Guarantee Enat Bank (2016-2024)

The proposed intervention is a guarantee aimed at facilitating lending over 7 years to women and SMEs from a local commercial Bank in Ethiopia, Enat Bank. USAID, Sida and Enat Bank share the risks emerging from expanded credit to the targeted recipient group. Half of the risk of loss relating to the expanded loan portfolio stays with Enat bank, while Sida and USAID take on the rest. The total expected credit expansion covered under this guarantee is 10 MUSD. Thus the overall objective of the interventions is to improve access to credit for Ethiopian women and SMEs through the recipient bank. Through better access to finance, SMEs are expected to better realize their growth potentials which are currently hampered by financial repression in Ethiopia. As recruitments are required to meet the needs for growing SMEs, incomes are expected to grow and social as well as economic vulnerability decrease for entire households of newly recruited employees. In addition to direct outcomes such as income and employment improvements for vulnerable population segments, in Enat's case estimated to 75 percent increase in household incomes for 500 new employees, a range of more indirect benefits from credit expansion are common in financially repressed environments, such as increased access to products and services for Ethiopian people as consumers, improved global competitiveness as SMEs strengthen value chains for export products, increased incomes from investments and tax payments, as well as improved gender equality as benefits are directed at women's businesses.