IFC helping Ethiopia expand its leasing sector, strengthen smaller businesses
IFC, a member of the World Bank Group, and the National Bank of Ethiopia hosted Ethiopia’s first National Leasing Forum to strengthen Ethiopia’s leasing industry and help it reach its estimated $1 billion potential for supporting thousands of smaller businesses across the country.
The forum gathered stakeholders from the public and private sectors to discuss opportunities to support Ethiopia’s micro, small, and medium-sized businesses with leasing finance, a financial solution under which businesses with limited or even no collateral can more easily acquire the vehicles, equipment, or other items, they need to grow.
Speaking at the forum through his representative, National Bank of Ethiopia Vice Governor, Ato Solomon Desta, said, “Ethiopia’s micro, small and medium-sized enterprises play a vital role in the development of our country. We have been working diligently to create an attractive environment to attract investment and new players into the leasing sector so more businesses can access finance through leasing.”
IFC Country Manager for Ethiopia, Djibouti, Eritrea, Sudan and South Sudan, Cheick-Oumar Sylla, said, “IFC has partnered with Ethiopia to strengthen the country’s leasing infrastructure so more firms can access lease financing and grow. To date, this partnership has helped more than 8,600 MSMEs access lease financing worth $240 million.”
Leasing plays a vital role diversifying financial sector product offerings and increasing access to finance. It is particularly suited for micro, small and medium-sized enterprises across a range of sectors, from agribusiness and manufacturing to health, wishing to finance equipment needs.
Leasing finance is accessible for businesses run by both men and women. However, the value of Ethiopia’s current leasing market is only a fraction of its estimated potential. The more support financial institutions are provided to offer leasing – legislatively, technically and financially – the greater the access to finance options available to small and medium-sized businesses.
IFC has recently helped Ethiopia’s government create a favorable regulatory environment for leasing and has helped the Development Bank of Ethiopia and the five regional finance companies based in Addis, Debub, Kaza, Oromia, and Waliya launch leasing operations. In 2019, Ethiopia’s first independent leasing company, Ethiolease, launched operations. Leasing is the only financial sector in Ethiopia open to foreign investors.
