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The Development Bank of Ethiopia (DBE), which shed
all but one of its board members, requested an
additional 1.4 billion Br capital injection from the
federal government, Fortune learned.
The DBE has, in the first six months of this fiscal
year, given away 876 million Br in loans out of a
planned 2.4 billion Br. It made the request to the
National Bank of Ethiopia (NBE) following the
dwindling capital in the face of rising demand for
its services.
“We give loans for development,” said Essayas Bahre,
president of DBE. “We get the money that we lend
from what we collect, but when the money that we
collect does not suffice, the central bank fills in
the gap,”
The bank’s problems emanate from unhealthy loans,
say experts in the sector. Although the size if its
non-performing loans (NPL) has substantially
declined from what was once a staggering 94pc, it
nonetheless remains at over 60pc, six times larger
than what is internationally a best practice.
First established in 1909 under the reign of Emperor
Menelik II, as Society for the Promotion of
Agriculture and Trade, DBE has undergone eight
structural changes. It has gone through several
changes since then, including renaming itself seven
times before its current form in 2003, with a
capital of 1.8 billion Br. begun its reforms in mid
the 1990s, with a capital of 250 million Br, when it
was transformed from the Agricultural and Industrial
Bank of Ethiopia, a name it had retained during the
reign of the military regime.
It was during this period when the bank began to be
governed by a board of directors. It has had couple
of senior government officials leading it as
chairpersons of the board of directors such as Girma
Birru, also minister of Trade and Industry and the
incumbent Melaku Fenta, general director of the
Ethiopian Revenues and Customs Authority (ERCA).
Melaku is the surviving director at the DBE when the
government reshuffled all other directors few weeks
ago, Fortune learned.
Relieved from the board are Yakob Yala, state
minister for Agriculture and Rural Development in
charge of agricultural marketing; Abi Woldemeskel,
director general of the Ethiopian Investment Agency;
Nega Tsegaye, state minister of Foreign Affairs, and
five other government officials.
They have been replaced by six other officials,
including Abdulazziz Mohammed, vice president of the
Oromia Regional State; Haileselassie Tekie, general
manager of the Horticulture and Floriculture
Development Agency; Sileshi Lema, director general
of the Textile and Leather Development Centre;
Wasihun Abate, legal department head at the ministry
of Finance and Economic development (MoFED); and
Ahmed Hamza, an official at the Information Network
and Security Agency (INSA).
Essayas is pleased with the appointment of the new
directors, saying that they were picked from
government bodies that worked closely with the bank.
“There is a lot of work ahead of us,” Wasihun, one
of the new directors, told Fortune.
Whether or not the latest request for a capital
injection will be approved is not clear. Teklewold
Atnafu, governor of the central bank, was not
available for comment. |
Federal government reshuffles all but chairman of the board