AfDB and Dashen Bank Sign $40M Trade Finance Deal to Boost Ethiopia’s Import-Export Growth

In a landmark move set to strengthen Ethiopia’s trade ecosystem, the African Development Bank (AfDB) and Dashen Bank have signed a $40 million trade finance transaction guarantee facility aimed at bolstering the bank’s ability to provide critical support to the country’s import and export sectors. The agreement, signed during a formal ceremony in Addis Ababa, underscores both institutions’ commitment to fostering inclusive economic development and enhancing the resilience of Ethiopia’s private sector amid growing regional integration under the African Continental Free Trade Area (AfCFTA).

Empowering Trade and Private Sector Development

Under the terms of the agreement, the AfDB will offer guarantees of up to 100 percent to confirming banks against non-payment risks tied to trade finance instruments such as letters of credit issued by Dashen Bank. These guarantees will allow Dashen to issue more trade finance products without requiring additional collateral, effectively mitigating credit risk concerns for international correspondent banks.

The facility is especially tailored to benefit small and medium-sized enterprises (SMEs) and local corporates engaged in the import of essential goods and the export of locally produced commodities. These businesses, often underserved by the traditional banking sector, play a crucial role in Ethiopia’s agricultural and manufacturing value chains.

Leadership Reflections: A “Pivotal Moment” for Ethiopia

Speaking at the event, Dr. Léandre Bassole, the AfDB’s outgoing Deputy Director General for East Africa and former Country Manager for Ethiopia, emphasized the significance of the agreement within the context of AfDB’s long-term strategy for Ethiopia.

“This facility marks a significant step in our partnership with Dashen Bank and will play a vital role in fostering inclusive, private sector-led economic growth in Ethiopia,” he said. “It is a pivotal moment in the Bank’s growing engagement with the Ethiopian private sector and our broader efforts to support financial sector development.”

Ethiopian Banking Sector Breaks New Ground

Echoing similar optimism, Dashen Bank’s Chief Executive Officer, Asfaw Alemu, described the transaction as a historic development not just for his bank but for the broader Ethiopian financial industry.

“This is a first-of-its-kind transaction for a private bank in Ethiopia,” Alemu stated. “Securing this facility is a testament to our strong governance, operational soundness, and strategic focus. It reflects a shared vision to unlock Africa’s full potential.”

Alemu highlighted that the backing from AfDB would enable Dashen to facilitate the import of critical goods such as fertilizers, pharmaceuticals, solar panels, and agricultural equipment — items integral to Ethiopia’s food security, healthcare, and industrial growth.

Laying the Foundations of a Stronger Financial Sector

Ahmed Attout, Director of the Financial Sector Development Department at AfDB, placed the deal within the larger framework of financial reforms underway in Ethiopia. He noted that the Bank’s support extends beyond trade finance and includes structural initiatives such as the establishment of the Ethiopian Capital Market Authority and the Ethiopian Securities Exchange.

“These efforts are part of our broader commitment to building a resilient and inclusive financial system in Ethiopia,” Attout said. “This facility will help Ethiopian banks overcome persistent challenges in securing international credit lines, opening the door to more competitive and efficient trade operations.”

He also spotlighted AfDB’s work in launching Youth Entrepreneurship Investment Banks (YEIBs), aimed at expanding youth access to finance, and supporting the expansion of digital financial services through improvements in Ethiopia’s national payment gateway infrastructure.

Regional Implications and Future Prospects

The timing of this agreement is particularly significant, as Ethiopia ramps up its participation in intra-African trade initiatives through the AfCFTA. By strengthening trade finance capacity and reducing barriers to international transactions, the facility is expected to have ripple effects across the region, encouraging more seamless commerce and increased competitiveness.

With this new facility in place, Dashen Bank is poised to serve as a stronger intermediary between local businesses and global markets, while the AfDB reaffirms its position as a key partner in Ethiopia’s development journey.