IFC partners Dashen Bank to expand SME financing in Ethiopia

By:  Nana Appiah Acquaye

The International Finance Corporation (IFC) has announced a partnership with Dashen Bank S.C. aimed at increasing access to finance for small- and medium-sized enterprises (SMEs) in Ethiopia, with a focus on supporting economic growth, job creation, and financial inclusion.

Under the agreement, IFC will provide a $10 million unfunded risk-sharing facility to Dashen Bank. The arrangement will cover 50 percent of the bank’s credit risk on a targeted SME loan portfolio of up to $20 million equivalent. The IDA18 IFC-MIGA Private Sector Window (IDA PSW), a World Bank initiative designed to mitigate investment risks in challenging markets, will support the facility through a first-loss guarantee.

The partnership prioritizes SMEs operating in the agribusiness sector, as well as businesses that are women owned or led. Expanding financing opportunities for smaller enterprises remains a critical development objective in Ethiopia, where limited access to credit continues to constrain business growth and market expansion.

Dashen Bank Chief Executive Officer Asfaw Alemus described the initiative as a significant step in strengthening support for SMEs and agricultural enterprises. He noted that the risk-sharing mechanism would enhance the bank’s lending capacity while mitigating portfolio risks, enabling greater outreach to local businesses.

IFC Vice President for Africa Ethiopis Tafara emphasized that the agreement aligns with broader efforts to build a more inclusive and resilient financial system in Ethiopia. He highlighted the facility’s role in unlocking financing for micro, small, and medium enterprises, particularly agri-related businesses and women-led enterprises.

The announcement builds on IFC’s ongoing advisory engagement with Dashen Bank, which focuses on strengthening the bank’s SME business model, expanding market coverage, and enhancing credit underwriting and risk management practices.

IFC reported total commitments of $605 million in Ethiopia during fiscal year 2025, spanning sectors including telecommunications, agribusiness, and manufacturing. The institution’s strategic priorities in the country include agribusiness, infrastructure, renewable energy, logistics, manufacturing, pharmaceuticals, and housing.

IFC, a member of the World Bank Group, operates as a global development institution dedicated to advancing private sector growth in emerging markets. In fiscal year 2025, the organization committed a record $71.7 billion globally to private companies and financial institutions.