Dev't Bank's Non-Performing Loan Ratio Rises to 40 Percent

Addis Ababa September 28/2018 Development Bank of Ethiopia said its Non-Performing Loan (NPL) ratio has rose to 40 percent in 2017/18 from 9.9 percent in 2013/14. In a press conference he gave today about the major achievements and challenges of the bank over the last five years, President of the Bank, Haileyesus Bekele said the rise is mainly due to the ineffectiveness of rain dependent commercial farming projects. Though the Bank is expected to finance commercial farming projects that are harvested through irrigation, it has been financing projects dependent on rain. Shortage of foreign currency, inadequate power supply, unrests that occurred in some parts of the country over the past few years and ineffectiveness of mega projects financed by the bank have contributed to the growing ratio, he added. However, Haileyesus noted “we are planning on pulling down the ratio to 15 percent and below through comprehensive reforms aimed at enlarging provision of foreign currency, capital, and necessary support to financed projects.” Mentioning that half of the 40 percent NPLs were provided support under the bank’s resolution strategy in order to revive them, the president said “the NPL problem is temporary for it will soon be alleviated when financed projects return to regular performance.” Building institutional capacity including human resource, introducing up to date technology and managing alternative ways of scaling up capital are among the measures to be taken, he elaborated. The bank financed a total of 471 commercial agriculture projects, of which only 177 are in good shape, while 298 partially maintain requirements. The over 100 year old Bank through its 110 branches and 13 districts across the country provides medium and long term loans for investment projects in the government priority areas such as commercial farming, agro-processing, manufacturing and lease financing for small and medium enterprises.