The National Bank of Ethiopia licensed Ethio Lease, a subsidiary of U.S.-based Africa Asset Finance Company, making it the first foreign-owned company allowed to provide financial services in Ethiopia, New Business Ethiopia reported.
The National Bank of Ethiopia building in Addis Ababa, photographed in April 2008. (Shagada / Wikimedia Commons, public domain) [file photo]
The equipment leasing company launched on Aug. 8, 2019, at the Sheraton Addis in the presence of central bank governor Yinager Dessie, Finance Minister Ahmed Shide and Ethio Lease board chairman Girma Wake, a former chief executive of Ethiopian Airlines, New Business Ethiopia and 2merkato reported.
“Being the first company to provide equipment leasing services, Ethio Lease promises to be a game changer in Ethiopia,” Yinager said. Ahmed Shide linked the license to a pledge Prime Minister Abiy Ahmed made at the World Economic Forum in Davos to open Ethiopia to foreign investment.
The company said it would buy equipment in foreign currency and lease it to firms in manufacturing, agriculture, health care, energy and food processing, including coffee, for monthly fees in birr that bundle insurance and maintenance. Chief executive Girum Tsegaye said Ethio Lease would not have to queue for scarce foreign exchange because it uses funds from its parent company.
U.S. Ambassador Michael Raynor said the venture brought “tens of millions of dollars of American capital” and a model that “unleashes the potential of Ethiopian businesses, without adding to Ethiopia's debt burden.”
Ethio Lease offers capital leases covering most of an asset's economic life, and lessees can buy the equipment for its residual value at the end of the term. The company said it carried out a year-long feasibility study and market research in 2017 before entering the market.
Vice chairman Frans VanSchaik said equipment leasing is a trillion-dollar market in the United States, where 70 percent of equipment is supplied through finance or leasing programs. The International Finance Corporation estimated the pan-African leasing market at $40 billion in 2017, New Business Ethiopia reported.
Sources: New Business Ethiopia, 2merkato