Name: zinabu girma

Id BDU1207615

Email Zenaneh21@gmail.com

Submitted to: Assist professor seid Mohammed yasin

CHAPTER 9 Summary on export finance

Institutional framework for providing finance comprises Reserve Bank of Ethiopia Commercial Banks, Export
Import Bank of Ethiopia and Export Credit and Guarantee Corporation Reserve Bank of Ethiopia as a central bank
of the country these banks provide guide lines for finance related policy guide lines. The national bank Ethiopia as
reserve bank provides short and medium term loans respectively. Commercial banks have the mandate to provide
loans in concessional interest rate. Export import bank is started its job as a subsidiary of the Tanzanian export
import bank in Ethiopia, for Ethiopian importers and exporters. Consequently national bank of Ethiopia its
functionality is to regulate finance issues for the commercial banks, importers, exporters and whole sellers for the
further enhancement and sustainable development of the country to save foreign currencies.

Preshipment services for exporters regarding the financing issues were executed to prompt and promote export
markets in that specific country. Export finance pre condition is provided to facilitate loan receiving mechanism for
exporters for the purpose of Procurement of raw materials, Process and pack the goods and other details. Mostly
Preshipment credits have two ways to be addressed Packing Credit and Advance against Cheques, but there are also
respective mechanisms to reach desired level of achievements on covering the expectation of exporters.

In contrary export finance for post shipment finance is executed after the shipment process is performed to provide
corresponding loan for the exporter. As part of the export financing, the banks obtain the documents of the title of
the goods from the exporters. If the export bill purchased not realized on the due date obligations must loaded in
terms of monetary value. There are various kinds of export finance post shipment these are Export Bills
purchased/discounted, Export Bills negotiated, Advance against export bills sent on collection basis, Advance
against export on consignment basis, Advance against undrawn balance on exports, Advance against claims of Duty
Drawback respective to the above mentioned pre requisites of export finance post shipment criterions these
classifications assist exporters to negotiate with importers, related bank officials and mediators also.

Export under deferred payment requires Exporters to obtain permission from the Reserve Bank through authorized
dealers in the event of non-realisation of export proceeds within the prescribed period. Because the reserve bank is
formulated pre conditions to permit deferred credits, this will enable realization of export proceeds over a period
exceeding six months. In the lane of performing and running this job commercial bank, EXIM (export and import)
bank and working group considers proposals of contracts of value to provide intended clearance for marketing
scenario apprehended between exporters and importers. Meanwhile to execute these issues deferred credit facilities
are crux facilities like Cash credit, Over Draft, Packing Credit, Some other fund based credit facilities are Bill
Discounted, Bill Purchased , Advance against hypothecation of Vehicles ( Transport Loan), Letter Of Credit and
others are under the deferred credit facilities which are divided into fund based and non-fund based deferred credit
facilities, further most fund based require direct outflow of Bank’s fund and non-fund based facilities didn’t require
the involvement of bank outflow.

Financial institution in Ethiopia started its regime since 1905 by the joint support of Egyptians and United Kingdom
by 500,000 pound and latterly becomes Abyssinia bank. Keeping this in mind the national bank of Ethiopia is
established and it incorporates 60% of total bank deposits, bank loans and foreign exchange. Developmental bank of
Ethiopia also provides other banking services such as checking and saving accounts to its clients. NBE aims to foster
monetary stability and a sound financial system, maintaining credit and exchange conditions conducive to the
balanced growth of the economy. Other commercial banks which fail under the control of national bank of Ethiopia
and controlled by finance ministry of Ethiopia like Dashen, Birhan, zemen, oromia, Debub global, united bank,
Awash, Wegagen and others provide comprehended services for exporters and importers depending on their past
experience on returning loans and their capacities to keep the due dates.

All in all understanding the pre-conditions, financial frame work, was of transferring and receiving goods in the
supply chain root of export market is the essence of marketing in the current globalized and competitive market
scenario due to this perspective whole sellers, exporters and importers must realize and recognize this crux issue.