Factors Affecting Project Financing in Development Bank of Ethiopia (The Case of Head Office, Addis Ababa, Ethiopia)

Abstract

Development Bank of Ethiopia is a financial institution that is mandated to finance various economic sectors’ projects for the fulfillment of Ethiopian development. This study is undertaken with the objective of assessing the practices and identifying the factors affecting project financing in Development Bank of Ethiopia. To achieve this objective, both qualitative and quantitative research approaches were used together. The researcher used both primary and secondary source of data and the study used questionnaires and semi- structured interview for data collection. The target of population for this study was managements and employees those are working on credit, appraisals and loan approval positions. The target population comprises 153 staffs. The study used census. The data was analyzed through the use of IBM Statistics SPSS version 23.0 software that involves tables, frequency distribution and percentages. Based on the results, the study has identified factors as borrowers/customers related, bank specific and external environment related factors. Regarding borrowers the study identified that they have not enough understanding and knowledge on their own project, they have not timely and sufficiently presented their documents as per the standard of the Development Bank of Ethiopia, they have weak assessment on the market, technical, economic and environmental feasibility for the applicable projects, they have weak financial strength and risk management to finance their projects and have weak back and forward integration with their parties. Concerning bank specific, the research identified that bank has no flexible policies and procedures as per the necessity of each project and document screening, appraisal and disbursement works has long time process. Moreover, all external environment related factors are identified as project financing factors in DBE. Based on the key findings and conclusion of the study, the researcher forwarded the significant recommendations. The bank shall conduct continuous awareness creation forums as well as experience sharing programs with different government organs, stakeholders and collaborators to streamline the Bank’s service to align with national development agenda