DEVELOPMENT CREDIT AUTHORITY-DCA

1. DEVELOPMENT CREDIT AUTHORITY-DCA PRESENTATION TO FTF PARTNERS 2nd QUARTRLY COORDINATION MEETING

2. Overview of DCA In Ethiopia The major objective of DCA is to support the development of key Economic Sectors and financial markets through mobilization of public fund and demonstrate the sustainability and profitability of Credit operation under represented economic Sector (SMEs engaged in different activities) DCA programs have been implemented since 1999 at Global and National levels in order to facilitate increased lending via partnerships with local private banks. As a result, in Ethiopia more than 38 million USD loans have been disbursed to business enterprises with a subsidy cost of $3.2 million USD, which leveraged $1: $12 Currently, Ethiopian DCA have been expanded to provide enhanced coverage to agriculture enterprises (Small Agriculture farmers & Coop unions) and health care institutions.

3. DCA –Way of doing Business Background Approach • Needs Partnership agreements with local private banks • USAID provides 50% of borrower’s collateral needs • In the case of default, Partner banks reimbursed the net principal of loan provided on basis of the agreement • All loans made with partner banks’ funds • Due diligence and credit decisions made by lender

4. ACTIVE ETHIOPIAN DCA LPG Agricultural Equipment Financing DCA Health Care DCA Diaspora owned business enterprises LPG Women owned business enterprises LPG Structure

5. NEW SIGNED LPG STRUCTURE Health care • A US$13.5 million, multi-bank loan portfolio guarantee for private health providers offering HIV/AIDS and TB services • Equipment financing facility shared by two private commercial banks - NIB Bank and Bank of Abyssinia • A US$7.3 million, multi-bank loan portfolio guarantee for six years • Equipment financing facility shared equally by two private commercial banks - Bank of Abyssinia and Zemen Bank • Many applicants were submitted their BP to partner banks with the support of Serengeti-Capital TA & waiting for banks decision Agriculture

6. EXPECTED IMPACT • Enable financing of bankable projects that haven’t an opportunity to get loan without providing Collateral to banks • Partner banks increase lending in agricultural sector – especially financing for agricultural equipment • Targeted small holder farmers and agro-processing industries will have opportunity to accumulate capital assets that enable them to maximize their farming activities • Increase the diversity of employment opportunity and income in rural areas • Create a sustainable partnership between private sector & financial institutions, which enable partner banks to develop their own strategy for expanding lending to targeted business w/o guarantee requirements • Additional local banks will be attracted in DCA mechanism, and introduce Agr-Equip leasing business • Contribute the achievement of FtF objectives in poverty reduction & Economic growth in targeted regions Results Long-term goals

7. SERENGETI CAPITAL’S ROLE Provide technical assistance under the various programs as follows: Serve as a point of contact for DCA implementation & monitoring Provide borrower focused TA Provide bank focused TA Health care Agricultural equipment leasing Technical assistance Diaspora Women entrepreneurs

8. BORROWER FOCUSED TA Business development • Assist with business plan development • Review Business plan and cash flow projections • Appraise Feasibility studies • Advise on bank regulations and guidelines • Business registration assistance • Training on business skills & knowledge Advisory Services • Advise about the requirements of DCA guarantee loans • Link potential borrowers with appropriate banks

9. BANK FOCUSED TA • Training on SMEs lending mechanism • Training on credit-risk analysis and cash-flow lending • Pre-screening and referrals of potential beneficiaries • Evaluation of potential projects eligibility & requirements at field level with bank staffs • Monitoring and Supervision of beneficiary projects performance on the field • Designing & promoting a lending product using the guarantee scheme • Advising on setting up specific lending units in the bank to promote new products around guarantee • Develop Outreach strategy to potential borrowers targeted by guarantees Capacity building Marketing assistance

10. THANK YOU!