The World Bank is now calling for diversification on infrastructure funding in Ethiopia in a bid to finance its infrastructure projects to avoid heavy reliance on the state.
In recent years the country has been carrying much of the burden of raising finance for infrastructure development while at the same time demanding that banks invest the equivalent of 27% of the loan portfolio in low-yield state development bonds, leaving little for private business to borrow.
But in a turn of events Ethiopia says it would change its policy demanding banks invest 27% of their loan portfolio in state bonds.
Although continued infrastructure development remains one of Ethiopia’s best strategies to sustain growth observes the World Bank, the current financing model cannot be sustained.
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