ASSESING CHALLENGES OF EXPORT FINANCING IN ETHIOPIAN COMMERCIAL BANKS

Abstract

This study assessed the challenges faced while financing exporters in Ethiopian commercial banks. Two state-owned commercial banks and two private owned commercial banks were selected for consideration of the study: Commercial Bank of Ethiopia (CBE); Construction and Business Bank (CBB) and Awash International Bank (AIB) and Dashen Bank (DB). In order to assess the level of challenges and its resulted impact, the study has been conducted by designing five-point likert scale questionnaires and secondary data was used. The study adopted non-probability purposive sampling technique to select 120 respondents from bank experts and 40 exporters of which the responses of 101 respondents from credit experts and 26 from exporters were analyzed. The study found out that there is limited performance by exporters, the diversion of funds and export proceeds from the lending banks, prevalence of unsatisfied request of exporters for foreign currency, inadequate financing of export business by commercial banks, lack of flexibility of banks policy and procedure, inadequacy of support by government for the sector, unfair competition between commercial banks, lengthy loan processing time, inadequacy of infrastructural development, lack of education and training, inadequate IT support are observed. So as to improve the export financing level capacity building for commercial banks, policy changes by NBE and further attention requirement by government agencies are among the recommended solution.