Dashen Bank, one of Ethiopia’s largest private lenders, has secured a $40 million trade finance guarantee from the African Development Bank (AfDB) to support importers and exporters struggling with foreign currency access.
The agreement, concluded this week at Dashen’s headquarters in Addis Ababa, is part of the AfDB’s Transaction Guarantee Product.
It allows the bank to issue letters of credit and other trade instruments backed by the AfDB’s full risk coverage—effectively shielding international confirming banks from counterparty risk.
“This partnership not only strengthens our capacity to support Ethiopian businesses but also aligns with our vision of becoming the leading bank in Africa,” said Asfaw Alemu, CEO of Dashen Bank.
The AfDB had approved the facility in August, but formal execution follows recent shifts in Ethiopia’s foreign exchange regime, including a move toward a more flexible exchange rate system.
The National Bank of Ethiopia has been gradually narrowing the gap between official and parallel market rates in a bid to modernise the FX framework and improve transparency.
While central bank governor Mamo Mihretu declared Ethiopia’s chronic FX shortages “a thing of the past” in a recent statement, businesses still report delays accessing hard currency.
Banks continue to ration forex, and trade finance remains costly due to country risk perceptions.
The $40 million guarantee will support imports of essential goods such as fertilisers, pharmaceuticals, agricultural machinery, and solar panels.
Though unfunded, the facility offers critical risk mitigation that could lower transaction costs and improve trade flows.
According to an AfDB statement, the intervention is designed to “crowd in” international financial institutions and help restore confidence in Ethiopia’s trade system. The bank noted that limited access to trade finance has constrained private sector growth across much of Africa.
The facility also aligns with Ethiopia’s broader economic reforms and its preparations to open the banking sector to foreign competition.
It comes on the heels of Dashen’s partnerships with British International Investment and the Dutch development bank FMO in 2023 to expand SME lending and digital banking.
As Ethiopia positions itself for deeper integration into global markets, the AfDB’s risk-sharing tools are becoming increasingly central to unlocking private capital and supporting trade-led growth.
