instrument issued for a period of more than one year with
the purpose of raising capital by borrowing. . It is a debt security, under
which the issuer owes the holders a debt and, depending on the terms of
the bond, is obliged to pay them interest (the coupon) and/or to repay the
principal at a later date, termed the maturity. Interest is usually payable
at fixed intervals (semiannual, annual, sometimes monthly).
Savings Bond
Savings bond is an alternative type of saving or a debt instrument issued
by the government. A savings bond is basically a more restrictive (longer
maturity period) type of savings account. Savings bonds are considered
one of the safest types of savings schemes because they are backed by
the full faith the government. The big advantage of a savings bond is that
the rates of interest you can expect to earn are generally higher, as you
need to be able to commit your savings for a set period.

2. Characteristics of the Grand Ethiopian Renaissance Dam

Bond

It is a bond which enjoys full government Guarantee.

It is a bond marketed to finance the Grand Ethiopian Renaissance

Dam which the government intends to build on Abay River.

3. Bond Types

Interest bearing Bond

Non- interest bearing Bond

3.1 The bond can only be sold to Ethiopian Nationals and foreign nationals
of Ethiopian Origin.
3.2 Interest accrued will be paid every six months.

4. Benefits of the Bond

4.1 Revenue accrued will be free from any tax.
4.2 It can be used as collateral to get loans from banks.
4.3 For the client it will earn revenue
4.4 Since it has full government Guarantee it is risk free.
4.5 It earns better interest than the normal savings rate.
4.6 It can be transferred as an inheritance or to a third party.

5. Bond Value
5.1 The minimum Bond value is 50 in Birr. Bond values of 25 (for
denomination only), 50, 100, 300, 400, 500,600,700,800,900, 1000,
2000, 3000, 4000, 5000, 10,000 and 50,000, 100,000, 200,000,
500,000 and 1,000,000 could be purchased. There is no limit on the
maximum amount one wants to buy.

6. To purchase a bond the following needs to be fulfilled

6.1 For those 18 and older: - Kebele or Work ID
6.2 For children: Birth Certificate
6.3 For Student: School or Keble ID

7. Bond -Maturity Date and Interest Rate

7.1 Interest Rate
The interest rate is paid based on the following maturity dates:

Bonds with Maturity date up to 5 years 5.5%

Bonds with maturity date above 5 years--6%

8. How to buy bonds

8.1 Through Development Bank of Ethiopia (DBE) and commissioned
agents including Commercial Bank of Ethiopia (CBE) and Regions
Micro-Finance institutions.
These banks have branches in many parts of the country which makes it
easier to buy bonds.

9. About transferring the bond to a third party

9.1 The Bond can be transferred as a gift or as an inheritance by
signing on the back of the coupon, the bond can also be used as a
collateral to take loans from banks as well as it can be sold to a third
party via secondary market.

10. About buying the bond on behalf of a third party

10.1 It is allowed to by a bond in the name of a third party. However, the
name that will appear on the bond will be that of the bearer of the
bond. The person that will be buying the bond on behalf of the third
party can sign at the back of the coupon, care-of the coupon owner.
The principal and interest paid at the time of maturity will only be
returned to the owner of the coupon or to the person that is legally
representing the bond owner.
10.2 Parents or guardians can buy bonds on behalf of their minor children.
This can be done by writing the name of the Child/Children on the
coupon and by signing care-of on it. If parents want to keep the
interest and principal until the child/ children get the age of 18 this
can be considered accordingly.

Export Credit Guarantee(ECG)

Print

Background

Export credit guarantee is a scheme provided to safeguard export financing

banks against losses resulting from the export transaction they finance. The
scheme is a vehicle to facilitate exporters access to bank credit and enables
local exporters not to lose an export market due to inability to get bank
credit. It enables national exporters to compete on equal footing with other
exporters in increasingly competitive foreign markets.

Previously, the National Bank of Ethiopia had been handling the scheme
until it is transferred to Development Bank of Ethiopia from February 1, 2007
onwards. During the start of operation at DBE, the Branch operation and
project management department was responsible for handling the operations
of the scheme. Later on, as of August 2008, Export Credit Guarantee and
Special Fund Administration Bureau (ECGSF) start to undertake the
responsibility.

Process and eligibility requirements

Local exporters, those engaged in non-coffee export, lodge their pre- or
post-shipment loan application to any licensed commercial banks operating
in Ethiopia. These commercial banks appraise the export business with their
applicable credit policy and procedures. Upon the written request of a
financing bank, the guarantor, DBE, issues letter of guarantee to cover 80%
of the outstanding loan balance and interest thereof when the project is
found within acceptable risk level of DBE.
The guarantee period is up to 365 days to cover pre-shipment export loan
extended to exporters and post-shipment guarantee period may extend up
to 180 days.
Exporters shall satisfy all of the following in order to be considered eligible
for export credit guarantee

The export project to be financed under ECG scheme shall be bankable;

Exporters shall not carry loss category loans;
Exporters Shall present bona-fide purchase order from foreign buyer;

Exporters Shall produce evidence of a valid investment certificate and/or

trade license

New exporters, those engaged in export business for less than 12 months at
time of applying, shall produce property or other collateral

1.

New producer-exporters shall produce a collateral equivalent to at least

40% of the amount of the loan requested.

2.

Other new exporters shall produce property or other collateral equivalent

to at least 50% of the amount of the loan requested.

Both (Producer/other new exporters) shall produce evidence that all

3. proceeds from non-perishable goods to be exported shall be paid through
irrevocable letter of credit.

Existing exporters, those who have been engaged in export business for at
least 12 months prior to the date of application, shall produce from local
banks documentary evidence about receipt of export proceeds in the 12
months preceding the date of application for export credit guarantee.

Necessary documents/attachments

The following are the necessary Documents/attachments to be fulfilled for

export credit guarantee

 Fully completed ECG application format by the financing bank

Copy (ies) of complete loan approval form (LAF) prepared by the

financing bank (including related annexes)

Export credit guarantee request application cover letter written by

financing bank addressed to the DBE.

Copy of exporters (borrowers) application letter for export credit filed

with financing bank.

Copy of business license

Copy (ies) of valid purchase order from foreign buyer(s)

Copies of export proceeds tickets evidencing export receipts over the

recent 12 months prior to the application date

Copies of recent financial statements of the borrowing company

Exporters letter of declaration stating that all information provided and
documents submitted to the financing bank are correct and true to the best
knowledge of the borrower.
Credit information of the client (CIC) obtained from NBE data base within
less than 1 month period of application for DBEs Export Credit
Guarantee.
Written documents that shows the applicants credit discipline

DBEs distinguishing feature is its project based lending tradition.

Projects financed by the Bank are carefully selected and prepared,
thoroughly appraised, closely supervised and systematically
evaluated.

The Bank extends credit to credit worthy borrowers and projects that
have received a thorough appraisal and found to be financially and

economically viable and socially desirable in terms of environment

protection, employment generating capacity and other social benefit
that may be included in the framework of development regulation act
of the Government.

Process Description/Purpose Statement

The Core Credit Process of the Bank is designed to serve the customer
with a shortest possible time, minimum cost and high quality. This
process starts its function by attracting and persuading customers to
apply for manufacturing, agro processing, and agriculture loans, which
is the domain of the priority area and ends at loan collection.

This process is responsible for the overall loan administration of the

Bank for those projects with a loan of fifteen million birr and above. It
is equally accountable to any failure to meet the set standards of
outputs. Moreover, this process is the one that has access for
customers and represent the Banks corporate credit operation system.

The process works with the Loan Appraisal and Project Rehabilitation
and Loan Recovery Sub-processes and Loan Approval Team to deliver
credits to its customers and collect loans.

The core credit process accepts all kind of manufacturing, agro processing
and commercial agricultural projects loan applications from both walk-in and
sourced customer and undertakes the necessary investigation on the
required documents and borrowers within shortest possible time and cost to
extend loans. The process shows all activities of the job in an organized way
accordingly defined the duties and responsibilities of individual performers
and creates transparency and accountability.

The Core Credit Process is important to have a clear picture of the whole
credit process and creates a transparent way of doing things by properly
defining tasks and assign responsibilities to all professionals so that there
will be proper loan delivery and portfolio management in the Bank. The
detail workflow of the Corporate Credit Process is stipulated hereunder;

Customer Sourcing: This is the first step of the Loan process that
focuses on the recruitment of potential customer through promotion and
persuading investment loan applicants.

Document Screening: This is the second step of the credit process. It

focuses on screening loan documents forwarded by customer.

Loan Application Receiving: This third step of the credit process focuses
on: Verifying completeness of loan documents, Singing disclaimer agreement
and Receiving Loan application.

Due Diligence Assessment: These steps of the Loan Process focus on

undertaking due diligence assessment on a loan applicant. At this step all
applicant related information are assessed and analyzed to know credit
worthiness of the applicant.

Follow up Loan Appraisal Process: These steps of the Loan Process

ASP for appraisal and follow-up of the appraisal activity.

Discussion on Draft Appraisal Report with Customer: At this step of

the loan process, the contact person communicates the customer &
discusses on the appraisal report and aware the customer about conditions
set for loan provision.

Loan Granting: This step of the loan process prepares loan and mortgage
contract and make ready for signature and documentation.

Equity Contribution and Compliance Check: This step of the Credit

process requires blocking and utilization of equity contribution as a predisbursement condition.

Effecting Disbursements: This step of the credit process undertakes

disbursements by checking the implementation progress of a project.

Inspecting Project Implementation Progress: This step of the Credit

process sees about proper utilization of the disbursements and
implementation progress in terms of schedule set.

Project Implementation Completion Follow up: This step of the credit

process helps to know completeness of project implementation.

Loan Repayment Follow up: This step of the process helps to assure
timely loan repayment after project follow up is carried out.

Project Follow up: This step of the credit process helps to undertake
continuing project follow-up to ensure timely loan collection and
sustainability of project.

Project insurance Follow up: This step of the credit process helps to
undertake continuing project follow-up to ensure timely and appropriate
insurance purchase and renewal to minimize the likely risk of the project.

Loan Settlement: These steps of the credit process help for settlement of
the loan and release of collateral after the loan is repaid.

DBEs distinguishing feature is its project based lending tradition.

Projects financed by the Bank are carefully selected and prepared,
thoroughly appraised, closely supervised and systematically
evaluated.

The Bank extends credit to credit worthy borrowers and projects that
have received a thorough appraisal and found to be financially and
economically viable and socially desirable in terms of environment
protection, employment generating capacity and other social benefit
that may be included in the framework of development regulation act
of the Government.

Process Description/Purpose Statement

The Core Credit Process of the Bank is designed to serve the customer
with a shortest possible time, minimum cost and high quality. This
process starts its function by attracting and persuading customers to
apply for manufacturing, agro processing, and agriculture loans, which
is the domain of the priority area and ends at loan collection.

This process is responsible for the overall loan administration of the

Bank for those projects with a loan of fifteen million birr and above. It
is equally accountable to any failure to meet the set standards of
outputs. Moreover, this process is the one that has access for

customers and represent the Banks corporate credit operation system.

The process works with the Loan Appraisal and Project Rehabilitation
and Loan Recovery Sub-processes and Loan Approval Team to deliver
credits to its customers and collect loans.

The core credit process accepts all kind of manufacturing, agro processing
and commercial agricultural projects loan applications from both walk-in and
sourced customer and undertakes the necessary investigation on the
required documents and borrowers within shortest possible time and cost to
extend loans. The process shows all activities of the job in an organized way
accordingly defined the duties and responsibilities of individual performers
and creates transparency and accountability.

The Core Credit Process is important to have a clear picture of the whole
credit process and creates a transparent way of doing things by properly
defining tasks and assign responsibilities to all professionals so that there
will be proper loan delivery and portfolio management in the Bank. The
detail workflow of the Corporate Credit Process is stipulated hereunder;

Customer Sourcing: This is the first step of the Loan process that
focuses on the recruitment of potential customer through promotion and
persuading investment loan applicants.

Document Screening: This is the second step of the credit process. It

focuses on screening loan documents forwarded by customer.

Loan Application Receiving: This third step of the credit process focuses
on: Verifying completeness of loan documents, Singing disclaimer agreement
and Receiving Loan application.

Due Diligence Assessment: These steps of the Loan Process focus on

undertaking due diligence assessment on a loan applicant. At this step all
applicant related information are assessed and analyzed to know credit
worthiness of the applicant.

Follow up Loan Appraisal Process: These steps of the Loan Process

ASP for appraisal and follow-up of the appraisal activity.

Discussion on Draft Appraisal Report with Customer: At this step of

the loan process, the contact person communicates the customer &
discusses on the appraisal report and aware the customer about conditions
set for loan provision.

Loan Granting: This step of the loan process prepares loan and mortgage
contract and make ready for signature and documentation.

Equity Contribution and Compliance Check: This step of the Credit

process requires blocking and utilization of equity contribution as a predisbursement condition.

Effecting Disbursements: This step of the credit process undertakes

disbursements by checking the implementation progress of a project.

Inspecting Project Implementation Progress: This step of the Credit

process sees about proper utilization of the disbursements and
implementation progress in terms of schedule set.

Project Implementation Completion Follow up: This step of the credit

process helps to know completeness of project implementation.

Loan Repayment Follow up: This step of the process helps to assure
timely loan repayment after project follow up is carried out.

Project Follow up: This step of the credit process helps to undertake
continuing project follow-up to ensure timely loan collection and
sustainability of project.

Project insurance Follow up: This step of the credit process helps to
undertake continuing project follow-up to ensure timely and appropriate
insurance purchase and renewal to minimize the likely risk of the project.

Loan Settlement: These steps of the credit process help for settlement of
the loan and release of collateral after the loan is repaid.

International Banking Service Process (IBSP) has been

providing

efficiently

and

effectively

the

following

International Banking Services for its customer who has a

credit relation with the Bank.

1. Import Transactions
Advance Payment

Under this method, the seller receives payment from the buyer prior to
shipment or rendering the service.

This mode of payment is

appropriate for imports of small items for values not exceeding USD
5,000.00 or its equivalent in other foreign currencies. If the advance
payment is more than USD 5,000 an advance payment bank guarantee

for the equivalent amount should be presented.

Required Documents: Performa Invoice, License, Insurance certificate./policy,
undertaking letter for the entry of goods, beneficiary's Bank and A/C details
and TIN certificate (additional documents may be requested as and when
situation demand).
Letter of Credit (L/C) /Documentary Credit
A Letter of Credit (LC) is a conditional but irrevocable undertaking
issued by DBE to the exporter at the request of the importer to effect payment
up to a stated amount within a stated time period against presentation of
compliant documents. The Letter of Credit is governed by the ICC rules
defined in Uniform Customs Practice (UCP) 600, NBE Directives and the
Banks Policies and Procedures

 Required Documents: Performa invoice, Insurance certificate/policy, License,

L/C application form and TIN certificate (additional documents may be
requested as and when situations demand).
Cash Against Document (CAD) /Documentary Collection

When an importer concludes a contract with a seller indicating method of

payment as documentary collection/CAD, prepare and submit its purchase
order to DBE for approval before shipment of goods. After the Bank approves
the purchase order ,the customer instructs the seller to ship the goods and

sends the documents via the exporter bank

Required Document: Purchase order, Performa invoice, insurance. /policy,
License & TIN Certificate (additional documents may be requested as and
when situations demand).
(Note: For all import & export transactions, import/export permit duly
filled, signed and stamped is mandatory with NBE). The Bank doesn't
provide foreign trade services for Customers under NBE's delinquency
list until they clear their commitments or bring waiver letter from NBE.
2. Export Transactions
Advance Payment

This is the most basic / preferred payment methods for goods. The
supplier receives cash in advance from the buyer before goods are

shipped.
Required Documents: Advance payment receipt (Incoming Telegraphic
Transfer) advice or customs declaration along with bank advice for the
sale of the Cash Notes to the Bank. (If deposited in Foreign Currency
Cash Notes), commercial invoice, sales contract, License & TIN
certificate.

Consignment

The consignment sales are applicable to the perishable items such as fruits,
cut flowers, meat, live animals, molasses and others in accordance to the list
provided by NBE,

Required Documents: Commercial Invoice, sales contract, License, TIN

certificate & undertaking letter to repatriate the proceeds timely (additional
documents may be requested as and when situations demand)
Letter of Credit (L/C)

An export letter of credit is an instrument issued by a foreign bank on behalf

of its importing customer favoring an exporter who is customer of DBE.

Required Documents: Authenticated L/C (SWIFT MT 700), Commercial
Invoice, Sales contract, License and TIN certificate (additional documents may
be requested as and when situations demand).
Cash Against Document (CAD)

Under this mode of payment customers shipped the agreed up on goods to

the buyer and present shipping documents along with covering letter to the

bank for collection of payment

Required Document: Commercial Invoice, Sales contract, License,
undertaking letter and TIN certificate (additional documents may be
requested as and when situations demand).
3. Foreign Exchange Service
Purchase and Sales of Foreign Currency (F/CY) Cash Notes

Forex bureau of the Bank buy FCY Cash Notes at the prevailing exchange
rate.

Forex bureau of the Bank also sell FCY Cash Notes for Holiday travel
expenses, Business travel allowance, medical expense, Educational expenses
and General transfers as per NBEs Directives and the Banks Policies and
Procedures.
4. Foreign Exchange Remittances
Incoming Transfers
IBSP provides incoming transfer services to customer through its
correspondent banking via SWIFT
Outgoing Transfers

IBSP also provides foreign currency transfers to foreign beneficiaries on

behalf of local customers against foreign exchange permit approved by the
Bank via SWIFT
5. Foreign Currency Account
Non-Resident Foreign Currency Accounts (NR-FCY)
IBSP opens and maintains accounts denominated in foreign currency that
provides the Account holders the privilege to instruct transfer of funds abroad
without foreign exchange permit approval or make local payments in Birr.
Retention Accounts
IBSP opens and maintains foreign currency accounts for exporters and
frequent recipients of foreign exchange remittance to enable retain all /portion
of their export earnings and inward remittances as per the NBE directive.

RUFIP

Print

Background of RUFIP

The limited outreach of the commercial banking system and NGO supported
credit schemes and the uncertainty surrounding the sustainability of the
input supply loan programme have galvanized Government of Ethiopia (GOE)
to establish a legal and policy framework conducive to the growth of
microfinance institutions (MFIs) and rural saving and credit cooperative
societies (RUSACCOs).
The country strategy recognizes that one of the major constraints to the
sustained increase in agricultural production and productivity islack of access
to reliable financial services by poor rural households who account for about
85% of the total population. Rural Financial Intermediation Programme
(RUFIP) has been proposed as one means of tackling the problem.

The Rural Financial Intermediation Programme (RUFIP) is national, sector

wide investment, which address key institutional and policy issues critical for
the development of vibrant and sustainable rural financial system. The
rationale and urgent need of the RUFIP is to reduce poverty in the rural
areas of the Country.

Rural Financial Intermediation Programme (RUFIP)

Objectives
The programme goal is to alleviate rural poverty through the sustained
increase in incomes and assets of poor rural households. This would be
attained through increased agricultural production and productivity in
addition to off-farm and none farm income generating activities.

The

programmes primary objectives is to promote the effective delivery of

efficient, demand driven financial services responsive to the needs of the
rural poor, including smallholder framers.

Specific objectives of the programme

RUFIP aimed at
(i)

Expanding outreach to about 6.9 million rural households by 30

June

2019

through

development,

and

financial

provision

of

deepening,
equity

and

institutional
credit

funds

concomitant with savings mobilization, sound prudential norms,

operational and financial sustainability and good governance.
(ii)

Develop

community

banking

framework

through

the

establishment of grass roots, people owned and managed rural

savings and credit cooperatives (RUSACCOs).
(iii)

Promote linkages between rural financial institutions and the

banking system.

(iv)

Improve regulation and supervision through support to the NBE

and the AEMFIs.

(v)

Strengthen the institutional capacity of Federal and Regional

cooperative Promotion Bureaux to effectively promote, supervise
and regulate RUSACCOs and their unions.

Programme Cost and Financing

The total estimated RUFIP II cost is USD 248 million (ETB 4.23 billion).
Pertaining to the overall programme cost financing arrangement, from the
total program cost (International Fund for Agriculture Development) IFAD,

(Commercial

Banks)

CBs,

(Development

Bank

of

Ethiopia)

DBE,

(Government of Ethiopia) GOE and (Micro Finance Institutions) MFIs would

contribute 41%, 30.3%, 13.8%, 11.7% , 2.7% , and 0.5% respectively.

Programme Components
RUFIP comprised four components which include:

Institutional development within the microfinance and cooperative

sub-sectors.
Improved Regulation and supervision of Micro Finance Institutions
(MFIs) by strengthening the institutional capacity of National Bank of
Ethiopia (NBE), Association of Ethiopian Micro Finance Institutions

(AEMFIs)
Equity and Credit Funds for MFIs and RUSACCOs.
Programme coordination and management.

Programmme Organizing and Executing Agency

The key agencies responsible for implementation of the programme are:

Development Bank of Ethiopia (lead implementing Agency)

National Bank of Ethiopia (NBE)

Association of Ethiopian Microfinance Institutions (AEMFIs)

The Domestic Commercial Banks

The Federal and Regional Cooperative Promotion Bureaus (FCA)

Programme Coordination and Management Unit

A programme coordination and management Unit (PCMU) has established in

DBE which is primarily responsible for management of equity and credit
funds, institutional development of MFIs in association with AEMFIs
and the overall coordination of programme activities. There are also
two committees that would involve in policy and decision- making in the
programme implementation process. These committees include:
1. Progrmme Management Committee (PMC): the main function of
this committee shall involve in decision making and guiding of
the overall programme implementation process.
2. National Rural and Microfinance Policy steering committee
(NRMFPC): this committee shall mainly involve in policy issues at
national level.

Programme operation current status

RUFIP I have been under implementation for 7 years since 2003/4 to
2009/2010 a total programme cost was USD 88.73 million.

As per the

interim evaluation of Rural Financial Intermediation Programme I (RUFIP)

conducted by IFAD in 2009, RUFIP I was successful in achieving its
objectives in the microfinance sub-sector and had a real and sustainable
impact on rural poverty. The programme was found to be relevant and
timely, and its overall performance was satisfactory.

In view of the overall results obtained from RUFIP I, the interim evaluation
made a strong case for the development of a second-phase of RUFIP. As a
result the government of Federal Democratic Republic of Ethiopian and IFAD
agreed to have the second phase of the programme i.e. RUFIP II.
RUFIP II builds on the success of the Rural Financial Intermediation
Programme one to scale up the delivery of financial services from a baseline
of about 3.3 million to 6.9 million poor rural households by 30 June 2019,
the total estimated RUFIP II cost is USD 248 million (ETB 4.23 billion). The
government and financers reached to consensuses for the launching of
RUFIP II for the next seven years (2011/12- 2018/19).
The overall development objective of the programme is to provide
sustainable access to rural households to a range of financial services
through a nationwide network of some 30 MFIs and about 5 500 RUSACCOs
(and 100 unions of RUSACCOs) as well as capacitating the programme
beneficiaries in the form of capacity building. RUFIP II was launched on July
2012 and started operation for the past one year.

List of Priority Sectors

The Bank provides loans for Commercial Agriculture, Agro-Processing,
Manufacturing and Extractive Industries, preferably export focused. The

economic sub-sectors for which the loanable financial resource will be

availed are:

Commercial Agriculture
Commercial scale Horticulture products, vegetables, fruits, mushrooms and
the like;
Commercial scale improved seed multiplication
Commercial scale food grain farming (wheat, maize, rice etc.)
Commercial scale Coffee plantation & development;
Commercial cotton farming ;
Commercial scale bio-fuel plantation (Jatrophia, castor oil plant, etc);
Commercial scale tea plantation & development;
Commercial scale poultry framing & processing;
Commercial scale palm oil plantation & processing;
Commercial scale rubber tree plantation & development;
Commercial scale silk worm farming;
Commercial scale crocodile farming & processing;
Commercial scale stockbreeding with ranch development;
Commercial scale oil seeds farming & processing including sesame;

Commercial scale sugar cane and other similar production & processing;
Commercial scale Apiculture;
Commercial scale spices, medicinal plants and essential oil production,
extraction & processing;
Commercial scale fiber (Sisal) crops & processing;
Commercial Bamboo plantation for pulp and paper production,
construction;
Commercial scale fish farming & processing;
Commercial scale Swine farm & processing;
Commercial scale Ostrich and duck farm & processing.

Agro Processing

Commercial scale food processing plants including pasta production

integrated with milling;
Commercial scale cotton production and ginning;
Commercial scale dairy products production (pasteurized milk, cheese &
butter);
Commercial scale animal feed production and processing;
Commercial scale bovine animals and/or shoats production and processing
and/or canning;

 Commercial scale poultry projects (broiler, egg and one day old chicks
production);
Commercial scale coffee processing (roasting and grinding);
Commercial scale edible oil extraction & processing (margarine, refined
edible oil, sesame ( tehina);
Commercial scale commercial fruit juice production;
Commercial scale bio-fuel production and processing;
Commercial scale Malt production;
Commercial scale organic fertilizer production;

Manufacturing

Manufacturing of beverages, mineral and bottled water;

Manufacturing of Textiles and fabrics ;
Industry scale wearing apparel factory (garment factory);
Tanning of finished leather and leather products;
Paper and paper products (converting) factory;
Chemicals and chemical products factory;
Rubber and rubber products factory;

 Non-metallic & other construction materials factory (cement, gypsum,

marble, bricks, glass & glassware etc.);
Manufacture and processing of base metal and steel products.
Precious & base metal mining factory (gemstones, tantalum, gold etc);
Fabricated metal products factory
Motor vehicles, trailers and semi-trailers assembly;
Sugar and sugar by products (ethanol, confectionary);
Pharmaceuticals factory;
Packing materials production;
Electrical power generation (from geothermal, wind, solar etc);
Electrical and electrical apparatus manufacturing;
Sanitary materials factory;
Micro dams for power generating plants.