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Development Banking and Its Function in Ethiopia

The Development Bank of Ethiopia was established in 1951 as the country's first development financial institution. It has changed its name several times over the decades as its role evolved. The Bank aims to promote economic development through financing industry, agriculture, commerce and manufacturing. It obtains funds from the government and lends over half of its industrial financing to projects located in or around Addis Ababa. The Bank works to develop both agricultural and industrial sectors via loans, project administration and supervision, and facilitating economic activity in underdeveloped regions of Ethiopia.

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593 views3 pages

Development Banking and Its Function in Ethiopia

The Development Bank of Ethiopia was established in 1951 as the country's first development financial institution. It has changed its name several times over the decades as its role evolved. The Bank aims to promote economic development through financing industry, agriculture, commerce and manufacturing. It obtains funds from the government and lends over half of its industrial financing to projects located in or around Addis Ababa. The Bank works to develop both agricultural and industrial sectors via loans, project administration and supervision, and facilitating economic activity in underdeveloped regions of Ethiopia.

Uploaded by

samuel debebe
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© © All Rights Reserved
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Development banking and its function in Ethiopia

One of the two specialized bank established in the 1940s during


the imperial regime was the agricultural bank . it was initially
established in the 1945s and it was replaced by development
bank of Ethiopia in 1951. It is a specialized state owned and
governed by government developmental financial instituition .

It is also the first Ethiopian developmental financial institution.

It have been changed its name for several times or for about 7
times starting from the year 1945 up to 1994.

From 1945 to 1949 agricutural bank of Ethiopia

1949 to 1951 agricutural and commercial bank of Ethiopia

1951 to 1964 developmental bank of Ethiopia

1964 t0 1970 investement bank of Ethiopia

1970 to 1979 agricultural and development bank of


Ethiopia

1979 to 1994 agricutural and industrial and development


bank of Ethiopia

1994 to present time development bank of Ethiopia


The goal or the main objective of the bank is to promote
economic development and economic growth through industry
, agriculture, financing commerce and manufacturing .

The main source of fund for the government bank of Ethiopia is


the government grant . since it initially run and governed by the
government .

The bank has its own policy for loan requested by different
institution . Any deficit unit especially industrial and
agricultural sector want a fund , should have an asset valued
200 % and the amount that issued against debt if they fail to
repay the loan.

The bank security requested to direct loan to urban areas


because property value in this area are high and it excluded
loan to potentially productive area because the communial
owner ship prevail in this area .

Nearly 57% of the industrial sector financed by the bank which


are located around or in addis ababa .

The peculiar function of the development bank:

 To grant or advance loan and credit for the development


of both agricutural and industrial sector
 To supervise or administrate and control activites of
project that are financed by the bank
 To facilitate both agricultural and rural development
 T o promte economic activity in backward area of the
country
 To enhance evenly development among the nine region
of the country by allowing equal distribution of resources
 To facilitate both small and large sector industry
 To enhance the development of industrial sector by
increasing the productivity of agricultural sector .

 Factor that have been obstacle for the development


bank from working flexbliy :
 Lack of cadastral survey
 Lack of clearly defined certificate of ownership
 The prevalence of tenant cultivation
 The absence of legally defined tenant landlord
tenant relationship

Ethical conduct and compliance management is the working


culture of development bank of ethiopia.

The conversion of the countrys economic policy from


command to free market economic system granted the bank to
run independently from national bank of Ethiopia.

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