The Development Bank of Ethiopia (DBE) is to take yet another loan at 1.4 billion Br from the Commercial Bank of Ethiopia (CBE) in its bid to fulfil its lending commitments, estimated to reach over three billion Birr, which are approved for a series of companies, including some in the export sector.

The bank extended 876 million Br in loans in the first six months of the 2009/10 fiscal year. It started seeking loans itself because it was short on cash to meet its lending target of 2.4 billion Br for the year, according to Esayas Bahre, president of the DBE.

The decision to lubricate the investment financing arm of the state came after a national export committee, chaired by Prime Minister Meles Zenawi, decided, last week, to respond to the demands of the DBE’s managers for additional financing. A month ago, they requested the additional financing either through a capital injection or through bonds from the National Bank of Ethiopia (NBE).

The DBE will get the money from the CBE on five per cent interest, which it will advance to its borrowers on 7.5pc interest, reliable sources disclosed. The DBE will be disbursing this money to the companies whose budget requests have been approved in the next five months.

This is not the first time the DBE has been oiled with cash from another state owned bank. A little over four billion Birr was channelled from the CBE to the DBE over the past two years. In May 2009, it borrowed 1.2 billion Br, with the first disbursement of 300 million Br made in September 2009.

Companies in the textile, leather and cement industries are in line to get loans from the bank, Esayas told Fortune. These are prioritised sectors because the first two are export focused and the second is vital for the booming construction industry in the country. Local and foreign direct investment (FDI) companies are among those that could get the loans, Esayas said.

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