External Loan and Supplier’s Credit Beneficiaries in Ethiopia.

Reference External Loan and Supplier’s Credit (As Amended) Directives No. FXD /82/2022

External Loan and Supplier’s Credit Beneficiaries in Ethiopia.

What is External Loan?

What is Supplier’s Credit?

“External loan” means a loan acquired from an eligible recognized lender and approved and registered by the National Bank of Ethiopia;

“Supplier’s credit” means an interim short term financing provided by a third party   supplier;

Eligible Borrowers and Requirements

Who are eligible for External Loan and Supplier’s Credit?

Eligible Borrowers are;

  • Exporter
  • Foreign Investor
  • Manufacturing Sector
  • Agricultural Machines/Inputs Imports and LGP Gas import

What Are the Requirements fulfilled for External Loan and Supplier’s Credit?

Exporter

An exporter is eligible to acquire an external loan or supplier’s credit provided that the acquired loan is going to finance an export oriented investment that generates foreign currency.

The following requirements shall be fulfilled for approval and registration of external loan or supplier’s credit to be acquired by an exporter:

a) Application letter;

b) Valid export license given by pertinent licensing authority;

c) For External loan;

– The draft loan agreement with detailed terms showing interest rates and applicable charges, loan disbursement schedule, repayment schedule, borrower-lender relationship, purpose of the loan and other particulars as may be deemed necessary by the National Bank of Ethiopia

d) For suppliers credit;

– Pro-forma invoice with repayment period and term of payment

e) Document justifying the capacity to repay the loan

You can read the requirement should be fulfilled for other eligible borrower in External Loan and Supplier’s Credit (As Amended) Directives No. FXD /82/2022.

Approval and Registration of External Loan

The National Bank of Ethiopia shall register external loan up on presentation of the following documents:

a) Application letter;

b) A bank advise (if the loan is in cash);

c) Customs declaration and all relevant shipping documents (if the loan is in kind);

d) Copy of external loan approval letters

The National Bank of Ethiopia shall issue approval letter for external loan and suppliers credit if all conditions are fulfilled.

All-in- Cost Ceilings

The all-in-cost ceilings for external loan shall be:

Average Maturity Period  All-in-cost Ceilings  
Up to three years  six month SOFR for USD or Equivalent in ESTR for EURO and SONIA for GBP Plus 2%
Three years and up to five years  six month SOFR for USD or Equivalent in ESTR for EURO and SONIA for GBP Plus 3%  
More than five years  six month SOFR for USD or Equivalent in ESTR for EURO and SONIA for GBP Plus 5%  

When changing international market requires, the National Bank of Ethiopia may vary the all in cost ceiling stated here in above.

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