VEGA Ethiopia & USAID Launch New DCA Program
Status:
Program Related
December 2008 - In the presence of the USAID/Ethiopia Mission Director, Mr. Glen Anders Mr. Addis Alemayehou, Chief of Party of VEGA Ethiopia AGOA+ and his team held a press conference on December 3rd, 2008 at the Hilton Addis. The purpose of the conference was to officially launch the start of a Development Credit Authority (DCA) Program to the public.
The Development Credit Authority (DCA)
The DCA is a broad financing authority that allows private sector bank resources to have a greater and sustainable impact in supporting economic growth. The program strengthens the ability of partner banks to extend loans to business enterprises in new sectors or target clientele.
In sum, USAID guarantees 50% of the borrower’s collateral requirements and will reimburse partner banks the net principal on default loans covered under the agreement. All loans are made with partner bank funds. Neither USAID nor VEGA Ethiopia is involved in due diligence or the credit decision made by the lending institutions.
New DCA Agreement
The DCA agreement was signed in September 2008 to cover collateral requirements for loans extended up to USD 17.12 million to women and Diaspora entrepreneurs.
Under the new agreement, VEGA Ethiopia will review business plans, appraise feasibility studies and provide guidance in the course of the loan approval process to qualified applicants. VEGA Ethiopia will also arrange trainings for various stakeholders, organize events and conferences to improve lending practices and promote DCA utilization. VEGA Ethiopia will act only as a facilitator; all the credit decisions are made by partner banks. The Financial Institutions covered under the new technical assistance arrangement are:
Nib Bank, and
VEGA Ethiopia AGOA+
The VEGA Ethiopia AGOA plus Project provides technical assistance to private firms and business membership organizations to increase AGOA exports and attract capital inflows and create jobs in Ethiopia.
To tap the potential of Diaspora and women entrepreneurs, USAID has broadened the scope of VEGA Ethiopia activities to include technical support to its Development Credit Authority (DCA) guarantee facilities. The purpose of these facilities is to avail resources to help the Diaspora and women entrepreneurs capitalize on existing and upcoming business opportunities.
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