Ethiopian artist Yegerem Dejene

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The famous Ethiopian artist Ethiopian artist Yegerem Dejene appreciate his wife.

Development banks adopt various business models. Considering source of fund, various development banks operating elsewhere use deferent funding options including saving and deposit mobilization from the public. 

Others receive budgets from government or get finance from different financial institutions and/ or raise fund from domestic and international capital markets. Indeed, many financial experts believe that development banks should focus on their lending activities to avoid competition with the private banks in mobilizing savings. 

 

Coming back to Ethiopia and considering its funding mechanism, DBE (contrary to its establishment purpose indicated in proclamation number 83/2003, Article 6.6) is a non-deposit taking institution and uses first-tire (i.e., direct delivery) business model for over 90% of its credit operation. Further, it is fully owned by the government.

 

Starting this year, the Ethiopian government (i.e., NBE) is terminating its fund supply to DBE due to the end of the in-famous 27% NBE Bills. The closure of such major financial stream of the bank would undoubtedly undermine its liquidity. In economies such as ours where the private sector has acute shortage of investment finance and that the margin between deposit rate and lending rate is so high, it is advisable for development.

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