Dashen Bank S.C.

• Catalysing markets: Our investment will improve the enabling environment (for other investors) as it is the first by a foreign investor into the Ethiopian financial services sector.

• Direct: The loan is targeted at Dashen Bank’s exporter book for capital expenditure, which will help these business to grow and export more. Benefits for owners and employees of these businesses include increased jobs and improved quality and safety of jobs. The foreign exchange funding to exporters will also bring benefits for their suppliers, such as increased demand for inputs and improved productivity.

Ethiopia

The employees of the exporters are largely manual labourers in the agricultural sector, many of whose salaries are below the $6.85 PPP poverty line. This is in addition to the general characteristics of agricultural sector workers (described under suppliers).

Ethiopia

Suppliers to the exporting companies are largely household farmers who have the highest poverty rates in Ethiopia (World Bank, 2019). Agricultural worker incomes are below $1 a day (ILO, 2021) and agricultural workers are low-income by the $6.85 PPP poverty line (Ethiopian Labour Force Survey).

The loan will likely be taken up by approximately ten companies with an average of over 800 employees per company, securing their incomes (via business growth) and improving job quality in some cases. The suppliers to the exporting companies are largely household farmers with a broad range from 20 to 30,000 individuals per exporting company. Where companies are expanding, we would expect this number to increase slightly.

• Duration: This will be aligned to the tenor of the loan (three years). The tenor of the loans to the exporters will vary. Impact is expected to last beyond the tenor of the loan as it will be used for capital expenditure for business growth.

• Depth: This will vary depending on the company and the role of the employee but could include increased safety and learning new skills.

• Duration (supplier): This will be aligned to the growth of the exporter and will depend on the suppliers’ relationship with the exporter.

• Financial additionality: The investment makes BII the first foreign investor to provide funding to a private commercial bank in the country.

• Value additionality: This will be provided through an environmental and social action plan (ESAP), supporting the bank's E&S processes.

• Mobilisation: There is a strong case for mobilising other commercial and DFI investors by improving the enabling environment through the execution of a successful investment.

Evidence Risk

Data collection, especially on the agricultural exporters, could be difficult so assessing impact over time may be challenging.

External Risk

Political uncertainty, ongoing civil war, and a food crisis could all affect the macro environment, including the repatriation of funds.

Drop-Off Risk

Long-term, positive impact could be affected if the mobilisation thesis does not materialise and commercial capital does not replace DFI capital (creating a dependency on DFI funding).

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