The National Bank of Ethiopia today granted the first financial services license to a foreign-owned company, Ethio Lease, as the Ethiopian Government delivers on its promise to gradually liberalize the economy and create jobs.
Increasing foreign direct investment is a centerpiece of Prime Minister Abiy Ahmed’s reform agenda to increase private sector growth in a country where an estimated 75% of the 100+ million population are under 30 and the average age is 18.
Ethio Lease will address the equipment and foreign exchange shortages facing Ethiopia by providing local businesses with access to high-quality equipment, allowing businesses to grow their operations and thereby creating jobs and increasing productivity throughout the country. Ethio Lease is a wholly-owned subsidiary of New York-based equipment leasing firm, Africa Asset Finance Company Inc. (AAFC).
Ethio Lease’s offerings include leases for high-quality equipment, mostly in partnership with leading Original Equipment Manufacturers (OEMs).
AAFC will provide funding, expertise, oversight, and governance to Ethio Lease, which is independently managed by an experienced team of mostly Ethiopian professionals located in Ethiopia. Frans Van Schaik, Chairman and CEO of AAFC will serve as Vice Chair of Ethio Lease.
Van Schaik commented, “Ethiopia is poised for growth as the government takes significant strides to create jobs and improve the quality of life for its population of more than 100 million. By providing leasing solutions to growing businesses, we believe our capital will help stimulate economic activity while generating attractive risk-adjusted returns for our lenders and investors.”
There is a large, underserved market for non-bank financial institutions in Africa. While equipment finance and leasing is widely used in developed countries and has become a trillion-dollar market in the U.S. where the Equipment Leasing Finance Association (ELFA) estimates the market at 70% of all equipment purchases it’s a different story in other parts of the world. According to the latest Global Leasing Report by the White Clark Group, the Pan-African leasing market was estimated to be just USD 5.4 billion in 2015, while the International Finance Corporation (IFC) estimated the Pan-African market at USD 40 billion in 2017. AAFC believes the increased adoption of leasing will be economically transformative and accelerate the development of many African nations and companies.
His Excellency Dr. Yinager Dessie, governor of the NBE, stated, “As the first company to provide equipment leasing services, Ethio Lease promises to be a game-changer in Ethiopia. We believe this venture has a huge potential to boost the economy while providing significant financial gains for the country.”
Michael Raynor, U.S. Ambassador to Ethiopia, said, “Ethio Lease represents an amazing opportunity – tens of millions of dollars of American capital; the latest in manufacturing, agriculture, and construction equipment technology; and a sustainable financial model that unleashes the potential of Ethiopian businesses without adding to Ethiopia’s debt burden. This is a prime example of how the United States invests in Ethiopia.”
Girma Wake, vice chairman of AAFC and chairman of Ethio Lease, said, “Throughout my career, I saw first-hand the importance of having high-quality equipment in sustaining and growing a business. This equipment not only makes businesses more productive, but it allows them to expand into new sectors and to hire new workers, driving overall economic growth.”
Gabriel Negatu, an AAFC board member, said, “Ethiopia and many other parts of Africa are well-positioned for a transition to a more open and dynamic economy. The introduction of equipment leasing in this market has the potential to have a transformative impact on the local economy and to create countless jobs.”
As Chairman and CEO of AAFC, Frans VanSchaik is a seasoned manager with more than 30 years of international experience in direct investment and operational management, including more than 10 years of on-the-ground experience in Africa.