Country
Ethiopia

Local Project Partner
Zemen Bank

German Project Partner
Frankfurt School of Finance and Management

Donor
European Investment Bank (EIB)

Duration
05.01.2026 - 14.01.2028

There is a financing gap for small and medium-sized enterprises (SMEs) in Ethiopia. This also affects the agricultural sector, which accounts for the largest share of employment in the country and a significant portion of exports. Financing SMEs along agricultural value chains is therefore of great importance for the country’s economic development. For this reason, the EIB is providing Zemen Bank with a credit line to build its portfolio in the agri-food sector. Zemen Bank must comply with extensive conditions attached to the loan, with a focus on climate protection, environmental sustainability, and women-led enterprises. This project supports Zemen Bank in implementing the credit line and fulfilling these conditions.

The project is taking place against the backdrop of major challenges in Ethiopia’s regulatory and economic environment. Since the end of the fixed exchange rate system in the summer of 2024, a significant devaluation of the Ethiopian birr (ETB) and the resulting rise in prices have had a major impact on the economy and society as a whole. As a result, the National Bank of Ethiopia has limited credit growth by private financial institutions to curb inflation. Liquidity constraints remain a recurring challenge that continues to limit the ability of Ethiopian banks to expand their lending. Existing credit lines from various donors, including the EIB, can fill this gap, with many of them targeting micro and small enterprises with lower loan volumes and specific target groups, such as women. These credit lines are largely disbursed in local currency. Banks and end borrowers are therefore not exposed to currency risk, and the market is responding well to the credit lines.

Tasks
1. Development of Zemen Bank’s environmental and social management systems
2. Supporting Zemen Bank in developing appropriate distribution channels in the agricultural sector
3. Raising awareness and providing support for compliance with EU directives
4. Expanding Zemen Bank’s reach among women
5. Supporting Zemen Bank in complying with the EIB’s contractual requirements
6. Providing tailored technical assistance to micro, small, and medium enterprises (MSMEs) as final beneficiaries