Development Impact Report

DEVELOPMENT BANK OF ETHIOPIA
i
Executive Summary
The Development Bank of Ethiopia (DBE) is a pivotal institution in promoting economic

development by financing key sectors such as agriculture, industry, manufacturing, mining,
tourism, energy, and SMEs. This report evaluates the socio-economic impacts of DBE-
financed projects from 2018 to 2023, emphasizing their contributions to job creation, tax
revenue, environmental sustainability, and social development.
DBE's financing has been instrumental in creating numerous job opportunities, significantly
reducing unemployment rates in various regions. These jobs span across multiple sectors,
fostering economic growth and stability. Additionally, the successful implementation of these
projects has generated substantial tax revenues for the government, aiding in national
development and public service funding.
The social impact of DBE projects has been profound, with notable improvements in access
to potable water, education, and healthcare facilities. Infrastructure development, particularly
in roads and electricity, has enhanced connectivity and economic opportunities for many
communities.
Environmentally, most DBE projects have adhered to sustainable practices, resulting in

neutral to negative impacts. There have been a few instances of water and air pollution in
specific districts, which highlight the need for on-going environmental monitoring and
assessment.
Overall, DBE's projects have made significant contributions to Ethiopia's socio-economic

development. However, addressing challenges such as foreign currency shortages, political
instability, and infrastructure deficits through strategic interventions is crucial to ensuring the
continued success and sustainability of these projects.
i
Table 1: Strategic Pillar 1- Policy and Business Model of the Bank......................................................11
Table 2: Strategic Pillar 2- Finance and sustainability..........................................................................12
Table 3: Strategic Pillar 3- Governance and structure.........................................................................16
Table 4: Strategic Pillar 4- Leadership and Human Resource...............................................................18
Table 5: Strategic Pillar 5- Loan Recovery and Accountability.............................................................20
Table 6: List and amounts of disposed Assets in FY2022/23 (in millions)............................................21
Table 7: List of Re-instated/Rehabilitated Projects in FY2022/23 (in Millions)....................................22
Table 8: Strategic Pillar 6- Information Technology Systems...............................................................23
Table 9: Strategic Pillar 7- Systems and Working Procedures..............................................................25
Table 10: Total Approval by Sector Performance (FY2022/23) (‘000)..................................................28
Table 11: Loan Approvals by Operating Units Performance (FY2022/23) (‘000).................................29
Table 12: SMEs (Project and Lease) Approval by Sector Performance (FY2022/23) (‘000)..................34
Table 13: SMEs (Project and Lease) Disbursement by Sector Performance (FY2022/23) (‘000)..........35
Table 14: SMEs (Project and Lease) Collection by Sector Performance (FY2022/23) (‘000)................36
Table 15: SMEs (Project and Lease) Outstanding by Sector Performance (FY2022/23) (‘000..............37
Table 16: Socio-Economic Impact of Head of Financed Projects.........................................................41
Table 17: Major Challenges faced by head office loaning units Projects those are operational from
July 2018-June 2023............................................................................................................................43
Table 18: Socio-Economic Impact of Projects Financed by Districts....................................................46
Table 19: Major Challenges Faced by District......................................................................................48
Table 20: Bank level export proceeds and FDI 2018/19 to 2022/23 in ''000,000''.............................53
Table 21: EFCMD, Operational Projects between July 2018 and June 2023........................................55
Figure 1: NPLs Ratio Including Tigray Region (Actual) Trend for (2018/19 to 2022/23)......................14
Figure 2: NPLs Ratio (GAAP) excluding Tigray Trend (2018/19 to 2022/23)........................................15
Figure 3: Return on Asset (ROA) Strategic Plan Vs. Actual Trend (2018/19 to 2022/23).....................16
Figure 4: Return on Equity (ROE) Strategic Plan Vs. Actual Trend (2020/21 to 2022/23)....................16
Figure 5: Figure 5 Asset-Liability Mismatch Trend (June 2019 to June 2023)......................................17
Figure 6: Total Loan Approval Trend (from FY2019/20 to FY2022/23)................................................29
Figure 7: Trend of Total Loan Disbursement (Plan Vs Actual)..............................................................31
Figure 8: Trend of Total Loan Collection (Plan Vs Actual), Source: SPCMD..........................................32
Figure 9: Loan Outstanding (Plan Vs. Actual).......................................................................................33
Figure 10: Non-Performing Loans........................................................................................................34
Figure 11: Trend of SME Project and Lease Approval (from FY2020/21 to FY2022/23).......................35
Figure 12: Trend of SME Project and Lease Disbursement from FY2020/21 to FY2022/23)................36
Figure 13: Trend of SME Project and Lease Collection (from FY2020/21 to FY2022/23) .........37
Figure 14: Trend of SME Project and Lease Outstanding (from FY2020/21 to FY2022/23).................38
Figure 15: Trend of SMEs Financing NPLs (Project and Lease) Financing (2020-2023)........................39
Figure 16: Trend of Lease Financing NPLs (2020-2023.................................................................40
Chapter one
1. Introduction
The Development Bank of Ethiopia (DBE) is a policy bank dedicated to promoting economic
development by financing key government priority sectors such as agriculture, industry,
manufacturing, mining, tourism, energy, and small and medium-sized enterprises (SMEs).
Besides providing financial support to viable projects, DBE actively engages in development
programs aimed at addressing socioeconomic problems and promoting equitable growth. This
involves collaborating with government agencies, international organizations, and other
stakeholders to implement projects and programs benefiting low-income groups. Below is
stated mission, vision and value of DBE
Mission
"The Development Bank of Ethiopia is a specialized financial institution established to

promote the national development agenda through development finance and close technical
support to viable projects from the priority areas of the government by mobilizing funds from
domestic and foreign sources while ensuring its sustainability. The Bank earnestly believes
that these highly valued objectives can best be served through continuous capacity building,
customer focus and concern to the wider environment."
Vision
"To be a world-class Development Bank that helps to achieve Ethiopia's economic
transformation vision by 2030."
Values
 Commitment to Mission
 Teamwork
 Learning organization
 Customer focus
 Concern to the environment
 Integrity
Financial Product and Services
 Long-Term Loan  Loan buyout
1
 Medium-Term Loan  Managed Fund
 Working Capital Loan for DBE
 Idea Finance
projects
 Lease Financing  Interest Free Banking
 Co-Financing or Syndicate  Whole sale financing
DBE also assesses the socio-economic impacts of the projects it finances, evaluating the
significance of changes these activities bring about. The impact assessment of the
Development Bank of Ethiopia (DBE) involves evaluating the socio-economic effects of the
projects it finances. This process is crucial for understanding how DBE's initiatives contribute
to the country's development and helps in making informed decisions for future projects. By
being able to measure and communicate impact, DBE can effectively convey the
contributions of its activities to the country's development, both internally and externally.
DBE’s development impact evaluations demonstrate how its financed projects and
development programs contribute to the development of various economic sectors and
regions.
1.1. Objective of the Development impact report
1.1.1. General Objective
The general objective of this particular development impact report is to assess the socio-
economic impact of projects financed by DBE through head office and district loaning units.
1.1.2. The specific objectives of the report are to:
Evaluate Socio-Economic Changes: To systematically measure and analyse the socio-

economic changes brought about by DBE-financed projects and programs. Promote Equitable
Growth: To identify and highlight the extent to which the benefits of DBE’s interventions are
distributed across different regions and sectors.
Enhance Accountability and Transparency: To provide a transparent account of DBE’s

activities, outcomes, and impacts to stakeholders, including government agencies,
international partners, and the general public.
Inform Decision-Making: To generate insights and data that can inform DBE’s strategic
planning, policy formulation, and project design, ensuring that future i Demonstrate Value
and Effectiveness: To showcase the tangible benefits and effectiveness of DBE’s investments
in driving economic development, thereby justifying the allocation of resources and securing
As a whole development impact assessment report aims to provide DBE with a holistic
understanding of the development impacts achieved through its lending, technical assistance,
and other support activities across various sectors. The report outcome will help the bank
make more informed strategic decisions to better align its operations with the national
development agenda.
1.2. Scope of the Report
This development impact report covers head office and district loaning units, External Fund
Management Directorate and International Banking Service Directorate. The report also
covers SME financing and project financing.
The report is limited only to cover operational project in time frame of 2018 to 2023 which
DBE strategic reform is implemented.
This Development Impact Report encompasses various facets of the Development Bank of
Ethiopia’s (DBE) operations, including:
Head Office and District Loaning Units:
Socio-economic impact of projects financed by head office and districts is assessed. How
these units have contributed to DBE’s overall mission and strategic goals achievement is
assessed pretty much well.
External Fund Management Directorate:
Socio-economic Impact of External Fund Management Directorate is part and parcel the
current report as the directorate main activity or operation has directly and indirectly has
social, environmental and economic impact fostering economic growth of the nation.
International Banking Service Directorate:
Trends of DBE financed export proceeds and FDI are analysed and evaluated their impact in
terms foreign currency generation to the economy.
Project and SME Financing:
Analysis of project financing and SME socio-economic impact on job creation, tax
generation to the government, social and environmental impacts are critical reviewed on this
report.
The report focuses on operational projects within the period of 2018 to 2023, during which
DBE implemented significant strategic reforms. This period is critical as it reflects the impact
of the strategic changes introduced by DBE, providing a comprehensive overview
1.3. Methodology
The methodology for the socio-economic analysis in the Development Impact Report ensures
a thorough and systematic evaluation of DBE’s contributions to Ethiopia’s development. By
combining secondary data review, primary data collection, and comprehensive data analysis,
the report aims to provide a clear and evidence-based assessment of the socio-economic
impacts of DBE-financed projects. This robust methodology supports transparency,
accountability, and informed decision-making for future strategic initiatives.
1.3.1. Data Sources and Compilation
The data presented in the table is based on a secondary data analysis approach. The source of
the data is the district, head office loaning units, internal records and monitoring reports of
the Development Bank of Ethiopia (DBE). The data covers the operational period from July
2018 to June 2023.
1.3.2. Analytical Approach
The analysis follows a descriptive approach, focusing on the key socio-economic indicators
for the projects under each directorate. The indicators include the number of projects,
sectorial distribution, jobs created (permanent, temporary, and total), tax paid to the
government, and the major challenges faced. To analyse the data, the study utilized basic
descriptive statistics, such as percentile, mean and averages, where applicable. A
comprehensive socio-economic impact assessment should indeed utilize both qualitative and
quantitative approaches to provide a well-rounded analysis. The original approach of
compiling and analysing the key quantitative indicators such as number of projects, jobs
created, tax contributions applied quantitative approach. Qualitative Analysis challenges
faced by the projects under each directorate were identified through a qualitative assessment
of the monitoring reports and field observations. These challenges were then categorized and
presented in the table to provide a comprehensive understanding of the operational
constraints.
Chapter Two
2. Implementation of DBE Strategic Reform 2018/19-

2022/23
DBE was fighting to survive five years ago, and many studies, including NBE supervisory
reports, show that practically all of the bank's prudential and financial indicators have
consistently deteriorated, putting it close to insolvency. Following a BOM order in 2018,
DBE conducted a full investigation of the Bank's prudential and financial problems,
preparing an analysis document against all applicable standards, and developing
comprehensive reform proposals. The strategy document analysis assesses whether the
present business model, governance, and organisational structure align with the bank's goal
and objectives.
Functionally, the Bank's work units are not organised around significant economic sectors
like agriculture and manufacturing. Instead, the current organisational structure was
established based on loan size, specifically big, medium, and small-scale loans.
This has negatively affected staff specialization and core competences in specific sectors such
as agriculture, industry, and SMEs.
2.1. Fundamental problems that caused strategic reform to be implemented bank

wide
Deteriorated Asset quality: The bank's loan portfolio quality was so poor, with much higher
levels of non-performing loans (NPLs) than is considered normal for development banks
(maximum of 15%). Non-Performing Loans (NPLs) increased to Birr 15.4 billion, or 39.4%
of total outstanding loans, in December 2018, despite a steady increase in the level of overall
loan portfolio.
Poor Know Your Customer Assessment: The Bank's due diligence assessment was reliant
on information gathered from clients, which was not sufficiently supported by complete and
trustworthy information, particularly for foreign investors, PLCs, and borrowers of rain-fed
agricultural loans.
Weak and Shallow Project Appraisal: The Bank's project appraisal falls short of providing
a thorough overview and analysis of a project.
Imprudent Lending Practices and Bad Credit Culture: Project loans were approved
without proper due diligence or appraisal of financial and technical feasibility, citing the need
for development and job creation.
Return on Asset (AOR): Return on asset (ROA) was declined from 1.5% in 2012 to minus
(-0.63%) at the end of June 2018.
Return on capital (ROC): ROC was fell to (- 10.8%) at the end of 2017/18, from 14.20% in
2012.
The debt-to-equity ratio: The debt-to-equity ratio increased to 26:1 as of June 30, 2018, up
from roughly 9:1 in 2012. The proper ratio is 4:1. This means the bank's capital is
significantly leveraged.
Finally, following a thorough SWOT and PESTL analysis, the bank decides to execute
appropriate holistic and bank-wide reforms to solve the identified challenges and improve the
bank's overall performance.
2.2. Status of Strategic Reform Program Implementation
The bank, after undertaking a thorough SWOT and PESTL analysis, decides to implement
appropriate holistic and bank-wide reform that can address the identified problems of the
bank and put the overall performance of the bank in a better position.
The strategic reform has seven (7) pillars; 27 strategic objectives; each of the strategic
objectives has its own key performance indicators (KPIs).
Strategic pillars are keys strategic areas identified that the reform is going to focus on. The
selected strategic pillars cover mission critical areas and key support and enabling functions.
Moreover, specific strategic objectives are identified under each pillar. The following 7
strategic pillars are identified
1. Policy and Business Model: Review business model and update credit policy.
2. Finance and Sustainability: Diversify funding sources, ensure prudent lending, and
optimize profit.
3. Governance and Structure: Ensure proper checks and balances and timely decision-
making.
4. Leadership and Human Resource: Competent management, continuous training,
adherence to policy, and succession planning.
5. Loan Recovery and Accountability: Improve loan collection, enhance asset
disposal, and ensure compliance.
6. IT Systems: Enhance core banking system and ensure IT security.
7. Systems and Working Procedure
Thus far, the Bank has implemented most of the strategic objectives and KPIs. There have
been visible progresses in the achievement of the most KPIs, and hence most of the KPIs
were fully completed. Profoundly, the credit and financial performances of the Bank have
been greatly improved with the registration of significant reduction of NPLs and thereby
increased its profitability comparing to the previous year’s performance. Despite the fact the
mandate of the Bank is to finance development-oriented projects, ensuring the profitability is
also critical for its sustainability and implementing its mission in the long-term.
Therefore, the following tables do not only indicate what the proposed strategic pillars,
strategic objectives and KPIs are, but also highlights the status of the implementation of each
KPI in the 2022/23 fiscal year.
Table 1: Strategic Pillar 1- Policy and Business Model of the Bank

Strategic Objectives (SO) Key Performance Indicators (KPI)
S.O. 1.1: To review the Bank’s business model KPI 1: Approved business model by the
and synchronize its products; end of June 2021
S.O. 1.2: To review and update the credit and KPI 1: Revised credit and lease policy by
lease policy of the Bank to align it with the end of March 2021
the current changes in the political and
macroeconomic landscape.
Under the first strategic pillar of Policy and Business model of the Bank, two strategic
objectives are briefly presented accordingly with their KPIs, and milestones reached in the
fiscal year.
Strategic Objective 1.1: To review the Bank’s business model and synchronize its
products:
KPI 1: Approved business model by the end of June 2021

 The Business Model of the Bank is already finalized and approved by the Board of
Management (BOM). The management has continually monitored the proper
implementation of the Bank's business model during budget year (2022/23 F.Y.)
 Human resource redeployment completed.
Strategic Objective 1.2: Review and update the credit and lease policy of the Bank to
align it with the current changes in the political and macroeconomic landscape.
KPI 1: Revise credit and lease policy by the end of March 2021
 The BOM has approved the Credit and Lease financing policies in July 2022 and the
policies are operational.
 Non-interest Banking Policy has been approved by NBE and IFB work unit has been
operational and processing loan applications.
 Draft Idea Financing Policy is prepared and to be submitted to the BOM for approval.
However the work unit this time round IF work units is screening and appraising
viable projects to be financed by the bank
 Memorandum of Understanding (MoU) was signed with Ministry of Innovation and
Technology (MInT) and the Ministry of Labour and Skills (MoLS) to strengthen
collaboration in SMEs and Idea Financing programs of the Bank.
Table 2: Strategic Pillar 2- Finance and sustainability
S.O. 2.1: Conduct studies to diversify KPI 1: Source of funding study conducted by the end
funding sources of the Bank and of March 2021
minimize its dependency on NBE
priority sector loan
S.O. 2.2: Ensure prudent lending practice in KPI 1: Bring NPLs down from current 40.9 percent to
the Bank and maintain quality of 34 percent by June 2020, 24 percent by June
loans to reduce NPLs 2021; and 10 percent by June 2022.
KPI 2: Complete the study on Asset Quality Review
by June, 2022
S.O. 2.3: Optimize the Bank’s profit to KPI 1: Improve ROA from the current -2.19 percent to
ensure sustainability 1 percent by June 2020, 1.25 percent by June 2021,
and 1.5 percent by June 2022.
KPI 2: Improve ROE from the current -135.85 percent
to 3.1 percent by the end of June 2020
S.O. 2.4 Improve the loan collection KPI 3: Avoid Asset/ Liability maturity mismatch
capacity of the Bank (Continuous)
To achieve the targets set under strategic pillar 2, the following specific activities have been
carried out in the fiscal year under review:
Strategic Objective 2.1: Conduct studies to diversify funding sources of the Bank and
minimize its dependency on National Bank of Ethiopia (NBE) priority sector loan.
KPI 1: Source of funding study conducted by the end of March 2021

 The Bank had conducted a study on the source of funding with different kind of
products. Meanwhile, the NBE issued a directive known as ‘Investment on DBE
Bonds’ in 2021 with a directive SBB/81/2021, and all commercial banks operating in
Ethiopia are deemed required to buy the DBE-bond. Article 4.4 of the directive states
that “A commercial bank shall annually invest a minimum of 1% (one percent) of its
outstanding loan and advance in DBE Bond until the aggregated bond holding equals
10% (Ten Percent) of its total outstanding loans and advances.”
 Accordingly, the Bank has mobilized Birr 25 Billion from the sale of DBE-bond
during the 2022/23 fiscal year.
Strategic Objective 2.2: Ensure prudent lending practice in the Bank and maintain
quality of loans to reduce NPLs.
KPI 1: Bring NPLs down from 40.9 percent to 10 percent by June 2024.
NPL ratio (GAAP) including Tigray Strategic Plan Vs performance

40.0%
35.0% 33.9%
30.0%
23.3% 24.3%
25.0%
20.2% 19.2%
20.0%
14.8%
15.0%
10.0% 7.2%
5.0%
0.0%
2018/19 (Baseline) 2020/21 2021/22 2022/23
Plan Actual
Figure 1: NPLs Ratio Including Tigray Region (Actual) Trend for (2018/19 to 2022/23)
The NPLs ratio computed using the GAAP approach in June 2019 was 33.9 percent. The
bank’s NPL witnessed a drastic reduction in the reform period due to the various measures
the bank took to reduce the high level of NPL. The NPL ratio fell to 7.2 percent in 2022/23,
which is lower than the 10 percent expected by end of the strategic reform plan (Error:
Reference source not found).
NPL ratio (GAAP) excluding Tigray Strategic Plan Vs performance

40.0%
35.0% 33.9%
30.0%
25.0% 23.3%
20.2% 19.2%
20.0%
14.8%
15.0% 12.1%
10.0%
7.2%
5.0%
0.0%
2018/19 (Baseline) 2020/21 2021/22 2022/23
Plan Actual
Figure 2: NPLs Ratio (GAAP) excluding Tigray Trend (2018/19 to 2022/23)
Likewise, the NPL ratio excluding the Tigray region was 7.2 percent owing to the NBE’s
decision to reschedule the loans in the region (Figure 2).
Strategic Objective 2.3: Optimize the Bank’s profit to ensure sustainability
KPI 1: Improve ROA from the -2.19 per cent to 2.4 per cent by June 2023.
DBE registered historic level of profit during the fiscal year under review. The Bank’s net
profits after provisions reached Birr 6.4 Billion in FY2022/23; hence this resulted in ROA of
4.0 per cent. This achievement is 1.6 per cent higher than the target set out for FY2022/23 in
the strategic reform plan.
Return on Asset (ROA) Strategic Plan Vs Performance
5.0%
4.0%
4.0%
3.3%
3.1%
3.0%
2.4%
2.0%
1.3% 1.5%
1.0%
0.0%
2018/19 (Baseline) 2020/21 2021/22 2022/23
-1.0% -1.0%
-2.0%
Plan Actual
Figure 3: Return on Asset (ROA) Strategic Plan Vs. Actual Trend (2018/19 to 2022/23)
KPI 2: Improve ROE from the -135.85 percent to 9.6 percent by the end of June 2023.
 As a result of the large net profit registered in the current fiscal year, the Bank’s total
capital increased to Birr 40 Billion. Accordingly, the ROE is 16.0 percent (Figure 4).
Return on Equity Strategic Plan Vs Performance

20.0% 16.0%
13.2%
11.0%
10.0%
2.1% 3.1% 3.5%
0.0%
2018/19 (Baseline) 2020/21 2021/22 2022/23
-10.0%
-20.0%
-30.0%
-34.5%
-40.0%
Plan Actual
Figure 4: Return on Equity (ROE) Strategic Plan Vs. Actual Trend (2020/21 to 2022/23)
KPI 3: Avoid Asset/ Liability maturity mismatch1

1
The Bank's total asset has increased from Birr 92.6 Billion in FY2019/20 to Birr 160.8
Billion in FY2022/23. The rise in the Bank’s capital to Birr 40 Billion during this period
contributed by the significant increase as witnessed in total asset. Hence, the Bank will
continue to increase its total asset with limited reliance on borrowing and other liabilities.
Asset-Liability Mismatch Trend

180.0
160.8
160.0
140.0 128.9
123.1
120.0
in Billions
92.6 120.8
100.0
80.5
80.0 96.6
91.1
85.0
78.3
60.0
40.0
June 2019 June 2020 June 2021 June 2022 June 2023
Asset Liability
Figure 5: Figure 5 Asset-Liability Mismatch Trend (June 2019 to June 2023)
Table 3: Strategic Pillar 3- Governance and structure

S.O. 3.1: Ensure proper checks and balances KPI 1: Ensure 6 eyes principle at all levels of
at every level of credit operation credit operations by Sept. 2021
S.O. 3.2: Ensure good governance at each KPI 1: Revised governance related policies and
level of governance structure including the directives by the end of March 2021.
Board
S.O. 3.3: Ensure proper and timely decision KPI 1: Customer satisfaction level of 80% by the
making end of June 2021
S.O. 3.4: Ensure that the Banks credit services KPI 1: Fully Implemented Districts and Branches
are fairly and efficiently accessible rationalization by the end of March 2021
The performance under the third strategic pillar has been reported below and comparisons
were made against the previous years, if deemed necessary:
Strategic Objective 3.1: Ensure proper checks and balances at every level of credit
operation
KPI 1: Ensure 6 eyes principle at all levels of the credit operations.

 All loaning units have been implementing the 6 eyes principle at all levels of credit
operations to maintain proper checks and balances.
 Multiple layers of screening and approval systems are in place in all loaning units of
the Bank. According to this, the loan approval process goes through several
checkpoints from customer relations under the specific directorates to the project
appraisal directorate, then to the corporate loan review team and finally to the loan
approval committee consisting of representatives from various work units. For
corporate loans, the Approval Committee consists of three Vice Presidents and three
Directors. Therefore, the principle of 6 eyes is being applied in the continuous activity
of the Bank's credit operations.
 The Bank has appointed five (5) approval committees at the Head Office to oversee
the loan approval process for the Districts. Initially, the project or lease loan request
comes from the Branch after conducting the KYC (Due Diligence) and the appraisal
and necessary documents are sent to the project appraisal and loan appraisal team
under the District. Finally, the loan approving decision will be made by the committees
established at the Head Office.
 In general, checks and balances are strictly maintained in every credit underwriting
process.
Strategic Objective 3.2: Ensure good governance at each level of governance structure
including the Board of Management.
KPI 1: Revised governance related policies and directives by the end of March 2021
 The Bank is subject to comply with respective governance-related directives issued by

the regulatory institutions. Accordingly, there are policies, procedures and manuals
that are at stage of draft, final and waiting for approval either by President or BOM. As
a continuous activity, ensuring proper implementation of indicative directives is being
carried out.
Strategic Objective 3.3: Ensure proper and timely decision making
KPI 1: Customer satisfaction level of 80 percent by the end of fiscal year.

 Actions were taken to improve customer satisfaction by establishing compliant
handling, improving responsiveness, through continuous system improvement, and
accountability.
 Research collaboration is underway with Addis Ababa University to conduct customer
satisfaction survey.
 The Bank has been providing Lease Financing training to SMEs. Accordingly, in
collaboration with the World Bank, the Bank has facilitated a 4 th round training and
90,154 participants were attended fully the training.
Strategic Objective 3.4: Ensure that the Banks credit services are fairly and efficiently
accessible.
KPI 1: Fully Implemented branches rationalization by the end of March 2021.
 The Bank implemented the new organizational structure and redeployment activities.
The Bank also increased the number of Districts to 24 and Branches to 100.
 These newly established Districts became fully operational in the fiscal year.
 Registration of branches is underway as per National Bank of Ethiopia's regulations.
 Thus, the Bank is striving to ensure the credit services fairly and efficiently
accessible.
Table 4: Strategic Pillar 4- Leadership and Human Resource
S.O. 4.1: Ensure that operating units are managed KPI 1: Conduct Management redeployment by
and lead by competent professionals the end of June 2022
S.O. 4.2: Enhance the capacity of staff and KPI 1: New blood work force included in the
management through continuous capacity Bank (Continuous)
development works KPI 2: Trainings provided (Continuous)
KPI 3: Exposure visit and experience sharing
programs conducted (Continuous)
S.O. 4.3: Ensure that the staff and management of KPI 1: Administrative and disciplinary actions
the Bank adhere to the policy and code of conduct taken (Continuous)
and maintain work discipline in the Bank
S.O. 4.4: Establish succession plan for the next 5 KPI 1: Succession plan prepared by the end of
years June 2021
The specific activities carried out to achieve the targets set under strategic pillar 4 are
presented below:
Strategic Objective 4.1: Ensure that operating units are managed and led by competent
professionals.
KPI 1: Conduct Management redeployment by the end of June 2022
 In the FY2022/23 under review, the Bank has completed management redeployment in
line with the new organizational structure.
Strategic Objective 4.2: Enhance the capacity of the staff and management through
continuous capacity development works
KPI 1: New blood work force included in the Bank (Continuous process).
 During the FY 2022/23, only one new employee joined the Bank
KPI 2: Trainings provided (Continuous process)
 During the fiscal year, a variety of training programs were provided for 3,324
employees at the Bank's premises and other training centres (including at the EIFS).
KPI 3: Exposure Visit and Experience Sharing Held (Continuous process)
 During the fiscal year, an employee was permitted to attend Master of Science (MSc)
in International Trade Policy and Trade Law. In addition, the Bank has provided
study leave for an employee to attend short-term training on Postgraduate Diploma in
Advanced Computer in India.
 In particular, the exposure visit is held on AADFI & AfDB Annual Meeting in Egypt,
Lease Financing Business Experience in India and online course on Capital Markets
and Financial instruments Certificate.
Strategic Objective 4.3: Ensure that the staff and management of the Bank adhere to
the policy and code of conduct and maintain work discipline in the Bank.
KPI 1: Administrative and disciplinary action taken (continuous process).
 During the FY2022/23, the Bank has taken administrative and disciplinary action
against a total of ten (10) employees. Three (3) of the employees were given a first
written warning; two (2) of the employees were given a first written warning with a
penalty of 12.5 percent of salary deduction; two (2) of the employees were given a
second written warning; One (1) employee served last written warning with salary
deduction of 25 percent; one (1) employee was given last written warning.
Additionally, last written warning and demotion was given for one employee of the
Bank.
Strategic Objective 4.4 -Establish succession plan for the next five years
KPI 1: Succession plan prepared by the end of June, 2021
 With financial support from the GIZ, GFA consultants submitted draft succession
planning.
Table 5: Strategic Pillar 5- Loan Recovery and Accountability
S.O. 5.1: Enhance the asset disposal KPI 1: Collection from disposal to be increased by
performance of the Bank 40 percent in 2020/21 F.Y.
S.O. 5.2: Improve the working methods KPI 1: 50 percent of projects under rehabilitation
and performance of PRLR functions will be uplifted to performing ones by the end
of June 2021
S.O. 5.3: Ensure the proper compliance KPI 1: Number of actions taken based on audit
to internal policies and procedures and findings (Continuous)
prevail law enforcement
Regarding this strategic pillar, the following activities have been carried out to achieve the
target:
Strategic Objective 5.1: Enhance the asset disposal performance of the Bank
KPI 1: Collection from disposal to be increased by 40 percent in 2022/23 F.Y.
 In the FY2022/23, a total of Birr 2.64 Billion was collected from asset disposals which
are managed by the On-going Concerns and Acquired Asset Management Directorate
and various Districts (Table 6).
Table 6: List and amounts of disposed Assets in FY2022/23 (in millions)
Initial Bid Disposal Sales
No Project Name
Price Amount
1 Ayka Addis textile PLC 1,824.7 1,824.6
2 Angeles cotton and textile PLC 258.8 315.0
3 Ruchi Agri PLC 91.5 93.0
4 BHO Bio products PLC 61.7 65.0
5 Ezana mining PLC 51.4 51.4
6 Else Addis textile (Stock) 48.3 48.6
7 Ayenew Degu/ Mersa tannery factory 43.2 45.2
8 Yigarsaduta agro processing PLC 36.8 38.3
9 Buta agro-industry PLC 27.5 32.1
10 Kidane Kebede 34.0 22.4
11 Atsebeha Gedena Hadera 16.4 16.6
12 Other 16 Projects (Annexed) 129.6 96.8
Total 2,643.2
Source: On-going Concerns Directorate and VP SMEs Cluster
Strategic Objective 5.2: Improve the working methods and performance of the project
rehabilitation functions.
KPI 1: 50 per cent of projects under rehabilitation will be uplifted to performing ones
by the end of June 30, 2022.
 Rehabilitation units at the Head Office and Districts are working with great effort to
uplift stressed projects using various rehabilitation methods. In addition, the NBE’s
decision for handling the non-performing loan in Tigray allowed projects contributed
for the drastic reduction of NPLs at the Bank level.
 In the FY2022/23, a total of 59 projects with total outstanding balance of Birr 839.98
Million were uplifted to performing loans from their previous status of non-performing
in June 2022 were (Table 7).
Table 7: List of Re-instated/Rehabilitated Projects in FY2022/23 (in Millions)
No Total
Name of Borrower June 2022 June 2023
outstanding
Sub-
1 VERDANTA HARVESTS PLC standard Pass 77.56
2 MESFIN TADESSE MULETA Doubtful Pass 54.28
Sub-
3 AMEN NATURAL SPRING WATER PLC standard Pass 51.56
MELKAMU AND HIS FAMILY AGRI DEV
4 PLC Loss Pass 45.59
Sub- Special
5 WEHAHA BOTTLING PLC standard mention 42.94
6 ASEL CONSTRUCTION WORKS PLC Loss Pass 39.88
Z.E.H AGGREGATE MANUFACTURING
MEAKAT AGRICULTURAL MECHANIZ
SORORO MACARONI MANU PROJECT Special
9 PLC Loss mention 24.76
10 ZATAT PLC Loss Pass 24.10
11 SISAY TESFA AND HIS FRIENDS PLC Doubtful Pass 22.36
Sub-
12 ASEMARAW MEKONEN standard Pass 22.17
13 WATTO COFFE PLANTATION DEVT PLC Loss Pass 22.15
14 LEGUDE AGRICULTURE PLC Loss Pass 20.49
15 WGI ZIERA GENERAL BUSINESS PLC Loss Pass 20.44
16 BEKRY RESHAD SEMAN Doubtful Pass 20.32
17 MUEZE YILAK MOLLA Loss Pass 20.29
18 GETACHEW KITILA GEMECHU Loss Pass 18.41
BLI AGRICULTURAL DEVELOPMENT
20 ALMETA IMPEX PLC Doubtful Pass 17.35
21 OTHER 39 PROJECTS NPLs Performing 206.61
Total 839.98
Source: Portfolio Management Directorate
Strategic Objective 5.3: Ensure proper compliance to internal policies and procedures
and prevail law enforcement
KPI 1: Number of actions taken based on audit findings.
 During the reporting period, there have been a total of 555 audit findings observed in
different working units of the bank. Out of which 145 were operational audit, 361
financial Audit, 26 IT audit and 23 legal audit findings.
 A legal Audit conducted for one Branch with eight (8) findings/ recommendations has
been given. From the total, six of the recommendations are fully implemented and two
are under progress.
 On the operational audits, there were a total of 145 recommendations were given for
Districts and Branches. Of which, 73 percent of the recommendations are fully
implemented. The remaining 27 percent of the operational audit findings are not
implemented yet.
 Financial Audits were conducted with a total of 361 recommendations given. Out of
which, 74.5 percent (269) are fully implemented, 8.9 percent (32) are under progress
and 16.6 percent (60) of the recommendations were not implemented yet.
Table 8: Strategic Pillar 6- Information Technology Systems
S.O. 6.1: To enhance the core Banking system KPI 1: Upgraded and updated core Banking system by
of the Bank the end of budget year.
S.O. 6.2: Enable the Bank use appropriate KPI 1: Fully implemented and functional reporting
technology for data management and report system (ERP) by the end of June 2021
preparation
S.O. 6.3: Facilitate the Bank’s operation by KPI 1: Fully networked branches by the end of Sept.
using electronic data exchange and transaction 2019
management
S.O. 6.4: Ensure that the Bank’s information KPI 1: IT security system installed by the end of Dec.
technology systems are secured and protected 2020
KPI 2: Disaster recovery site established by the end of
2022
S.O. 6.5: Enhance the credit process KPI 1: Applications installed by the end of Jan
through the use of information technology 2021
software
The Bank has undertaken the following specific activities under this strategic pillar and a
comparison is made against the previous year, if deemed necessary:
Strategic Objective 6.1: Core Banking system (T-24) upgrading and updating
KPI 1: Upgraded and updated core Banking system by the end of the budget year.
 It is completed. The Bank is using the upgraded and updated core banking system
starting from November 22, 2020. However, the system needs to be updated every two
years and the Bank is on the preparation stage to conduct the necessary update and
upgrade of core Banking system in the coming budget year. So far, the system requires
to be revisited for the incorporation of new module for Interest free Banking product.
During the reviewed year, the Bank had prepared upgrade assessment proposal and
after the approval of the president, the service provider agreed to upgrade the system.
Strategic Objective 6.2: Enable the Bank use appropriate technology for data
management and report preparation
KPI 1: Fully implemented and functional reporting system (ERP) by the end of June
2021.
 The Project office submitted an exit report for the Executives Management Committee
(EMC). So far, the exit report was discussed and waiting for approval from the
president. Currently, the ERP is fully implemented and has been operationalized.
 However, the utilization of the system was not done as per the demand. Taking into
consideration of new demand for Interest Free Banking and the realization of a need
for a system usage at full scale in the reporting process, the Bank has formulated a
Management Support Team and Technical Team in order to apprehend the usage.
 In addition, support team has been formed under Information Technology Service
Directorate (ITSD) to give any requested support and follow-up of the operation with
composition of technical and business staff in day to day activities.
Strategic Objective 6.3: Facilitate the Bank's operation by using electronic data
exchange and transaction management.
KPI 1: Fully networked branches by the end of Sept. 2019
 All the existing Branches of the Bank are fully networked with the core banking
system. Extending of the networking for the newly established Branches will be the
next task in accordance with the new organizational structure of the Bank.
 Previously, ToR has been prepared and Bid was published in detail for the
procurement of the required materials. As a result, the bidders submitted their
technical and financial documents. As the result of the technical evaluation and the
financial evaluation, the winner was announced for the next process.
 It is planned to commence in the coming budget year to fully network all of the
Braches that are recently opened in different parts of the country.
Strategic Objective 6.4: Ensure that the Bank's information technology systems are
secured and protected.
KPI 1: IT Security system installed by the end of Dec. 2022

 The IT security system installation has been completed with the exception of one
product that needs to be installed.
 INSA is consulting the Bank to resolve the security issue after the Bank requested
comment on the issue and currently the Bank is working closely.
KPI 2: Disaster recovery site established by the end of 2022 fiscal year.
 A direction has been given to build the Bank's Disaster Recovery site to be
implemented quickly.
 Currently, the Bank has prepared a short-term solution to procure a colocation service
from Ethio-telecom and waiting for the EMC deliberation on the procurement of the
service.
Strategic Objective 6.5: Enhance the credit process through the use of information
technology software
KPI 1: Applications installed by the end of January 2021
 The Loan origination and Document Management System is on the preliminary stage
in order to develop the software. Therefore, the information on the detail cost of the
product is collected and the budget estimation is done after making adjustment
considering the current situation.
Table 9: Strategic Pillar 7- Systems and Working Procedures

S.O. 7.1: Enhance the Bank’s risk KPI 1: Implemented risk grading and customer
management system classification by the end of Sept. 2020
S.O. 7.2: Strengthen the Monitoring and KPI 1: Revised performance management system
Evaluation system by the end of March 2021
S.O. 7.3: Revise the credit and lease financing KPI 1: Revised credit procedure by the end of
procedure March 2021
S.O.7.4: Establish appropriate communication KPI 1: Prepared and approved communication
and image building strategies strategy and information disclosure policy
by the end of March 2021
During FY2022/23, the Bank has carried out the following activities under this strategic pillar 7:
Strategic Objective 7.1: Enhance the Bank’s Risk Management System

KPI 1: Implemented risk grading and customer classification by the end of Sept. 2021
 Note: There is no status change in the reporting period.
Strategic Objective 7.2: Strengthen the Monitoring and Evaluation system
KPI 1: Revised performance management system by the end of March 2021
 The revised Balanced Score Card (BSC) performance measurement is fully

implemented and the Bank’s performance is measured/ evaluated by the BSC in a
quarterly and semi-annually basis. The Bank has set up a BSC Review Team to
provide performance based results based on the organizational structure for all
working units and ensuring its alignment.
Strategic Objective 7.3: Revise the Credit and Lease financing Procedure
KPI 1: - Revised credit and lease procedure manuals by the end of March 2021
 In the reviewed period, the bank assigned two committees to work on the Credit
procedure and Lease financing procedure. Both of the committees have prepared the
draft procedure and collected the essential comments from working units to
incorporate in the draft that needs to be sent to the president for approval.
 Note: There is status change compared to the previous year.
Strategic Objective 7.4: Establish appropriate Communication and image building

strategies
KPI 1: The Bank’s communication strategy has been prepared and approved for
information disclosure policy by the end of March 2021.
 The Communication Strategy is at draft stage. However, the second edition (revision)
of the first draft has been done after collecting the necessary document for the policy
and other related guidelines that are at drafting stage. These include Sponsorship and
Donation Guideline, Media and Communication procedure and Social Media Code of
Conduct are some of the documents that are under preparation.
Chapter Three
3. CREDIT OPERATIONS PERFORMANCE
3.1. Credit Operations Performances (FY2022/23)
This section presents the performances of total credit operations of the Bank. The FY2022/23
credit operations performances were presented by sector and operating units. In doing so, the
FY2022/23 actual loan approvals, disbursements, collections, and outstanding were compared
to the plan target as well as the performance in the preceding’s year. Subsequently, the annual
projections related to the credit operations in FY2023/24 will be presented based on the credit
operations performance of FY2022/23.
3.1.1. Total Loan Approval (FY2022/23)
The Bank planned to approve Birr 34.69 Billion for project and lease financing for
FY2022/23. The actual approval performance of FY2022/23 shows that the Bank approved
Birr 46.43 Billion. This remarkable achievement of approval indicates 133.8 per cent against
the planned target. In addition, the total loan approval performance during FY2022/23 is
107.8 per cent higher than the preceding year’s performance Figure 6: Trends of Total Loan
Approval (Plan vs. Actual)
Trend of Total Loan Approval (Plan Vs. Actual)
50,000.0 46,431.4
45,000.0
40,000.0
34,694.7
35,000.0
in Millions
30,000.0
25,000.0 22,340.6
19,165.1
20,000.0
13,761.0
15,000.0 10,400.4 10,097.7 10,359.5
10,000.0
5,000.0
-
2019/20 2020/21 2021/22 2022/23
Plan Actual
Figure 6: Total Loan Approval Trend (from FY2019/20 to FY2022/23)
The loan approval performance of the Bank shows a consistent growth of 100 percent for last
two consecutive years (Figure 6).
3.1.1.1. Total Approval by Sector
The actual total approval performance of manufacturing sector is 195.8 per cent against its
planned target. On the other hand, agriculture sector performs 94.9 per cent of its target.
Comparing with the achievements in the preceding year, manufacturing and agriculture
sectors exhibited growth of 131.7 per cent and 227.9 per cent respectively (Table 10).
Table 10: Total Approval by Sector Performance (FY2022/23) (‘000)
Source: SPCMD Compilation

3.1.1.2. Total Approval by Operating Units
Of the total loans approved amount in FY2022/23, Birr 34.69 Billion is approved at the
Corporate level. This achievement of Corporate loaning units is 148.1 percent against the
planned target. Moreover, the FY2022/23 achievement of Corporate loaning units is
increased by 100.6 percent compared to the actual approval performance of the preceding
year (Table 11).
Table 11: Loan Approvals by Operating Units Performance (FY2022/23) (‘000)

Performance
2021/22 2022/23
Against
Group Operating Unit Actual Plan Actual Change (%)
Target
(1) (2) (3) 5= [3-1]/1
4=3/2
Crop Production Directorate - 298,073.3 125,892.4 42.2% -
Horticulture and Forestry Directorate - 1,419,450.0 1,272,567.9 89.7% -
Livestock Directorate - 310,463.0 32,709.5 10.5% -
Poultry Directorate - 323,998.4 200,197.4 61.8% -
Textile and Leather Directorate - 427,919.4 112,379.7 26.3% -
Head Office
Food and Agro-Processing Directorate - 2,659,715.0 1,978,398.7 74.4% -

Chemicals and Pharmaceuticals Dir. - 791,512.3 - 0.0% -
Mining and Construction Directorate - 420,419.6 15,490,423.1 3684.5% -
Wood,Metals and Others Directorate - 3,143,895.4 3,166,086.3 100.7% -
Human Resource M Directorate 95,231.8 128,276.5 173,329.9 135.1% 82.0%
Ongoing Concern Directorate 1,203,534.1 1,621,150.6 2,023,855.0 124.8% 68.2%
Interest Free Banking Directorate - - - - -
External Fund and Credit Mgmt Dir. 5,669,441.1 5,499,999.0 6,839,631.4 124.4% 20.6%
CRMDs 10,328,210.8 6,382,969.2 3,275,486.3 51.3% -68.3%
Sub - Total 17,296,417.7 23,427,841.8 34,690,957.6 148.1% 100.6%
Adama District 684,741.5 1,458,232.8 1,586,576.5 108.8% 131.7%
Arbaminch District - 136,733.9 36,073.6 26.4% 0.0%
Assosa District - 126,140.8 58,140.0 46.1% 0.0%
Bahir Dar District 977,767.0 1,302,530.2 3,220,344.3 247.2% 229.4%
Bonga District - 204,843.4 60,693.1 29.6% 0.0%
Debrebirhan District - 303,743.4 392,765.3 129.3% 0.0%
Debremarkos Distict - 229,987.1 438,869.1 190.8% 0.0%
Dessie District 248,573.0 597,097.9 730,318.5 122.3% 193.8%
Dire Dawa District 399,598.8 447,818.2 303,153.4 67.7% -24.1%
Gambella District 31,642.8 377,725.0 96,667.3 25.6% 205.5%
Goba District - 116,278.2 220,306.8 189.5% 0.0%
Districts
Gondar District 196,354.6 777,680.6 573,944.2 73.8% 192.3%

Hawassa District 920,924.0 1,105,752.9 1,072,226.0 97.0% 16.4%
Humera District - - - 0.0% 0.0%
Jigjiga District - 194,004.6 245,580.1 126.6% 0.0%
Jimma District 97,460.0 276,293.5 38,181.7 13.8% -60.8%
Mekelle District - - - 0.0% 0.0%
Nekemte District 147,321.2 310,626.6 212,493.1 68.4% 44.2%
North East Addis Ababa District - 303,743.4 270,373.6 89.0% 0.0%
Semera District - 110,191.8 21,594.8 19.6% 0.0%
Shashemene District - 227,326.1 338,016.7 148.7% 0.0%
South West Addis Ababa District - 607,486.8 681,446.9 112.2% 0.0%
W/Soddo District 423,103.7 632,506.9 357,279.7 56.5% -15.6%
Wolkite District - 303,743.4 187,070.3 61.6% 0.0%
Addis Ababa District 916,675.6 1,116,365.8 598,322.5 53.6% -34.7%
Sub - Total 5,044,162.1 11,266,853.3 11,740,437.6 104.2% 132.8%
Grand Total 22,340,579.9 34,694,695.1 46,431,395.2 133.8% 107.8%
The remaining Birr 11.74 Billion is approved at Districts indicating a performance of 104.2
percent against the planned target. Compared to the total performance of Districts in
FY2021/22, the achievement in FY2022/23 is increased by 132.8 percent (Table 11).
When looking at the approval performance of work units at Corporate level, Mining and
Construction Directorate, On-going Concern Projects and Acquired Asset Management
Directorate, External Fund and Credit Management Directorate and Wood, Metals and Others
Directorate were performing above plan target. However, the remaining operating units
performed below their plan target. At the Districts level, Bahir Dar District, Goba District,
Debremarkos Distict, Shashemene District, Jigjiga District, Southwest Addis Ababa District,
Debre-Birhan District, Dessie District, Adama District achieved above the planned target in
the reporting period while the remaining Districts performed below their planned target.
3.2. Trends of Loan disbursement plan versus actual (2019/20-2022/23)
Figure 7: Trend of Total Loan Disbursement (Plan Vs Actual)
The above graph shows a graph titled "Trend of Total Loan Disbursement (Plan Vs Actual)".
The graph displays the planned and actual total loan disbursement values for the years
2019/20, 2020/21, 2021/22, and 2022/23.For each year, the graph shows two bars - one for
the planned value and one for the actual value. The planned values are shown in green, while
the actual values are shown in orange.
The graph indicates that the planned total loan disbursement has been steadily increasing over
the years, going from 11,962.50 million in 2019/20 to 26,375.70 million in 2022/23. The
actual total loan disbursement values have also been increasing, but at a lower rate compared
to the planned values. In 2022/23, the actual total loan disbursement is shown as 19,303.24
million, lower than the planned 26,375.70 million.
Overall, the graph visualizes the difference between the planned and actual total loan
disbursement figures over the four-year period, highlighting the organization's performance
compared to its targets.
3.3. Trends of Loan collection plan versus actual (2019/20-2022/23)
Figure 8: Trend of Total Loan Collection (Plan Vs Actual), Source: SPCMD
The image shows a graph titled "Trend of Total Loan Collection (Plan Vs Actual)". The
graph displays the planned and actual total loan collection values for the years 2019/20,
2020/21, 2021/22, and 2022/23.
For each year, the graph shows two bars - one for the planned value and one for the actual
value. The planned values are shown in green, while the actual values are shown in orange.
The graph indicates that the planned total loan collection has been steadily increasing over the
years, going from 7,885 million in 2019/20 to 14,816 million in 2022/23. However, the actual
total loan collection values have been lower than the planned values, with the gap between
the two widening over time. In 2022/23, the actual total loan collection is shown as 13,481
million, lower than the planned 14,816 million.
Overall, the graph visualizes the difference between the planned and actual total loan
collection figures over the four-year period, highlighting the organization's performance
compared to its targets.
3.4. Trends of Loan outstanding plan versus actual (2020-2023)
Figure 9: Loan Outstanding (Plan Vs. Actual)
The graph shown under a title of "Loan Outstanding (Plan Vs. Actual)". The graph displays
the planned and actual loan outstanding values for the years June 2020, June 2021, June 2022,
and June 2023.
For each year, the graph shows two bars - one for the planned value and one for the actual
value. The planned values are shown in green, while the actual values are shown in orange.
The graph indicates that the planned loan outstanding has been steadily increasing over the
years, going from 57.9 billion in June 2020 to 77.4 billion in June 2023. The actual loan
outstanding values have also been increasing, but at a lower rate compared to the planned
values. In June 2023, the actual loan outstanding is shown as 75.7 billion, slightly lower than
the planned 77.4 billion.
Overall, the graph visualizes the difference between the planned and actual loan outstanding
figures over the four-year period, highlighting the organization's performance compared to its
targets.
3.5. Trends of Non-Performing loans (NPLs) plan versus actual (2020-2023)
37.8% Trend of NPLs Ratio: Aggregate Loans (Bank level)

36.0%
34.4% 30.4%
31.0%
26.6%
26.0%
26.1%
21.0%
17.1%
16.0%
11.1%
11.0%
6.0%
June 2020 June 2021 June 2022 June 2023
NPLs including Tigray NPLs excluding Tigray

Figure 10: Non-Performing Loans
The graph displays the Non-Performing Loans (NPL) ratio, both including and excluding
Tigray, from June 2020 to June 2023. The green line represents the NPL ratio excluding
Tigray, while the red line represents the NPL ratio including Tigray. The graph shows a
steady decline in the NPL ratio over the years, with the NPL ratio excluding Tigray
decreasing from 34.4% in June 2020 to 11.1% in June 2023. The NPL ratio including Tigray
also decreases, but at a slower rate, going from 37.8% in June 2020 to 30.4% in June 2022.
The graph highlights the difference in the NPL ratio when Tigray is included or excluded,
indicating that the NPL ratio is lower when Tigray is excluded. This suggests that the NPL
situation in Tigray may be contributing to the overall higher NPL ratio for the bank.
Overall, the graph visualizes the trend of NPL ratios over the four-year period, providing
insights into the bank's loan portfolio performance and the impact of the Tigray region on the
overall NPL ratio.
3.6. SMEs (Project and Lease Financing) Approval by Sector
The overall approval performance of SMEs (project and lease) financing in FY2022/23 is
higher than 132.8 percent compared to the performance in the preceding year. The actual
approval performance of manufacturing sector in FY2022/23 is 130.5 percent higher than the
performance in the preceding year. On the other hand, agriculture sector performs 176.9
percent higher than the performance in FY2021/22 (Table 13).
Table 12: SMEs (Project and Lease) Approval by Sector Performance (FY2022/23)
(‘000)
Trend of SMEs (Project and Lease) Approval

14,000.0
12,000.0 11,740.4
10,000.0
8,000.0
in Millions
6,000.0 5,044.2
4,000.0
2,686.0
2,000.0
-
2020/21 Actual 2021/22 Actual 2022/23 Actual
Figure 11: Trend of SME Project and Lease Approval (from FY2020/21 to FY2022/23)
The trend of approval performance of SMEs (project and lease) financing has been showing a
double growth for the last two consecutive years (Figure 8).
3.7. SMEs (Project and Lease) Disbursement by Sector
The actual disbursement performance of SMEs (project and lease) financing is Birr 5.62
Billion at the end of June 2023. This achievement is 239.6 percent higher than the
performance in FY2021/22 (Table 18). Of this, the actual performance of agriculture and
manufacturing showed 118.5 and 259.8 percent increment respectively compared to the actual
performance in the preceding year respectively. Moreover, remarkable disbursement
performances in service as well as mining and energy were registered in FY2022/23
compared to the performance in the preceding year (Table 19).
Table 13: SMEs (Project and Lease) Disbursement by Sector Performance (FY2022/23)
(‘000)
Trend of Total SMEs (Project and Lease) Disbursement

6,000.00 5,564.30
5,000.00
4,000.00
in Millions
3,000.00
2,000.00 1,741.08 1,655.90
1,000.00
-
2020/21 2021/22 2022/23
Actual Actual Actual
Figure 12: Trend of SME Project and Lease Disbursement from FY2020/21 to
FY2022/23)
The trend data indicates that the actual disbursement performance of Districts in SMEs
financing is showing a year to year growth (Figure 12).
3.8. SMEs (Project and Lease Financing) Collection by Sector
Birr 4.9 Billion was planned to collect at District level in FY2022/23. The actual total
collection performance of Districts is Birr 2.56 Billion. This achievement is decreased by 7.2
percent compared to the achievement in FY2021/22. In FY2022/23, the collection
performances of all the sectors show a decline compared to their performance during the
preceding year (Table 14).
Table 14: SMEs (Project and Lease) Collection by Sector Performance (FY2022/23)
(‘000)
Trend of Total SMEs (Project and Lease) Collection
3,000.0 2,758.2
2,551.2
2,500.0 2,203.5
2,000.0
in Millions
1,500.0
1,000.0
500.0
-
2020/21 2021/22 2022/23
Actual Actual Actual
Figure 13: Trend of SME Project and Lease Collection (from FY2020/21 to
FY2022/23)
The trend data indicates that the overall collection performance of Districts is increased in
FY2021/22 compared to FY2020/21 achievement. However, the performance in FY2022/23
is declined compared to the performance in FY2021/22 (Figure 16).
3.9. SMEs (Project and Lease Financing) Outstanding by Sector
Birr 22.8 Billion loan outstanding was planned at Districts as at June 30, 2023. The actual outstanding
performance is Birr 23.51 Billion. This achievement is 26.2 percent higher than the performance in
FY2021/22 (Table 29).
Table 15: SMEs (Project and Lease) Outstanding by Sector Performance (FY2022/23)
(‘000

Trend of SMEs Project and Lease Financing Outstanding
25.0 23.5
20.0 18.6 18.6

in Billions
15.0
10.0
5.0
-
2020/21 Actual 2021/22 2022/23
Actual Actual
Figure 14: Trend of SME Project and Lease Outstanding (from FY2020/21 to
FY2022/23)
The trend data indicates that the loan outstanding at Districts level (Project and lease
outstanding) at the end of the fiscal years is showing a year to year growth (Figure
14).
3.10. Trend of SMEs NPLs (Project and Lease Financing)
The Districts' NPL ratio including Tigray Region is continuously declining since June 2020.
Accordingly, the Districts’ NPLs ratio as at June 30, 2023 was 29 percent both including and
excluding Tigray Region (Figure 15).
Trend of NPLs Ratio - SME Financing (Project and Lease)
65.0%
59.6%
60.0%
59.6%
55.0%
49.9%
50.0%
45.0%
40.0%
35.0% 42.6%
30.0%
28.1%
25.0%
20.0%
15.0%
Districts NPLs including Tigray Districts NPLs excluding Tigray

Figure 15: Trend of SMEs Financing NPLs (Project and Lease) Financing (2020-2023)
3.10.1. Trend of Lease Financing NPLs
The lease NPLs ratio including the Tigray Region was 22.1 percent as at June, 2022. The
lease financing NPLs is exhibiting a continuous decline. Accordingly, the NPLs ratio
including and excluding Tigray Region as at June 30, 2023 was 1.9 percent (Figure 25).
Trend NPLs Ratio: Lease Financing
30.0% 28.0%
24.8%
25.0% 22.1%
20.0%
15.0%
13.5%
10.0%
8.4%
5.0%
1.9%
0.0%
NPLs including Tigray NPLs excluding Tigray

Figure 16: Trend of Lease Financing NPLs (2020-2023
Chapter Four
4. Development Impact of DBE-Financed Projects
From the perspective of the Development Bank of Ethiopia (DBE), development impact can
be defined as the measurable positive changes or improvements brought about by the bank's
financing and support to various economic sectors and projects. The key aspects of
development impact from DBE's perspective may include:
1. Job creation and income generation: DBE's financing of projects and enterprises is
expected to contribute to creating new employment opportunities, improving incomes, and
enhancing livelihoods for the local population.
2. From the perspective of the Development Bank of Ethiopia (DBE), the tax generation to
the government can be considered as an important aspect of the bank's development impact.
By tracking and quantifying the tax generation to the government from its supported projects
and enterprises, DBE can demonstrate a tangible development impact that aligns with the
country's fiscal and economic objectives.
3. From the perspective of the Development Bank of Ethiopia (DBE), foreign currency
(FCY) generation can be considered an important indicator of development impact.
There are several reasons why FCY generation is a relevant development impact indicator for
DBE:
Macroeconomic stability: The generation of foreign currency, whether through exports,
remittances, or foreign direct investment, can contribute to the country's macroeconomic
stability by strengthening the balance of payments, improving the foreign exchange reserve
position, and reducing external vulnerabilities.
Economic transformation: The ability to generate foreign currency through productive
activities, such as export-oriented industries or import substitution, is a crucial driver of
economic transformation and diversification, which are central to Ethiopia's development
goals.
Availability of hard currency: The foreign currency generated can be used to finance
essential imports, such as capital goods, raw materials, and intermediate inputs, which are
necessary for the continued growth and development of the economy.
By tracking and reporting on the FCY generation from its portfolio of supported projects and
enterprises, DBE can demonstrate its contribution to the country's external sector
performance and overall development goals.7. Import substitution and export promotion:
DBE's support to industries and projects that enhance domestic production and substitution of
imports, as well as those focused on export development, can contribute to improved trade
balance and foreign exchange generation.
The overall objective of DBE's development impact is to facilitate the achievement of the
country's broader economic and social development goals, including poverty reduction,
industrialization, and sustainable and equitable growth.
4.1. Socio-Economic Impact of projects under head office loaning units
Table 16: Socio-Economic Impact of Head of Financed Projects

Sr. No Directorate No of Sectors Job created during project Tax paid to
project operation Govt.
Permanent Tempo Total Amount
1 Food and Agro Processing Directorate 9 Agro-Processing 1,517 464 2,033 331,801,383
2 Chemicals and Pharmaceutical Directorate 6 Manufacturing 203 584 787 12,216,124
3 Horticulture and Forestry Directorate 2 Agriculture 171 333 504 Tax Exempted
4 Livestock Directorate NA NA NA NA NA NA
5 Mining, Energy and Construction Directorate 6 Mining and Extractive 1,810 484 2,294 548,448,066
6 Textile and Leather Directorate 4 Manufacturing 1,123 575 1,698 30,605,582
7 Poultry Directorate NA NA NA NA NA NA
9 Crop Production Directorate NA NA NA NA NA NA
The data in the table-1 below gives us a comprehensive overview of the socio-economic
impact and challenges faced by the various loaning directorates of the Development Bank of
Ethiopia.
The above table provides a comprehensive overview of the socio-economic impact

assessment for the head office loaning units of the Development Bank of Ethiopia (DBE) for
the projects that were operational from July 2018 to June 2023.
The table covers 6 key loaning directorates of the DBE - Food and Agro Processing,
Chemicals and Pharmaceutical, Horticulture and Forestry, Mining, Energy and Construction,
Textile and Leather, and Livestock. Livestock Directorate, Poultry Directorate and Crop
Production Directorate did not have any operational projects within the time period of (2018-
2023)
In terms of the number of projects, the directorates varied considerably, with the Food and
Agro Processing Directorate having the highest number at 9 projects, while the Horticulture
and Forestry Directorate had the lowest at 2 projects.
The projects spanned diverse sectors, including agro-processing, manufacturing, agriculture,
mining and extractive industries, and textile and leather manufacturing. This indicates the
Bank's efforts to support a wide range of economic activities through its lending programs.
The data on jobs created during project operations provides valuable insights. The total jobs
created ranged from 504 for the Horticulture and Forestry Directorate to 2,294 for the
Mining, Energy and Construction Directorate. This highlights the significant employment
generation potential of the projects supported by the DBE.
In terms of tax contribution, the Mining, Energy and Construction Directorate stood out,
paying a substantial 548,448,066 ETB in taxes to the government. This underscores the
financial benefits that the government derives from the development projects facilitated by
the Bank.
Based on the information provided in the table, here is an analysis of the socio-economic
impact of the Development Bank of Ethiopia's head office loaning units from July 2018 to
June 2023.
Job Creation:
The projects supported by the bank's loaning units have created a significant number of jobs,
both permanent and temporary. The Food and Agro Processing, Mining, Energy and
Construction, and Textile and Leather directorates have been the largest contributors to job
creation, with over 1,000 permanent jobs and several hundred temporary jobs each.
However, the data is incomplete, as the Livestock and Crop Production directorates did not
provide any information on job creation.
Tax Contribution:
The projects have contributed substantial tax revenue to the government, with the Food and
Agro Processing, and Mining, Energy and Construction directorates paying the highest
amounts of 331.8 million ETB and 548.4 million ETB, respectively.
The Horticulture and Forestry Directorate projects were tax-exempt, likely due to incentives
or policies aimed at promoting those sectors.
Sectorial Diversity:
The bank's loaning units have supported projects across a range of sectors, including agro-
processing, manufacturing, agriculture, mining and extractives, and textiles and leather.
This diversification helps to spread the economic impact and reduce the bank's exposure to
risks in any single sector.
4.2. Major Challenges of projects financed by head office loaning units
Projects financed by head office loaning units face several challenges

Effectively addressing these challenges requires DBE to continuously strengthen its
institutional capacity, risk management practices, stakeholder engagement, and policy
alignment to maximize the development impact of its financed projects. Some of the key
challenges summarized in below tables:
Table 17: Major Challenges faced by head office loaning units Projects those are
operational from July 2018-June 2023
Sr. Directorate No of Sectors Major Challenges
No projects
1 Food and Agro Processing 9 Aggro-Processing • Raw Material Cost Escalation

Directorate • Foreign Currency Shortage
• Regional Unrest
2 Chemicals and Pharmaceutical 6 Manufacturing • Infrastructure and Utility Challenges
• Working Capital Shortages
• Political Instability and Regional Unrest
3 Horticulture and Forestry 2 Agriculture • No Challenges stated
Directorate
4 Livestock Directorate NA NA • No Challenges stated
5 Mining, Energy and 6 Mining and • Infrastructure Disruptions (electricity supply)
Construction Directorate Extractive • Political Instability and Security Concerns
• Foreign Currency Shortages
• Working Capital Constraints
• Debt Financing Challenges
6 Textile and Leather 4 Manufacturing • Political Instability and Security Issues
• High Employee Turnover
7 Poultry Directorate NA NA • No Challenges stated
9 Crop Production Directorate NA NA • No Challenges stated
(Sources: Head office loaning Units)
Based on the information provided in the table, the major challenges faced by the
Development Bank of Ethiopia's head office loaning units from July 2018 to June 2023 are:
Foreign Currency Shortage:
This challenge is reported across multiple directorates, including Food and Agro Processing,
Chemicals and Pharmaceutical, Mining, Energy and Construction, and Textile and Leather.
The lack of access to foreign currency is a significant obstacle for businesses that rely on
imported raw materials, machinery, or servicing of debt denominated in foreign currencies.
Political Instability and Regional Unrest: Several directorates, such as Food and Agro
Processing, Chemicals and Pharmaceutical, and Textile and Leather, have faced challenges
due to political instability and regional security issues.
This instability can disrupt business operations, supply chains, and the overall investment
climate in the country.
Infrastructure and Utility Challenges: The Chemicals and Pharmaceutical Directorate and
the Mining, Energy and Construction Directorate reported issues with infrastructure and
utilities, particularly disruptions in electricity supply.
Reliable and adequate infrastructure is crucial for the smooth functioning of manufacturing
and extractive industries.
Working Capital Shortages: The Chemicals and Pharmaceutical Directorate and the
Mining, Energy and Construction Directorate faced challenges with working capital
constraints. Insufficient working capital can hinder a business's ability to finance its day-to-
day operations and respond to market changes.
Debt Financing Challenges:
The Mining, Energy and Construction Directorate reported challenges with debt financing,
which can limit the ability of businesses to access the necessary capital for investments and
expansion.
These challenges highlight the need for the Development Bank of Ethiopia to work closely
with the government and other stakeholders to address systemic issues, such as foreign
currency availability, infrastructure development, and political stability, in order to create a
more conducive environment for businesses to thrive.
4.3. Societal and environmental impact of projects financed by Head office loaning
units
The societal and environmental impact refers to the wide-ranging effects that human
activities, technologies, and systems have on society and the natural environment. The
societal and environmental impacts can be both positive (e.g. technological progress,
environmental protection) and negative (e.g. pollution, social inequality). Assessing and
minimizing negative impacts while promoting positive ones is a key challenge for sustainable
development.
4.3.1. Societal Impact:
o Customers under Food and Agro Processing Directorate create societal impact, by
providing portable water access which improves community health and quality of life.
o .Customers under Chemicals and Pharmaceutical Directorate create societal impact by
Building multiple portable water projects that enhances water security for the
communities served.
o Customers under Horticulture and Forestry Directorate create Societal impact by
Constructing rural roads improves connectivity, access to markets, and economic
opportunities for rural populations.
o Customers under Mining, Energy and Construction Directorate create societal impact
by building schools and Participating in road construction that enhances connectivity
and accessibility. -
o Customers under Textile and Leather Directorate create societal impact by Building a
road that improves transportation and access.
o Customers under Wood, Metals and Others Directorate create societal impact
by constructing schools increases educational capacity and opportunities.
4.3.2. Environmental Impact:
For all the directorates, the information indicates "No negative impact", suggesting the
projects undertaken did not have any adverse environmental consequences. This is a positive
finding, though more details on the specific environmental considerations and mitigation
measures would be helpful to fully evaluate the environmental impact.
In summary, the available data points to predominantly positive societal impacts, particularly
in the areas of water access, education, transportation, and infrastructure development. The
environmental impact appears neutral, but more information is needed for a comprehensive
assessment. Continuing to monitor and optimize the balance between societal needs and
environmental protection will be crucial going forward.
4.4. Socio-Economic Impact of projects financed by districts units
Socio-Economic Impact of projects financed by DBE district units affects both local society
and the economy. These impacts can be broadly categorized into social and economic effects.
Here is a detailed analysis of the information provided in the socio-economic impact
assessment table for districts work units.
Table 18: Socio-Economic Impact of Projects Financed by Districts
Development Bank of Ethiopia
Socio-Economic Impact assesment for Districts
Projects that are operational from July 2018-June 2023
Type of Projects Sectors Job created during project operation Tax paid to Govt
Sr. No of
Districts
No projects Manufa Mining and Agro- Construct Tourism and
Project Lease Agriculture Permanent Tempo Total Amount
cturing Extractive Industry ion Hospitality
1 Adama District 84 10 74 43 40 1 2,133 464 2,597 66,725,480
2 Arbaminch District 15 1 14 4 4 2 2 2 1 197 146 343 5,504,666
3 Asosa District 4 3 1 3 1 77 110 187 5,308,063
4 Bahir Dar District 71 5 66 13 48 6 4 1,394 520 1,914 101,724,801
5 Bonga District 22 9 13 14 8 284 2,923 3,207 38,805,636
6 Debre Markos District 51 9 42 28 16 7 1,262 231 1,530 34,059,227
7 Debrebirahan District 27 5 22 8 9 7 2 1 393 204 597 24,982,883
8 Dessie District 47 4 43 17 8 5 14 3 794 105 900 20,649,943
9 Dire Dawa District 27 27 27 708 84 792 19,304,124
10 Gambella District 7 7 7 97 1,603 1,700 1,278,923
11 Goba District 30 30 27 3 213 88 284 623,960
12 Hawassa District 46 2 44 1 43 2 581 602 1,194 26,043,058
13 Jigjiga District 17 1 16 5 8 2 2 61 236 297 5,992,289
14 Jimma District 8 1 7 1 7 80 127 207 2,380,832
15 Mekelle District 39 13 26 25 13 1 354 168 522 3,364,633
16 North East Addis District 27 3 24 22 3 2 951 274 2,013 76,208,797
17 Nekemte District 14 14 5 8 1 145 320 465 5,744,013
18 Semera District 7 1 6 4 2 1 131 50 181 8,093,786
19 Shashemane District 70 3 67 35 34 1 547 235 782 7,837,720
South West Addis Ababa 94 11 83 7 80 3 1 3 - 3,650 274 3,917 146,952,109
20 Wolkite District 22 22 6 13 3 433 150 583 25,653,357
21 Wolayita sodo District 41 8 33 8 18 14 1 663 126 789 28,705,512
22 Humera District
Total 770 96 674 236 423 58 36 6 11 15,148 9,040 25,001 655,943,811
Project Distribution:
The table shows a total of DBE financed projects across 24 districts, with the highest
concentration of projects located in South-West Addis Ababa (94), Adama (84), and Bahir
Dar(71). At the aggregate district level, the majority of the projects belong to lease finance
customers, while a smaller portion are project finance projects. The project distribution is
skewed towards lease finance projects compared to direct project financing, suggesting the
DBE's emphasis on asset-based lending over direct project funding at district level. This
distribution pattern highlights the predominance of lease finance customers across the
districts.
Sectorial Composition:
The majority of the projects are in the manufacturing (435 projects) and agriculture (261
projects) sectors, indicating a strong emphasis on industrial development and value addition
in the agricultural sector.
The mining and extractive (60 projects), agro-industry (39 projects), and tourism and
hospitality (18 projects) sectors have a smaller representation, suggesting potential for further
diversification and expansion. The districts with the highest concentration of manufacturing
projects are South-West Addis Ababa, Adama, and Hawassa, highlighting these as industrial
hubs.
Job Creation:
The projects have created a total of 51,938 jobs, with 15,710 permanent and 35,415
temporary positions. The districts with the highest job creation are Gonder (26,937 jobs),
South-West Addis Ababa (3,917 jobs), and Bonga (3,207 jobs). The significant proportion of
temporary jobs suggests that the projects may have a limited long-term impact on
employment, and further efforts may be needed to promote more sustainable job creation.
Tax Contribution:
The projects have contributed a total of 674,914,905 Ethiopian Birr in taxes to the
government. The districts with the highest tax contributions are South-West Addis Ababa
(146,952,109 Birr), Bahir Dar (101,724,801 Birr), and North-East Addis Ababa (76,208,797
Birr).The tax contributions indicate the projects' significant economic impact and their
contribution to government revenues.
Overall, the table provides a detailed snapshot of the DBE's project activities and their socio-
economic impact across different districts in Ethiopia. The data suggests a focus on industrial
development and agricultural value addition, with significant job creation and tax
contributions. However, further analysis may be required to assess the long-term
sustainability and regional equity of these development initiatives.
4.5. Major Challenges of DBE financed projects at District level
DEB-financed projects managed by districts encounter a variety of obstacles and problems.

Projects that are under districts are facing recurring issues that impact the smooth operation
and success of their projects, including supply chain issues, security threats, working capital
shortages, infrastructure problems, and lack of access to foreign currency (FCY). Problems
with transporting materials and shortages of critical raw materials hinder project progress,
while political instability, conflicts, and security threats disrupt operations and market access.
Insufficient working capital and unreliable infrastructure, such as roads and power supply,
further hamper project efficiency.
The key challenges that adversely affect district projects are described in the following table.
Table 19: Major Challenges Faced by District

Major Challenges faced by Districts
Projects that are operational from July 2018-June 2023
Sr. No Districts Sectors Major Challenges
1 Adama Agriculture and • Additional Working Capital

Manufacturing
2 Arba Minch Agriculture and • Infrastructure problems
District Manufacturing • Lack of road that provide reliable all-season
access to the project site
3 Assosa Agriculture and Mining • Supply and high prices of agricultural inputs like
District seeds and fertilizers
• Security issues in the Western Oromia region
• Difficulty transporting marble blocks from the
quarry site to the slab processing t and supply final
product to market
4 Bahir Dar Agriculture, Mining, • Challenge to access to raw materials and market
District Manufacturing and Service to products due to security problem
• General security issues and instability in the
region
• Shortage of working Capital
5 Debre Agriculture,Manufacturing • Political Instability Challenges:
Markos and mining • Significant political instability and military
District operations in the region
6 Debrebirahn Agriculture, Agro • Security and Political Instability

District Processing, Manufacturing, • Lack of peace and security making all project
Construction and mining operations underutilized and inefficient
and Service • Problems accessing hard/foreign currency for
importing raw materials
• Input Cost Escalation:
7 Dessie Agriculture, Agro • Physical damage to assets due to conflict/war

District Processing, Manufacturing, • Security problems disrupting operations and
mining and Service markets
• Broader political instability affecting the business
environment
8 Dire Dawa Manufacturing • Electric Power Fluctuations:
District • Challenges related to unstable or fluctuating
electric power supply
• Shortage of Working Capital and Seasonality of
Raw Materials:
• Challenges related to the seasonal availability of
raw materials"
9 Hawassa Agriculture, Manufacturing • Security-related issues disrupting project
District and Mining operations
• Fluctuating electric power supply
• Shortage of critical inputs like fuel, wheat flour
from government sources
• Internal problems causing project shutdowns, but
still having to pay leases
• Shortages of critical raw materials like sugar and
other key varietie
10 Jigjiga Agriculture, Agro • Infrastructure challenges related to unreliable
District Processing, Manufacturing power supply.
and Mining • Operational issues with the product delivery
logistics
• Financial constraints due to working capital
shortages
11 Jimma Agriculture and
District Manufacturing • Shortage of working capital
• Hard currency/foreign exchange problems
12 North East Manufacturing, mining • Financial constraints (working capital, foreign

District and Service currency)
• Political/economic instability
• Supply chain issues (raw materials, skilled labor)
• Operational challenges (security, machinery
13 Nekemte Agriculture, Manufacturing •Security Problem around the project

District and Mining
14 Semera Agriculture, Manufacturing The projects are being impacted by ongoing war or
District and Mining conflict in the region
• Lack of Market Linkage
• The projects are facing challenges in accessing
and connecting to viable markets
15 Shashemane Agriculture, Manufacturing • Power interruptions

District and Mining • Equipment/machinery issues
• Procurement problems for specific items
16 Wolkite Agriculture, Manufacturing

District and Mining • Lack of Market Linkage
• The projects are facing challenges in accessing
and connecting to viable markets
17 South West Agriculture, Agro • Shortage of foreign currency.
Addis Ababa Processing, Manufacturing, • Social insecurity to enrich their customer
Construction and mining • Shortage of working capital
The table lists the major challenges faced by different district units of the Development Bank
of Ethiopia (DBE) for projects that have been operational from July 2018 to June 2023.
Here's a detailed analysis:
Key Points from the Table
Sectors Covered
 The sectors involved include Agriculture, Manufacturing, Mining, Agro Processing,

Construction, and Services.
 The most common sectors across all districts are Agriculture and Manufacturing.
Common Challenges
Security Issues:
o Present in multiple districts such as Assosa, Bahir Dar, Debre Markos, Debrebirahn,
Dessie, and others.
o Political instability and conflicts significantly disrupt project operations and market
access.
Financial Constraints:
o Shortage of working capital is a recurring issue in districts like Adama, Bahir Dar,
Dire Dawa, Jimma, and South West Addis Ababa.
o Hard currency/foreign exchange problems are noted in Debrebirahn and Jimma.
Infrastructure Problems:
o Infrastructure issues, such as lack of reliable roads and power supply, are mentioned
for Arba Minch, Jigjiga, and Dire Dawa.
o Fluctuating electric power supply is a specific challenge in Dire Dawa and Hawassa.
Supply Chain Issues:
o High prices and supply problems for agricultural inputs are noted in Assosa.
o Seasonal availability of raw materials and issues in accessing/importing raw materials
are challenges in Dire Dawa and Debrebirahn.
Market Linkage and Access:
o Challenges in accessing and connecting to viable markets are specifically mentioned

for Semera and Wolkite.
o Lack of market linkage is a barrier for project success in these districts.
Political and Economic Instability:
o Broad political instability affects regions like Dessie and Debre Markos.
Economic instability, combined with political issues, is a challenge for the North East
District.
Specific Challenges
 Adama: Additional working capital needed.
 Arba Minch: Infrastructure problems, including lack of reliable road access.
 Assosa: Security issues and difficulty in transporting marble blocks.
 Debrebirahn: Problems accessing foreign currency, input cost escalation.
 Dire Dawa: Electric power fluctuations and seasonal raw material availability.
 Hawassa: Internal project shutdowns due to various issues, including critical input
shortages.
 Jimma: Hard currency/foreign exchange problems.
 Nekemte: Security problems around projects.
 South West Addis Ababa: Shortage of foreign currency and social insecurity
impacting customer enrichment.
The DBE district units face significant challenges that can broadly be categorized into
security, financial constraints, infrastructure, supply chain issues, market access, and
political/economic instability. These challenges highlight the need for comprehensive
strategies to mitigate risks, ensure stable financing, improve infrastructure, enhance security,
and create stable market linkages to ensure the success and sustainability of projects.
4.6. Societal and Environmental Impact of projects financed by District
The societal and environmental impact refers to the wide-ranging effects that human
activities, technologies, and systems have on society and the natural environment. The
societal and environmental impacts can be both positive (e.g. technological progress,
environmental protection) and negative (e.g. pollution, social inequality). Assessing and
minimizing negative impacts while promoting positive ones is a key challenge for sustainable
development.
This socio-economic impact assessment examines the tangible benefits and potential
drawbacks of DBE-financed projects across multiple districts. The focus is on critical societal
impact indicators such as the establishment of schools and clinics, provision of potable water,
enhancement of road and electric power infrastructure, and other community benefits.
Additionally, the assessment identifies any negative environmental impacts associated with th
Here is a summary of the key points from the provided information:
4.6.1. Societal Impact
o The projects across the various districts had predominantly positive societal impacts,
including improved access to potable water, enhanced road and electricity
infrastructure, construction of schools and clinics, and support for community health
and low-income groups.
o Several districts saw multiple projects with significant positive impacts across various
sectors like education, healthcare, and basic infrastructure.
4.6.2. Environmental Impact:
o For the majority of the districts, there was no reported negative environmental impact
from the projects.
o However, in Adama District, 15% of the total 80 projects caused water and air
pollution.
4.7. Export proceeds and Foreign Direct Investment (FDI) performance of DBE
during (2018/19-2022/23)
Export proceeds, which refer to the revenue generated from the sale of a country's goods and
services to other nations, are crucial for economic growth. Strong export performance
generates foreign exchange earnings that can be used to finance imports, service external
debt, and expand domestic production capacity. It also allows a country to leverage its
comparative advantages, facilitate technology transfer, and expose its industries to global best
practices, thereby improving productivity. Additionally, robust export activities contribute to
job creation and income generation, particularly in export-oriented sectors.
Similarly, Foreign Direct Investment (FDI), which represents the investment made by a
foreign entity in a domestic economy, is an important driver of economic growth. FDI brings
in capital, technology, and managerial expertise, which can boost productivity and
competitiveness. It can lead to the creation of new jobs, revenue generation, and the
development of supporting industries. Furthermore, FDI facilitates the transfer of skills,
knowledge, and best practices, enhancing the host country's human capital. FDI can also
contribute to the diversification of the economic base and the integration of the host country
into global value chains.
The interplay between export proceeds, FDI, and economic growth is complex and dynamic,
with each element influencing the others. Strong export performance and the effective
attraction of FDI can work in tandem to drive higher GDP growth, industrial development,
and improved living standards. A comprehensive analysis of these factors can provide
valuable insights into a country's economic performance and development trajectory.
Table 20: Bank level export proceeds and FDI 2018/19 to 2022/23 in ''000,000''
Development Impact Evaluation and policy Research Directorate
Bank level export proceeds and FDI 2018/19 to 2022/23 in ''000,000''
2018/19 2019/20 2020/21 2021/22 2022/23
Sources of FCY Plan Actual Plan Actual Plan Actual Plan Actual Plan Actual
FCY
Exports USD 69.41 69.94 60.27 40.26 48.04 23.94 31.04 20.82 21.69 14.77
Proceeds
FDI USD 37.72 29.23 31.17 5.53 4.63 0.5 0.73 0.68 0.82 130.43
4.7.1. Export Proceeds:
o DBE's export proceeds, measured in USD, have shown a declining trend over the 5-
year period.
o In 2018/19, the actual export proceeds were USD 69.93 million, which then decreased
to USD 40.26 million in 2019/20, a drop of around 42%.
o The decline continued in the subsequent years, with actual export proceeds falling to
USD 23.94 million in 2020/21, USD 20.82 million in 2021/22, and further down to
USD 14.77 million in 2022/23.
o The planned export proceeds targets were also not met in any of the years, indicating
challenges in achieving the bank's export-related objectives.
o The consistent decline in export proceeds suggests weakening export performance,
which could have implications for DBE's ability to generate foreign exchange, finance
imports, and support the country's overall economic growth.
4.7.2. Foreign Direct Investment (FDI):
o DBE's FDI inflows have also exhibited a declining trend over the 5-year period.
o In 2018/19, the actual FDI stood at USD 29.23 million, which then decreased to USD
5.53 million in 2019/20, a drop of around 81%.
o The FDI inflows further declined to USD 0.50 million in 2020/21, USD 0.68 million
in 2021/22, and slightly increased to USD 130.43 million in 2022/23.
o The planned FDI targets were not met in most years, except for 2022/23, where the
actual FDI inflow exceeded the planned target.
o The significant decline in FDI inflows over the years suggests that DBE has faced
challenges in attracting and retaining foreign direct investment, which could limit its
ability to access capital, technology, and expertise for its operations and expansion.
Both the export proceeds and FDI inflows of DBE have shown a declining trend over the 5-
year period, with the bank consistently falling short of its planned targets.
This trend raises concerns about the bank's ability to generate foreign exchange, finance its
operations, and contribute to the broader economic development of Ethiopia.
The reasons behind the declining export proceeds and FDI inflows could be manifold,
including macroeconomic factors, sectoral challenges, operational inefficiencies, or policy
changes that may have impacted DBE's performance.
To better understand the underlying drivers and formulate appropriate strategies, it would be
beneficial to conduct a deeper analysis of the factors influencing DBE's export and FDI
performance. This could involve examining the bank's sectoral focus, target markets,
investment policies, and operational practices, as well as the broader economic and political
landscape in Ethiopia.
By addressing the challenges and implementing targeted initiatives to enhance export
competitiveness and FDI attraction, DBE could potentially reverse the declining trends and
contribute more effectively to the country's economic growth and development.
4.8. External Fund Management Directorate performances during (2018/19-2022/23)
The credit operation of external fund management fund directorate is summarized as follow
in the below table
Table 21: EFCMD, Operational Projects between July 2018 and June 2023
External Fund and Credit Management Directorate (EFCMD)
Projects that are operational from July 2018 - June 2023
Loan Loan Remark
Sr. Project Number of
Sector Sub-Sector Loan Loan Collected Outstanding Finance Type (Beneficiary
No name Beneficiaries
Approved Disbursed (P+I) (P+I) types)
• SME Capital Goods
Financial Financing
1 SMEFP 6,259 SM Es
Service • SME Micro Finance
micro-financing 9,516.55 7,309.47 3,749.60 4,898.26 • SME Private Commercial
Financial
2 WEDP WEDP MFI's 27,257 W omen
Service micro-financing 7,453.05 6,604.41 3,993.20 4,143.60
Financial
3 KfW SME SME Micro Finance 417 SM Es
Service micro-financing 432.02 230.97 0 231.23
Renewable Solar
MDRE&E Mining &
4 Energy & En. Solar home system 336,000 Lanterns
EP Energy 7,530.39 5,995.27 3,964.60 291.51
efficient pr and Homes
RUFIP I
5 Financial Service Micro Finance Loan 7,000,000 Rural
& II micro-financing 84 310.68 916.28 1,476.50
Households
6 RUFIP III Financial Service
micro-financing 3,606.57 3,281.34 2,487.50 2,347.53 Micro Finance Loan 5,091,895
Interventio
Consumer
Not yet reported
7 n Credit Financial Service Micro Finance Loan
micro-financing 1,704.55 1,474.22 1,362.89 44.74 Cooperative
Line for
TOTAL 30,327.13 25,206.36 16,474.06 13,433.37
I- Small and Medium Enterprises Financing Program (SMEFP) Program

The SMEFP (Small and Medium Enterprises Financing Program) under the Financial Service
sector has been a significant initiative aimed at supporting SMEs through SME Capital
Goods Financing, SME Micro Finance, SME Private Commercial Bank. Here is a detailed
analysis of the program's data and its contribution to SME’s:
Program Overview
 Loan Approved: 9,516,554,587 ETB
 Loan Disbursed: 7,309,473,319 ETB
 Loan Collected (P+I): 3,749,596,535 ETB
 Loan Outstanding (P+I): 4,898,262,849 ETB
 Finance Type: SME Capital Goods Financing, SME Micro Finance, SME Private
Commercial Bank
 Beneficiaries: 6,259 SMEs
Contribution to SMEs
The SMEFP program has played a crucial role in supporting entrepreneurs indirectly through
its broad support for SMEs. Here's how:
Access to Finance:
The program has facilitated significant financial support with over 7.3 billion ETB disbursed.
This level of financial backing has allowed entrepreneurs to access the capital needed to start
and expand their businesses.
By providing micro-finance, the SMEFP has helped to level the playing field, enabling more
SMEs to enter the entrepreneurial space.
Diverse Financial Products:
The SMEFP offers various financial products, including SME Capital Goods Financing and
SME Private Commercial Bank loans. These diverse financial options have allowed SMEs to
choose the type of financing that best suits their business needs, whether it be for capital
investment or working capital.
Support for SMEs:
The program's broad support for SMEs means that entrepreneurs who run small and medium-
sized enterprises have benefited from improved business sustainability and growth prospects.
This support has been vital in helping SMEs navigate challenges and capitalize on new
opportunities.
By bolstering the SME sector, the program has indirectly created a more inclusive economic
environment.
Job Creation and Skill Development:
The growth of women-owned businesses has led to job creation, providing employment
opportunities.
The SMEFP program has made significant strides in supporting SMEs. By providing
substantial financial support and diverse financing options, the program has empowered
entrepreneurs, contributing to their economic and social up-lift.
II-Women Entrepreneurship Development Program (WEDP)
The Women Entrepreneurship Development Program (WEDP) is a key initiative under the
Financial Service sector aimed explicitly at supporting women entrepreneurs through micro-
financing. Here is a detailed analysis of the program's data and its significant contributions to
women entrepreneurs:
Program Overview
 Loan Outstanding (P+I): 4,143,601,016 ETB
 Finance Type: Micro Finance Loan
 Beneficiaries: 27,257 women
Contribution to Women Entrepreneurs
Enhanced Financial Access:
With over 6.6 billion ETB disbursed, the WEDP has significantly improved access to finance
for women entrepreneurs. This financial support has been crucial in helping women
overcome the traditional barriers they face in accessing credit.
The program's focus on micro-finance loans has tailored its financial products to the specific
needs of women, providing them with the necessary capital to start and grow their businesses.
Support for Business Growth and Sustainability:
The substantial amount of loans approved and disbursed highlights the program's extensive
reach and impact. By providing financial resources, WEDP has enabled women entrepreneurs
to invest in their businesses, purchase necessary equipment, expand operations, and increase
productivity.
The program has fostered business sustainability, ensuring that women-owned businesses
have the financial backing needed to survive and thrive in competitive markets.
Economic Empowerment and Independence:
WEDP's support has empowered 27,257 women, allowing them to achieve greater economic
independence. This empowerment extends beyond financial aspects, enhancing their
confidence and ability to make significant business decisions.Economic empowerment of
women leads to broader societal benefits, including improved family welfare and community
development, as women are more likely to reinvest their earnings in their families and
communities.
Improved Loan Performance:
The program's loan collection rate, with nearly 4 billion ETB collected, indicates a robust
repayment performance. This suggests that the women beneficiaries are successfully
managing and repaying their loans, reflecting the viability and success of their businesses.
The outstanding loan amount of approximately 4.1 billion ETB shows ongoing support and
confidence in the program, ensuring continuous financial flow and support for more women
entrepreneurs.
Skill Development and Training:
Alongside financial support, WEDP often provides training and capacity-building programs
to enhance the business skills of women entrepreneurs. This holistic approach ensures that
women not only receive financial resources but also gain the necessary skills to manage and
grow their businesses effectively.
Skill development initiatives contribute to the long-term success and sustainability of
women-owned businesses, making them more competitive and resilient.
In conclusion, the Women Entrepreneurship Development Program (WEDP) has played a
pivotal role in fostering the growth and success of women entrepreneurs in Ethiopia. By
providing substantial micro-financing, the program has significantly enhanced financial
access for women, contributing to the growth, sustainability, and economic empowerment of
women-owned businesses. The program's robust loan performance and its focus on skill
development further underscore its effectiveness in supporting women entrepreneurs.
Overall, WEDP has made a meaningful impact on the entrepreneurial landscape for women,
promoting greater economic independence and societal benefits.
III. KfW SME Program
The KfW SME program, under the Financial Service sector, focuses on providing micro-
financing to small and medium-sized enterprises (SMEs). Here is a detailed analysis of the
program's data and its contributions to SMEs:
Program Overview
 Loan Approved: 432,015,544 ETB
 Loan Disbursed: 230,971,999 ETB
 Loan Collected (P+I): N/A
 Loan Outstanding (P+I): 231,225,119 ETB
 Finance Type: SME Micro Finance
 Beneficiaries: 417 SMEs
Contribution to SMEs
Improved Access to Finance:
The KfW SME program approved over 432 million ETB in loans, of which approximately
231 million ETB has been disbursed. This significant financial support has enabled SMEs to
access the necessary capital for their operations and growth.
By focusing on micro-financing, the program has addressed a critical gap in the financial
market, providing smaller businesses with the funds they need but often struggle to obtain
from traditional banking institutions.
Support for SME Growth and Development:
The financial assistance provided by the KfW SME program has been instrumental in
fostering the growth and development of 417 SMEs. This support has enabled these
businesses to invest in essential resources, expand their operations, and increase their market
presence.
SMEs are a vital component of the economy, driving innovation, employment, and economic
diversification. The program's support has contributed to enhancing the overall business
ecosystem.
Sustainability and Business Resilience:
With 231 million ETB still outstanding, the program shows a commitment to long-term
support for SMEs. This ongoing financial backing is crucial for the sustainability and
resilience of these businesses, particularly in navigating economic uncertainties and market
challenges.
The outstanding loan amount indicates that the program's beneficiaries are still in the growth
phase, utilizing the funds to stabilize and expand their operations.
Capacity Building and Technical Assistance:
The KfW SME program often goes beyond financial support by offering technical assistance
and capacity-building initiatives. These initiatives help SMEs improve their business
management practices, financial planning, and operational efficiency.
Enhanced business skills and knowledge contribute to the long-term success and
competitiveness of SMEs, ensuring they can effectively utilize the financial resources
provided.
Economic Impact and Job Creation:
By supporting SMEs, the KfW SME program indirectly contributes to job creation and
economic development. SMEs are major employers, and their growth leads to increased
employment opportunities, which in turn boosts local economies and community
development.
The program's focus on SMEs helps in diversifying the economic base, reducing dependency
on large enterprises, and promoting a more inclusive and robust economic environment.
In conclusion, the KfW SME program has made significant contributions to the growth and
development of small and medium-sized enterprises in Ethiopia. By providing essential
micro-financing, the program has enhanced financial access for SMEs, supported their
growth and sustainability, and contributed to economic diversification and job creation. The
outstanding loan amount indicates ongoing support, ensuring that these businesses have the
financial resources needed for their continued development. Overall, the KfW SME program
has played a crucial role in strengthening the SME sector, promoting a more resilient and
dynamic economy.
IV. Market Development for Renewable Energy and Energy Efficient Products
(MDRE&EEP) Program
The Market Development for Renewable Energy and Energy Efficient Products
(MDRE&EEP) program under the Mining & Energy sector focuses on promoting the use of
renewable energy and energy-efficient products. Here is a detailed analysis of the program's
data and its significant contributions:
Program Overview
 Loan Outstanding (P+I): 291,505,837 ETB
 Finance Type: Micro Finance Loan
 Beneficiaries: 336,000 rural households
Contribution to Renewable Energy and Rural Development
Enhanced Access to Renewable Energy:
The MDRE&EEP program has approved over 7.5 billion ETB in loans, with nearly 6 billion
ETB disbursed to beneficiaries. This substantial financial support has facilitated the
widespread adoption of renewable energy solutions among rural households.
By providing micro-finance loans, the program has enabled rural households to afford and
install renewable energy systems, such as solar panels and energy-efficient products, thereby
reducing their reliance on non-renewable energy sources.
Promotion of Energy Efficiency:
The program's focus on energy-efficient products has contributed to reducing energy
consumption and promoting sustainable energy practices. This initiative helps households
lower their energy bills and enhances their overall energy security.
Energy-efficient products, such as improved cookstoves and lighting solutions, not only save
energy but also reduce health risks associated with traditional energy sources, such as indoor
air pollution from biomass fuels.
Economic and Environmental Benefits:
By supporting the adoption of renewable energy and energy-efficient products, the program
has provided significant economic benefits to rural households. Lower energy costs and
improved energy access have enhanced the living standards and economic resilience of these
communities.
Environmentally, the program has contributed to reducing greenhouse gas emissions and
mitigating the impact of climate change by promoting clean and sustainable energy solutions.
Empowerment of Rural Households:
With 336,000 rural households benefiting from the program, MDRE&EEP has played a
crucial role in empowering these communities. Access to renewable energy has improved
their quality of life, enabling better lighting, communication, and access to information.
Empowered with reliable and sustainable energy, rural households can pursue new economic
opportunities, such as small-scale businesses and agricultural activities that depend on
electricity.
Sustainability and Long-term Impact:
The collection of nearly 4 billion ETB in loans (principal and interest) indicates a strong
repayment performance and the financial viability of the program. The outstanding loan
amount of approximately 291.5 million ETB shows ongoing support and the continued
impact of the program.
The MDRE&EEP program's long-term benefits include sustained access to renewable
energy, ongoing economic development, and improved environmental outcomes for rural
areas.
The Market Development for Renewable Energy and Energy Efficient Products
(MDRE&EEP) program has made significant contributions to promoting renewable energy
and energy efficiency in Ethiopia. By providing substantial micro-financing, the program has
enabled 336,000 rural households to adopt sustainable energy solutions, resulting in
economic, environmental, and social benefits. The program has not only improved energy
access and affordability but also empowered rural communities, contributing to their long-
term development and resilience. Overall, MDRE&EEP has been instrumental in driving the
transition to clean energy and enhancing the sustainability of rural households.
V. The Rural Financial Intermediation Program (RUFIP I & II)
The Rural Financial Intermediation Program (RUFIP I & II) has made a significant impact on
rural communities through its micro-financing initiatives in the financial services sector. With
a substantial loan approval of Birr 83,999,535 and disbursal amounting to 310,684,355 Birr,
the program has effectively provided essential financial resources to rural households. The
impressive collection of 916,275,760 Birr indicates strong repayment discipline among
beneficiaries, reflecting the program's successful facilitation of sustainable borrowing
practices.
The outstanding loan amount of 1,476,497,260 Birr underscores the ongoing financial
engagement and continued support provided by RUFIP I & II to rural communities. By
employing microfinance loans, the program has directly benefited approximately 7,000,000
rural households, enhancing their access to financial services and empowering them
economically. This access has enabled rural households to invest in livelihood improvements,
small-scale businesses, and agricultural activities, thereby fostering economic growth and
resilience in underserved regions.
RUFIP I & II's focus on micro-financing within the financial services sector has not only
promoted financial inclusion but also contributed to poverty reduction by providing
accessible capital for entrepreneurial endeavors and sustainable development. The program
stands as a testament to effective financial intermediation, significantly improving the socio-
economic landscape of rural areas by empowering individuals and communities with the tools
and resources needed for long-term prosperity.
VI. The Rural Financial Intermediation Program (RUFIP III)
The Rural Financial Intermediation Program (RUFIP III) has played a crucial role in
advancing financial inclusion and economic development in rural areas through its micro-
financing initiatives within the financial services sector. With a substantial loan approval of
3,606,573,758 Birr, the program has demonstrated a significant commitment to providing
financial resources to underserved communities. Of this amount, 3,281,338,009 Birr have
been disbursed, ensuring that rural beneficiaries have access to essential capital for various
economic activities.
The program's success is further underscored by the loan collection of 2,487,495,086 Birr,
indicating strong repayment behavior among borrowers and the program's effectiveness in
fostering responsible financial practices. The outstanding loan balance of 2,347,533,521 Birr
reflects ongoing financial support and continued engagement with rural communities,
reinforcing the program's sustainability and long-term impact.
By focusing on microfinance loans, RUFIP III has directly benefited approximately
5,091,895 beneficiaries, empowering them to invest in livelihood improvements, small
businesses, and agricultural enterprises. This support has not only stimulated local economies
but also enhanced the resilience of rural households by providing them with access to
financial tools and opportunities previously unavailable.
Overall, RUFIP III stands as a pivotal initiative in promoting inclusive economic growth and
reducing poverty in rural areas. Through its micro-financing activities, the program has not
only provided financial stability but also empowered communities to pursue sustainable
development, thereby contributing significantly to the socio-economic advancement of rural
regions.
VII-Intervention Credit Line for COVID 19
The Intervention Credit Line for COVID-19 has been a critical initiative within the financial
services sector, particularly in the realm of micro-financing, aimed at mitigating the
economic impact of the pandemic. With a substantial loan approval of 1,704,549,734 Birr,
the program swiftly disbursed 1,474,215,191 Birr to beneficiaries, demonstrating its
responsiveness in providing urgent financial support during a crisis. The significant collection
of 1,362,889,937 Birr indicates strong repayment capabilities among borrowers, reflecting the
effectiveness of the program in facilitating sustainable borrowing practices even amidst
economic challenges.
Despite the challenges posed by the pandemic, the program has maintained a relatively low
outstanding loan balance of 44,744,223 Birr, showcasing prudent financial management and
ensuring ongoing support to beneficiaries. The Intervention Credit Line has directly benefited
83 microfinance institutions (MFIs), consumer cooperatives, and multipurpose cooperatives,
highlighting its broad reach and contribution to supporting financial intermediaries that serve
diverse community needs.
By providing timely and accessible microfinance loans, the program has helped these
institutions continue their operations and extend critical financial services to individuals and
businesses affected by COVID-19. This support has not only bolstered economic resilience
but also facilitated recovery efforts, enabling communities to navigate the economic
downturn more effectively. Overall, the Intervention Credit Line for COVID-19 has been
instrumental in mitigating financial hardships, preserving livelihoods, and fostering stability
within the financial ecosystem during a global crisis.
Chapter Five
5. Conclusion and Recommendation
5.1. Conclusion
The development impact evaluation report provides a comprehensive assessment of the

socio-economic impacts generated by the Development Bank of Ethiopia's (DBE) financing
and support activities across various sectors from 2018 to 2023. The key findings
demonstrate that DBE's interventions have made significant contributions to Ethiopia's
economic development agenda following the implementation of a comprehensive strategic
reform from 2018/19 to 2024.
The Development Bank of Ethiopia has made significant strides in promoting economic and
social development through its financing initiatives. The projects funded have led to notable
improvements in infrastructure, access to essential services, and economic growth in various
regions. However, persistent challenges such as financial constraints, political instability, and
infrastructure deficiencies need to be addressed to enhance the impact and sustainability of
these projects.
The bank's efforts have yielded predominantly positive societal impacts, particularly in
improving access to water, education, and healthcare. The economic benefits are evident in
job creation and local economic stimulation. Environmental impacts have been minimal, with
most projects adhering to sustainable practices.
After the implementation of the 5-year strategic reform, the positive impacts of DBE's project
and SME financing have been enhanced, generating employment, increasing tax revenues,
and fostering social and environmental benefits. Throughout its operations, DBE has
demonstrated a strong commitment to its mission, values, and the pursuit of equitable growth
across different regions and sectors.
5.2. Recommendations
Based on the findings of the development impact evaluation, the following recommendations
are provided to further enhance the effectiveness and impact of DBE's activities:
 Strengthen monitoring and evaluation (M&E) systems: Develop robust M&E
frameworks to regularly track and assess the socio-economic impacts of DBE's
financed projects and programs. This will enable more informed decision-making and
allow for continuous improvement.
 Provide training for head office loaning units, district, and other concerned work units
to broaden their understanding of development impact.
 Strengthen Political Stability: Work with government and local authorities to mitigate
the effects of political instability and security issues on project operations.
 Promote Environmental Sustainability: Implement more robust environmental
assessment and monitoring frameworks to ensure projects do not adversely impact the
environment.
 Increase Market Access: Facilitate better market linkages and access for project
outputs to ensure economic viability and growth.
 Establish a well-structured database to easily extract all required data for development
impact assessments.it.
 Enhance Communication and Image Building: Finalize and implement the bank’s
communication strategy and information disclosure policy to improve transparency
and stakeholder engagement. Promote the bank’s achievements and the socio-
economic impacts of its projects to build a positive image and attract future funding.
 Continuously review and refine strategies: Regularly review and adapt DBE's
strategies, policies, and operational approaches based on the insights gained from the
development impact evaluations, ensuring the bank's activities remain aligned with
the evolving national development priorities.
By implementing these recommendations, the Development Bank of Ethiopia can further
optimize the effectiveness of its financing and support activities, driving sustainable
economic growth and equitable development across the country.

Development Impact Report

Uploaded by

Copyright:

Available Formats

You might also like

Development Impact Report

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Development Impact Report

Uploaded by

Copyright:

Available Formats

DEVELOPMENT BANK OF ETHIOPIA

The Development Bank of Ethiopia (DBE) is a pivotal institution in promoting economic

Environmentally, most DBE projects have adhered to sustainable practices, resulting in

Overall, DBE's projects have made significant contributions to Ethiopia's socio-economic

"The Development Bank of Ethiopia is a specialized financial institution established to

1.1. Objective of the Development impact report

1.1.1. General Objective

1.1.2. The specific objectives of the report are to:

Evaluate Socio-Economic Changes: To systematically measure and analyse the socio-

Enhance Accountability and Transparency: To provide a transparent account of DBE’s

1.2. Scope of the Report

1.3.1. Data Sources and Compilation

1.3.2. Analytical Approach

2. Implementation of DBE Strategic Reform 2018/19-

2.1. Fundamental problems that caused strategic reform to be implemented bank

2.2. Status of Strategic Reform Program Implementation

Table 1: Strategic Pillar 1- Policy and Business Model of the Bank

KPI 1: Approved business model by the end of June 2021

KPI 1: Source of funding study conducted by the end of March 2021

NPL ratio (GAAP) including Tigray Strategic Plan Vs performance

NPL ratio (GAAP) excluding Tigray Strategic Plan Vs performance

Strategic Objective 2.3: Optimize the Bank’s profit to ensure sustainability

Return on Equity Strategic Plan Vs Performance

KPI 3: Avoid Asset/ Liability maturity mismatch1

Asset-Liability Mismatch Trend

Table 3: Strategic Pillar 3- Governance and structure

KPI 1: Ensure 6 eyes principle at all levels of the credit operations.

 The Bank is subject to comply with respective governance-related directives issued by

Strategic Objective 3.3: Ensure proper and timely decision making

KPI 1: Customer satisfaction level of 80 percent by the end of fiscal year.

KPI 1: Fully Implemented branches rationalization by the end of March 2021.

KPI 1: Conduct Management redeployment by the end of June 2022

KPI 1: Collection from disposal to be increased by 40 percent in 2022/23 F.Y.

KPI 1: Fully networked branches by the end of Sept. 2019

KPI 1: IT Security system installed by the end of Dec. 2022

KPI 1: Applications installed by the end of January 2021

Table 9: Strategic Pillar 7- Systems and Working Procedures

Strategic Objective 7.1: Enhance the Bank’s Risk Management System

 Note: There is no status change in the reporting period.

Strategic Objective 7.2: Strengthen the Monitoring and Evaluation system

KPI 1: Revised performance management system by the end of March 2021

 The revised Balanced Score Card (BSC) performance measurement is fully

 Note: There is status change compared to the previous year.

Strategic Objective 7.4: Establish appropriate Communication and image building

3. CREDIT OPERATIONS PERFORMANCE

3.1. Credit Operations Performances (FY2022/23)

3.1.1. Total Loan Approval (FY2022/23)

Figure 6: Total Loan Approval Trend (from FY2019/20 to FY2022/23)

3.1.1.1. Total Approval by Sector

Table 10: Total Approval by Sector Performance (FY2022/23) (‘000)

Source: SPCMD Compilation

Table 11: Loan Approvals by Operating Units Performance (FY2022/23) (‘000)

Food and Agro-Processing Directorate - 2,659,715.0 1,978,398.7 74.4% -

Gondar District 196,354.6 777,680.6 573,944.2 73.8% 192.3%

3.2. Trends of Loan disbursement plan versus actual (2019/20-2022/23)

Figure 7: Trend of Total Loan Disbursement (Plan Vs Actual)

3.3. Trends of Loan collection plan versus actual (2019/20-2022/23)

Figure 8: Trend of Total Loan Collection (Plan Vs Actual), Source: SPCMD

3.4. Trends of Loan outstanding plan versus actual (2020-2023)