Ethiopian Businessmen Establishing Private Development Bank

Costantinos Berhe Tesfu (PhD), a board member of the African Union (AU) Anti-corruption Commission, is leading a group of 25 prominent individuals who are working towards establishing the first private development bank in the form of Afri-Agro Industrial Bank.

Aberra Deressa, Ethiopia’s former minister of agriculture (MoA); Brehane Deressa, former mayor of Addis Abeba; and Gabriel Negatu, director of governance, economic and financial reform at African Development Bank (AfDB); are included among the founders.

On Wednesday, June 15, 2011, the bank made a public offering of 100,000 shares, each valued at 10,000 Br, with the aim to raise one billion Birr.

A selection process for the bank’s president and vice president is underway, with the announcements expected as early as two weeks, the media  has learnt.

Afri-Agro Industrial Bank, which was initiated three years ago, is set to open a project office within the next five months, according to Costantinos, who is also an assistant lecturer at the University of Addis Abeba (AAU).

The bank aims to add value to the agriculture sector by working with farmers’ unions and cooperatives. The bank’s business model is based on short-term and long-term investments and is particularly targeting value additions in agro processing projects.

“Farmers’ unions and cooperatives are our key partners in this endeavour and we will work closely with them to enhance their capacities, both as customers and partners,” Costantinos told said. “Our vision is to revolutionise agriculture in Ethiopia by pushing for more investments in mechanised agriculture by Ethiopians. We see it as a viable model; the conditions in the country indicate that there are opportunities for the export of value-added agricultural products.”

If sesame is processed to make sesame oil, one’s earnings stand to increase by 3,000pc and the bulk of the freight decreases, he explained.

By the bank’s side will be a venture financing company to finance long-term projects that would also source financing from international institutions such as the World Bank (WB), AfDB, International Fund for Agriculture Development, and hedge funds, according to Costantinos.

The bank plans to open a research wing as a knowledge centre for its dealings and will draw experiences from similar agro-industrial banks in China, India, and Kenya with collaborations in research and capacity building, he claimed