AACCSA Advocacy Wing
Access yo finance to business (Manufacturing, Construction, Import and Export etc
Thanks all !!!!!
Around 53% of financial access is given to the private sector, especially in 2023. On average, there has been a 27% increase in loans over the last three years. Among the estimated 120 million people, an average of 2 million private sector entities took out loans, accounting for approximately 1.6%.
A large number of SMEs receive credit from Microfinance Institutions, but only have access to 7% of the total financial access.
The share of public bank loans was 77% ten years ago, but now it has decreased to 48.5%, with private bank loans increasing from 23% to 53.5%.
Generally, there is an increase in the demand for loans, however, banks face challenges related to leverage and deposit growth. Simultaneously, deposit growth is currently at 25% in private banks, public deposits have increased by 27%, while deposit growth in the private sector stands at 22% and public bank deposit rate is 25% in 2023. Liquidity is a problem.
Personally, I also need access to finance but have no collateral. Do any of you have collateral? However, the bank requires collateral, which is also a problem.
Oh, I have not repaid the loan I took for unplanned expenses from my wife. Do you have similar scenarios? Banks in Ethiopia also face problems with defaulted or expired loans and full default. Both banks and the private sector need to work on appraisals for repayment, and banks should reduce collateral requirements.
Inflation also plays a role in the problem of financial access in the background.
These are the notes I took from the panel discussion with experts from the National Bank, Development Bank, Private Banks, and international Banking service organizations today at the Interluxury Hotel, Addis Ababa.
On a personal note, the implementation of the Capital Market will solve most issues. Until then, I hope that the manufacturing, construction, import-export, and agricultural sectors can overcome these financial access challenges. Oh, and myself too.