The Commercial Bank of Ethiopia (CBE), a government controlled for-profit corporation, has announced that it will provide finance to four unnamed microfinance institutions (MFIs) in addition to the five it already supports. CBE already provides financial support to the Amhara Credit and Savings Institution and the Dedebit Credit and Savings Institution, which are two of the top fifty MFIs according to Forbes magazine, as well as the Addis Credit and Savings Institution and two others located in Tigray and the SNNP regional States.

Some critics chastise the CBE for only supporting MFIs with ties to regional or local governments. According to allafrica.com, Tezera Kebede of Poverty Eradication and Community Empowerment, another Ethiopian MFI, complained “about the inclination of CBE towards financing MFI’s which are either governmental or some how related to the government.” Abie Sano, President of CBE, responded by saying, “We finance MFI’s which only fulfilled CBE’s own requirements, rules, and procedures – but not to intentionally discriminate one from another,” but also added that the CBE was working to rectify recent criticisms.

When a 1963 law was passed forcing the State Bank of Ethiopia to separate its commercial and central banking responsibilities, the Commercial Bank of Ethiopia (CBE) was incorporated to handle the commercial banking duties. Although CBE is a share company, it is still under strong government control and is even described as a state-owned bank by the Addis Fortune. The prime minister’s office appointed Abay Tsehaye, who has worked on several other state-owned enterprises, as the chairman of the board on January 31, 2007. As of the 2006 annual report, several other board members were also government ministers.

According to the bank’s 2006 annual report (the most recent available), CBE had total assets of ETB 35.8b (USD 4.2b), a debt to equity ratio of 47 percent and a return on equity (ROE) of .48 as of June 30, 2006 (pg 27-28). Its Gross loan portfolio as of the same date was ETB 7.4b (USD 883m) (pg 36).

The Amhara Credit and Savings Institution, Ethiopia’s largest MFI, was founded in 1995 as a non-bank financial institution after evolving from a former non-governmental association (NGO). According to MIX Market, the MFI had totals assets of USD 138m a debt to equity ration of 271 percent and a return in equity of 28 percent as of December 31, 2007. It also had a gross loan portfolio of USD 110m which included 597 thousand active borrowers.

According to MIX Market, the Addis Credit and Savings Institution, founded in 2000, has total assets of USD 20m, a debt to equity ratio of 41 percent, and a return on equity of 2 percent. Its gross loan portfolio totals 13.9m with an outreach of 83,000 active borrowers. All financial data was reported as of June 30, 2006 and is denominated in local currency.

Dedebit Credit and Savings Institution is a non-bank financial institution founded in 1997. As of December 31, 2007, the MFI had total assets of USD 130m and a debt to equity ratio of 431 percent. A return on equity ratio was not available on MIX Market. It also had a gross loan portfolio of almost USD 98m with an outreach of 433 thousand active borrowers. The other two MFIs supported by the CBE were not listed on MIX Market, the microfinance information clearinghouse.

By Greg Casey, Research Assistant

Additional Resources:

AllAfrica.com: “Ethiopia: Ministry Says Four More Microfinance Institutions to Be Financed”

National Bank of Ethiopia: History

Forbes: “The Top 50 Microfinance Institutions”

Commerical Bank of Ethiopia: Home

CBE: 2006 Annual Report

Oanda.com: FX Converter

MIX Market: Amhara Credit and Savings Institution

Grameen Foundation Press Release: GF Secures More Than $5 Million in Funding for Ethiopian MFI ACSI

MIX Market: Addis Credit and Savings Institution

MIX Market: Dedebit Credit and Savings Institution

People’s Daily: Ethiopia’s Biggest Bank to Hand Over Management to Foreign Bank

Addis Fortune: PM Office Appoints Abay Tsehaye as CBE Chair