Good news for international investors. Africa’s second most populous country Ethiopia has shown it is now open for business by granting its first ever finance license in years to a foreign-owned company, Ethio Lease.
Here Is All You Need To Know
- The license was from the National Bank of Ethiopia which granted the first financial services license to a foreign-owned company, Ethio Lease.
- Ethio Lease is a wholly owned subsidiary of New York-based equipment leasing firm, Africa Asset Finance Company Inc. (AAFC).
- 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.
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GDP of Ethiopia
Ethio Lease Is Leading The Way For Explosion In Foreign-Led Investments In Ethiopia
Indeed, this finance license is a major invitation for foreign-led businesses to come invest in Ethiopia. So expect the emergence of a vibrant startup ecosystem led by foreign investors.
The United States is already leading the pack of investors
“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,” US Ambassador to Ethiopia, Michael Raynor said,
U.S.-based Africa Asset Finance Company Inc. (AAFC) is a non-banking financial services firm that provides equipment leasing and finance solutions. The firm is headquartered in New York. AAFC’s wholly-owned Ethiopian company, Ethio Lease, specializes in providing capital leases (or finance leases) to Ethiopian businesses for equipment in a range of vertical markets. For additional information, please visit www.aafc.com and www.ethiolease.com.
Here is what Ethio Lease Would Be Offering
Ethio Lease’s offerings include leases for high-quality equipment, mostly in partnership with leading Original Equipment Manufacturers (OEMs). This equipment includes:
- Agricultural machinery (e.g., tractors and irrigation equipment)
- Medical equipment (e.g., MRI scanners)
- Food processing equipment (e.g., imaging technology for coffee sorting)
- Large IT equipment (e.g., data center servers)
- Drilling rigs (for water bore holes, geothermal and infrastructure)
- Power generation (e.g., solar, wind, storage and energy efficient back-up power)
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.
“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,” noted Van Schaik
Read Also: Foreign Nationals In Ethiopia Can Now Set Up Banks And Insurance Business
A Look At Equipment Finance and Leasing Market In Africa
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.
“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,” Girma Wake, vice chairman of AAFC and chairman of Ethio Lease, said,