AfDB Approves $40 Million Trade Finance Transaction Guarantee Facility To Dashen Bank

The Board of Directors of the African Development Bank Group has approved a USD 40 million transaction guarantee facility to support Dashen Bank’s trade finance activities in Ethiopia.

The Facility will provide support to Small and Medium Sized Enterprises (SMEs) and local corporates’ import and export trade finance requirements. It will also support intra-Africa trade, thus directly contributing to the successful implementation of the African Continental Free Trade Area (AfCFTA) agenda.

The Bank Group will provide a guarantee of up to 100 percent to confirming banks for the non-payment risk arising from the confirmation of Letters of Credit and similar trade finance instruments issued by Dashen Bank.

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Following the approval, the AfDB’s director general for East Africa, Nnenna Nwabufo said that supporting trade in Africa is a key priority at the Bank. “Trade finance is an important driver of economic growth and is critical for cross-border trade, particularly in emerging markets.”

Reacting to the news, Asfaw Alemu, CEO of Dashen Bank, stated that after fulfilling the stringent due diligence requirements “its Board of Directors has approved a trade finance transaction guarantee facility of $40 million. This much-needed guarantee facility will be instrumental in expanding our bank’s trade services across the region and beyond.”

The AfDB’s Transaction Guarantee Product is an unfunded instrument that provides up to 100 percent non-payment risk cover to confirming Banks for trade finance transactions of eligible Africa-based Issuing Banks, enabling the Group to support local African banks operating in the continent, particularly in low-income countries and transition states.

(APO)

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Bondholders balk at Ethiopia’s surprise call for losses

Ethiopia caught its bondholders off-guard with a proposal to introduce a 20 percent haircut in the nation’s debt-restructuring process, setting the scene for tense negotiations.

The government’s suggestion to reduce the value of USD one billion eurobonds due in December contrasts with proposals creditors exchanged with Ethiopia last year, which would have seen them receive the principal in full, but over a longer period and at lower interest rates, according to Kevin Daly, emerging markets investment director at Abrdn Investment Management Ltd.

“I don’t think the bondholders committee will accept that,” Daly said. “The terms they offered last year were very different.”

While Prime Minister Abiy Ahmed didn’t use the word “haircut,” he told lawmakers on August 1 that “due to the current restructuring, at least the $1 billion eurobond is reduced to $800 million.” Eyob Tekalign Tolina, state minister in the finance ministry, declined to provide details on the proposal.

Abiy’s government is using the Common Framework created by the Group of 20 for those talks. The guidelines help poor nations bring diverse sets of creditors together to restructure debts that become onerous in the wake of the pandemic.

The Common Framework requires private creditors to provide as much debt relief as bilateral creditors. In Ethiopia’s case, China accounts for USD 7.4 billion of the USD 12.4 billion official bilateral debt, and chairs the official creditor committee with France.

The committee now has a working paper on how to treat that debt in line with the IMF’s parameters, Eyob said this week. The government’s advisers forwarded a “firm proposal” with those principles to their counterparts guiding bondholders. Talks could start later in August, according to him.

Two people close to the bondholders committee said on Aug. 7 that they were yet to receive the new proposal, and that the government’s comments about proposed cuts was premature.

Making a public announcement about a haircut is a bad start to the negotiations, said Abrdn’s Daly. One way to get bondholders to accept such losses would be to include a caveat that compels the government to pay more should Ethiopia’s exports outperform the IMF’s forecasts, he said. The nation’s liberalized currency regime should boost exports, according to Daly.

While a 20 percent loss wouldn’t be oversized for a typical African sovereign debt restructuring, the pronouncement surprised bondholders. They’ll likely resist it and talks will be tough, according to Lutz Roehmeyer, chief investment officer at Capitulum Asset Management GmbH.

“There is very little sympathy on the side of bondholders for any haircut,” he said. “Nobody sees a reason right now for a default at all.”

(Bloomberg)

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Ethiopia advances towards biometric passport launch with ICAO engagement, pre-registration now underway

Pre-registration and identity verification for biometric passports with embedded microchips is underway in Ethiopia ahead of a launch next year.

Officials from the Ethiopian Immigration and Citizenship Service (ICS) met with the International Civil Aviation Organization (ICAO) in Montreal for a consultation to ensure the new e-passport is internationally recognized. The consultations also addressed the implementation of technology to use the biometric passport at land borders in a way that complies with ICAO standards.

ICAO’s standard for biometric passports is in the midst of an update, and all passport scanners must meet the new standard by the beginning of 2026.

Key representatives from the aviation industry, including government minister and ICAO officials, met for the ninth African-Indian Ocean Region (AFI) Aviation Week in Gabon during July to discuss mutual support and collaboration. ICAO’s “No Country Left Behind” project was a central focus at the event, the organization says.

ICAO Council President Salvatore Sciacchitano said that the presence of so many key representatives from States and international and regional organizations is a clear demonstration of the recognition of the importance of aviation in Africa as an enabler for sustainable economic development, and the region’s strong commitment to speak in a single voice in shaping the future of international aviation.

The ICAO held talks on the sidelines on capacity-building and implementation with Ethiopia requesting capacity-building assistance from the ICAO to support its passport launch.

The contract for the biometric passport production was awarded to Toppan at the end of last year, and the company broke ground on a new facility in Addis Ababa for passport manufacturing and issuance on May 8.

The government has raised passport issuance fees ahead of the rollout. The Immigration and Citizenship Service (ICS) has set the price for a new passport at 5,000 birr (approximately US$62), and for expedited issuance at 25,000 birr ($311). Replacements of expired or filled passports cost the same, but with an additional cost if a correction is required. Lost passports cost 13,000 birr ($162) to replace.

(BIOMETRIC UPDATE.COM)

Dashen Bank inaugurates shoppers’, travelers’ club cards

Dashen Bank has inaugurated two new cards, the Travelers club card and the Shoppers’ club card, at its headquarters today with the presence of various stakeholders.

The Travelers Club card is aimed at providing club member customers with financing services that will make their journey seamless, while the Shoppers club card is prepared for frequent shoppers that creates better shopping experience through transaction discounts and financing their purchases of household items.

Both club cards are operated through a club membership debit card and can be opened and operated individually or jointly.

The club accounts that are needed to hold these cards are opened with a minimum initial deposit balance based on the customers’ desired status of membership.

Travelers’ club members have to deposit 500,000, 1,000,000, 1,500,000, 2,000,000, and 2,500,000 birr to secure Basic, Blue, Silver, Gold and Platinum Travelers’ Card Club membership respectively.

Shoppers’ club members have to deposit 50,000, 100,000, 200,000, 300,000 and 400,000 birr to get Basic, Blue, Silver, Gold and Platinum Shoppers’ Club Card membership respectively.

For both cards, the minimum initial deposit balance for each club membership shall be locked to maintain club membership of the customer.

For members of travelers Club Card, five percent discount on local transactions and purchases from the bank’s partner travel agents, hotels, resorts, and other shopping, recreational and vacation centers. For frequent shopper club members, the bank offers six percent on Basic, seven on Blue, eight on Silver, nine for Gold and 10 percent of platinum club account transactions conducted on the bank’s partner and purchases from the bank’s partner travel agents, hotels, resorts, and other shopping, recreational and vacation centers.

The bank will pay an annual interest rate of seven percent on the monthly minimum balance.

The Travelers’ Club Card and Shoppers’ Club Card also create privileged and expedited access to Fly Now Pay Later and DubeAle loans and priority to access the bank’s other customer loan products.

To be eligible for opening both accounts one needs to have valid and renewed ID card, two recent photographs, and optionally tax registration certificate.

(The Reporter)