The Development Bank of Ethiopia is launching a €31 million concessional loan facility, funded by the EU and KfW, to support small businesses in Afar, Amhara, and Tigray.
The Development Bank of Ethiopia (DBE) has announced a new financing initiative aimed at supporting micro, small, and medium-sized enterprises (MSMEs) in regions impacted by conflict. The program, supported by €31 million in funding from the European Union and the German government’s KfW Development Bank, will offer loans at concessional interest rates.
Tefera Befikadu, Director of Micro, Small and Medium Enterprises and Green Economy Projects at the DBE, confirmed that the funds will be channeled through four commercial banks and one microfinance institution. The initiative is designed to provide accessible capital to enterprises operating in the Afar, Amhara, and Tigray regional states.
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The loan facility is open to businesses across several key sectors, including:
Manufacturing
Services
Trade
Construction
Agro-processing
The program will prioritize applications from young entrepreneurs and women-led enterprises. This initiative follows a broader agreement signed in May 2026 between the DBE and its development partners to establish a lending facility specifically for areas affected by conflict and natural disasters.
Strategic Context
This lending program marks another step in the DBE's ongoing operational transition. According to Aksion.ET data intelligence, the bank has significantly improved its financial position over the last five years, reducing its non-performing loan ratio from 57.6% to a range of 7.8% to 13.4% through stricter recovery frameworks and a shift in sector exposure. As of the latest reporting, the bank maintains an asset base of approximately 38 billion Br, reinforcing its role as a key state-owned financial institution under the Ethiopian Investment Holdings.
While the bank has stabilized its balance sheet, it continues to navigate operational challenges, including foreign exchange shortages that impact machinery imports and ongoing coordination efforts with regional administrations regarding land titles and project foreclosures.
Source: New Business Ethiopia
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