As Ethiopia attempts to sustain its economic reforms, green transition, and financial sector modernization, the role of long-term, patient capital has never been more critical. At the heart of these efforts stands the European Investment Bank (EIB)—the European Union’s lending arm and one of the world’s largest multilateral development banks. With over four decades of engagement in Ethiopia, the EIB has quietly but powerfully contributed to transformational change, from rural water systems and clean energy to mobile money infrastructure and women’s entrepreneurship.
In this interview with Yared Nigussie of The Reporter Magazine, Leyla Traoré, EIB’s head of representation to Ethiopia and the African Union, explains how the Bank’s commitment goes far beyond traditional development finance EXCERPTS:
RELATED POSTS
The Reporter Magazine: The European Investment Bank has traditionally focused on large-scale infrastructure and climate finance. What is the unique long-term vision for EIB’s involvement in Ethiopia over the next 10 to 15 years, beyond the usual sectors?
Leyla Traoré: First, I want to emphasize that the European Investment Bank is fully committed to supporting Ethiopia’s transition to a green, inclusive, and climate-resilient economy—not just over the next decade, but well beyond that. We have been a partner to Ethiopia for more than 40 years. Our first operation in the country dates back to 1982. The vision I mentioned is long-term, and it aligns closely with Ethiopia’s Climate Resilient Green Economy [CRGE] strategy as well as the country’s broader development ambitions.
Our approach goes far beyond that of a typical development partner. We don’t think in short time frames of 10 to 15 years. We think in terms of generations. That’s a key difference between us and a traditional investment bank. Our loan terms can extend up to 30 or even 40 years, with generous grace periods during which the country is not required to repay. This kind of long-term, patient financing reflects our commitment to transformational impact.
Since our partnership began, we have invested over 400 million euros in direct financing in Ethiopia. This does not include additional indirect investments. Since 2015, we’ve also maintained a permanent representation in Addis Ababa—one of only six such offices we have across Sub-Saharan Africa. This underscores how strategically important we view Ethiopia and our partnership with it.
When we invest, we aim for transformational and lasting impact. In Ethiopia, we have supported projects in clean energy and telecommunications infrastructure. We’ve helped expand access to clean water for hundreds of thousands of people in small towns. We backed the country’s first mobile money system—the precursor to Telebirr—and supported its nationwide rollout. We’ve also championed women-led businesses and contributed to industrial development, including textile production in Bahir Dar.
All of this illustrates our long-term approach. We’re not here for quick wins. We’re here to support sustainable, inclusive development and to help build lasting prosperity alongside the Ethiopian people.
How does EIB assess the risk-return dynamics in Ethiopia compared to peer economies in East Africa, especially given the country’s ongoing macroeconomic reforms?
The EIB is the bank of the European Union [EU]—which means we are owned by all 27 EU member states. Each of them is a shareholder of the European Investment Bank. At the same time, we are also a proud member of the global family of multilateral development banks. What sets us apart is that we do not assess investments solely through the traditional risk-return lens. Our mandate is different. As a multilateral development bank, our role is to support partner countries in realizing their own development visions—especially when these align with the United Nations Sustainable Development Goals [SDGs] and the European Union’s Global Gateway strategy, which guides EU external investment priorities. Because our shareholders are the EU countries, we seek to find synergy between their strategic priorities and the development goals of our partner countries. Our aim is to deliver long-term, sustainable impact.
When we look at Ethiopia, just as we do with peer economies across Africa, we focus on the developmental value and sustainability of any project we consider financing. Our approach is designed to reinforce and align with the Ethiopian government’s own development strategy. When we engage with national reforms, we ask: What are the developmental objectives behind these reforms? How can we, as the EIB, amplify those impacts? That’s the heart of our work as a development partner—strengthening and scaling the positive outcomes.
We’ve seen this approach succeed in Ethiopia before. A standout example is the Urban Water Supply Program, which reached 48 small and medium-sized towns across various regions of the country. It brought clean water access to 120,000 households. That level of scale and ambition was remarkable—unlike anything we’ve seen in comparable projects elsewhere. In other countries, such efforts tend to be more modest in scope. Ethiopia’s bold vision and commitment to implementation really set it apart. We are proud to have been part of that success—and we look forward to continuing this kind of meaningful partnership.
How do you assess the post-implementation period of these projects?
I would say we are satisfied with the post-implementation results of the project. We specifically targeted many small towns and even very small cities close to rural villages across the country. This effort was fully in support of the Ethiopian government’s development vision. It’s important to emphasize that we do not impose projects or strategies. We only support initiatives that are aligned with the government’s own priorities. That alignment is essential to how we operate.
One of the reasons we are satisfied is because we can see real, tangible results. For example, about six months ago, I joined the Ministry of Water and Energy to inaugurate new water facilities in several small towns—places that previously had no access to clean water. To be there in person and witness the impact firsthand was deeply meaningful. These are the kinds of outcomes we value: visible, concrete improvements in people’s lives. That’s when we know our support has made a difference, and that’s when we can truly say we are satisfied.
What specific gaps or ‘white spaces’ in Ethiopia’s investment ecosystem has the EIB identified that others have yet to touch?
Unlike some other multilateral institutions, the European Investment Bank does not systematically conduct ecosystem gap assessments or engage in policy dialogue as part of our core mandate. That’s simply not our role—it varies from one institution to another. Instead, our focus is on identifying investment opportunities that can drive positive change and deliver measurable development outcomes with strong social impact. When we finance a project, we naturally promote best practices. We bring European expertise and combine it with local knowledge and innovation to help address specific challenges identified by our technical teams in the sectors we support.
From this perspective, Ethiopia presents a wide range of opportunities for institutions like the EIB to contribute meaningfully to the country’s development agenda. Our support is particularly relevant in areas such as renewable energy expansion, rural and agricultural finance—where access to credit remains limited—infrastructure connectivity, and private sector development.
These are the key sectors where we aim to add value. By working closely with the government, we seek to complement their efforts and help close critical development gaps in a sustainable, impactful way.
How open is EIB engaging with local Ethiopian investment vehicles such as sovereign wealth funds, pension funds, or newly capitalized commercial banks?
The European Investment Bank is closely monitoring the development of Ethiopia’s emerging investment vehicles, including sovereign bonds, pension funds, and newly capitalized commercial banks. Depending on their size, governance standards, and institutional maturity, we will assess whether the instruments we have at our disposal are suitable to potentially support these new actors.
What we are especially proud of, however, is the concrete strategic partnership we’ve recently established to help lay the foundation for a more resilient and inclusive financial ecosystem in Ethiopia. One example is our Greening Financial Systems technical assistance program, which we recently launched in partnership with the National Bank of Ethiopia [NBE]. The agreement was signed on the sidelines of the Ethiopian Finance Forum, and it perfectly illustrates our approach.
By partnering with the central bank, we can indirectly support the broader financial sector, including these emerging institutions. The Greening Financial Systems program—funded through Germany’s International Climate Initiative—provides specialized support to help the NBE assess climate-related financial risks and direct capital flows toward green and sustainable investments. The NBE plays a critical regulatory and enabling role in shaping the future of these new financial vehicles.
Another recent milestone we’re excited to share is that, in May 2025, the EIB Board approved funding for a new initiative: supporting Ethiopia’s green value chains through Zemen Bank. Zemen is not a new player—it is a well-established, trusted institution with a nationwide network. Through this partnership, we aim to strengthen support for small and medium enterprises (SMEs), particularly in agriculture, climate action, and environmental sustainability. A key focus of the initiative is also to promote women’s economic empowerment.
These are the types of targeted, strategic interventions we are undertaking to help shape a robust and inclusive financial sector in Ethiopia—one that works in synergy with the country’s emerging investment landscape.
With Ethiopia moving toward private capital mobilization, is EIB considering facilitating bond market development or supporting local green bond issuances?
The EIB is actively supporting the development of green finance in Ethiopia, primarily through the Greening Financial Systems technical assistance program we recently launched in partnership with the NBE. This targeted program is designed to help the central bank build institutional capacity to assess climate-related financial risks and develop regulatory frameworks that can enable sustainable finance products, such as green bonds.
The technical assistance we provide lays the groundwork for future initiatives in this space. Any potential move toward green bond issuance, for instance, can be supported and facilitated through this partnership with the NBE.
The EIB is one of the world’s largest issuers of green bonds, having issued more than 80 billion euros globally. We bring significant expertise in this area and are always ready to share best practices with Ethiopian authorities when requested.
However, it’s important to note that we do not have the mandate to lead comprehensive bond market development programs. That responsibility lies with national institutions. Any future green bond development in Ethiopia will be locally driven—led by Ethiopian stakeholders—with the EIB providing technical support and advisory input, particularly through our collaboration with the central bank.
What is EIB’s view on Ethiopia’s recently revised banking directive allowing foreign banks to enter the market? Would that change how EIB supports the financial sector?
The EIB welcomes Ethiopia’s revised banking directive that allows foreign banks to enter the market. We see this as a positive and progressive step toward modernizing the financial sector and enhancing competition.
From our global experience, we know that when such reforms are well implemented, they can significantly improve access to finance for both businesses and consumers. They also have the potential to attract foreign investment and expertise, while encouraging the development of new financial products and services.
All of these anticipated outcomes align closely with the EIB’s investment priorities—particularly in the areas of sustainability, social impact, financial inclusion, and equitable job creation.
What are the priority sectors for EIB’s planned investments in Ethiopia in 2025/26? Are there any unconventional sectors the Bank plans to explore; for instance, creative industries and circular economy?
The EIB’s priority sectors for upcoming investment in Ethiopia include several key areas, with health and human development at the top of the list. Health is a particular focus for us. A year ago, we provided technical assistance to the World Health Organization [WHO] in Ethiopia to support the development of a study aimed at creating a Primary Health Care Investment Plan for the country. We intend to use the findings from that study to guide our next health-sector investment in Ethiopia.
Another major area of focus is renewable energy and climate-smart infrastructure. We are exploring opportunities to support Ethiopia’s clean energy leadership—through projects in hydropower, solar, wind, and other sustainable energy sources.
The digital economy is also an important and emerging sector for us. We are exploring investments in digitalization, innovation, and technology infrastructure, recognizing their role in enabling inclusive growth. Additionally, we consider agri-food systems and sustainable agricultural value chains as priority sectors. These areas are vital for food security, rural livelihoods, and climate resilience.
You also mentioned non-conventional sectors. Yes, we are open to flexibility in our investment approach—as long as the proposed activity aligns with our core goals. If a project demonstrates strong social impact or contributes to sustainability and climate resilience, we are willing to consider it, even if it falls outside traditional categories. Our investment priorities are defined through alignment with both European Union objectives—since our shareholders are the 27 EU member states—and Ethiopia’s own national development strategies. We are trying to look for the intersection between these two frameworks and collaborate with the government to ensure our support is both relevant and impactful.
Looking at upcoming partnerships, we are seeing real momentum building and a redynamisation of our Ethiopian portfolio and local partnerships. For example, in June 2025, our Board approved support for the Rural Finance and Development Program—a flagship government initiative designed as a revolving fund to benefit smallholder farmers and rural communities across the country. This is the kind of patient capital that can transform lives at scale. We are proud to be partnering on this initiative with the Development Bank of Ethiopia, the Ministry of Finance, and the International Fund for Agricultural Development [IFAD].
We are also actively working on another promising opportunity—although it hasn’t been approved yet. This potential project involves major investment in Ethiopia’s energy infrastructure. It is a co-financed initiative led by the French Development Agency, in partnership with Ethiopian Electric Power [EEP]. The funding structure includes a grant from the European Union and loans from both the EIB and the French Development Agency.
If approved, this project will be implemented in collaboration with EEP and the Ministry of Water and Energy—a ministry we know well and have successfully partnered with in the past. The goal is to modernize Ethiopia’s power grid and build local capacity, building on our strong track record in the energy sector for the benefit of the Ethiopian people.
How is the EIB ensuring that its financing tools, technical assistance, or concessional loans are accessible to SMEs in Ethiopia and not just multinationals or large public entities?
In Ethiopia, as in many other African countries, the EIB has traditionally been active in directly financing large public sector needs. This remains a central part of our engagement. At the same time, we are also committed to supporting small and medium-sized enterprises. To reach them, we work through the local financial sector, which is a highly effective model. By channeling our support through domestic financial institutions, we not only help the private sector grow but also contribute to strengthening the financial system itself. A good example of this approach is our long-standing partnership with the DBE. We provide substantial funding to DBE, which then distributes it in smaller amounts tailored to the needs of SMEs across the country. This layered structure ensures that financing reaches businesses that might otherwise struggle to access credit, while also reinforcing the capacity of the national financial system.
How does the EIB plan to balance its climate goals with Ethiopia’s urgent developmental priorities such as job creation, industrialization, and post-conflict reconstruction?
We don’t view it as a balancing act but as integration. The EIB’s strategy is to seamlessly blend climate action with Ethiopia’s urgent needs—job creation, industrialization, and post-conflict reconstruction. As the climate bank, we’ve adopted a roadmap to prioritize sustainability. Our global experience shows that climate goals and development priorities are not in competition; they are mutually reinforcing. Every operation incorporates climate and sustainability targets, focusing on investments that deliver both environmental and developmental benefits. For instance, green infrastructure generates jobs, sustainable agriculture bolsters food security and export capacity, and digital innovation drives efficiency and economic growth.
To ensure accountability, we implemented an impact measurement framework several years ago. This systematic evaluation tracks both climate and development outcomes throughout a project’s life cycle, ensuring that every investment contributes to climate resilience and inclusive development. We do not fund projects that prioritize one at the expense of the other.
What will be the unique investment projects that you’re planning to implement ahead in Ethiopia?
Our upcoming initiatives in Ethiopia build on recent approvals and partnerships. A key project is the Rural Finance Initiative, recently approved by our board, in collaboration with the DBE and IFAD. This initiative aims to provide smallholder farmers across the country with affordable financing, implemented in full partnership with the Ethiopian government. We are also awaiting approval for a digital and energy project in collaboration with the French Development Agency. This project will modernize Ethiopia’s power grid to improve electricity distribution nationwide. We expect to receive approval soon and aim to begin implementation in the coming months and years.
Additionally, we recently secured approval for an operation with Zemen Bank. This partnership will provide secure funding to small and medium-sized enterprises, particularly in agriculture and agri-export activities. We prioritize a high percentage of women-led enterprises and sustainable businesses in these operations, ensuring alignment with our goals of inclusivity and environmental responsibility.
What new financial instruments is EIB experimenting with in fragile states or low-income countries that could soon be piloted in Ethiopia?
We are not introducing new financial instruments, as our existing ones are highly effective. Our flagship offering is a long-term loan, often extending up to 30 or 40 years, which commercial or traditional investment banks typically do not provide. These loans, designed for large public infrastructure projects, include grace periods to ease repayment. We also provide guarantees, often at a regional level, such as African guarantees, from which Ethiopia benefits as an African nation. Additionally, we offer direct loans to financial institutions, which we refer to as financial enterprise support, to bolster private sector growth, particularly for SMEs. These instruments are often paired with technical assistance, leveraging EIB’s expertise across all sectors we operate in. Our experts support projects from preparation through post-implementation monitoring. For example, in our water project across small towns in Ethiopia, a water engineer worked closely with the Ethiopian government on project design, provided ongoing support, and conducted multiple site visits to ensure successful implementation.
These instruments, while traditional, are tailored to fulfill our mandate as a multilateral development bank owned by the 27 European Union member states. They align with the EU’s vision and policies outside Europe, effectively addressing diverse needs, whether for large-scale public infrastructure or private sector development.
What is EIB’s stance on blending development finance with political dialogue—especially in conflict and post-conflict areas like Tigray or Amhara, where reconstruction is needed but politically sensitive?
We partner with the Ethiopian government to finance the needs of its people, focusing on developmental objectives in countries where support is most critical, such as those facing fragility or post-conflict challenges. As a multilateral development bank, the EIB has a counter-cyclical role, meaning we step in where private sector or traditional investment banks may hesitate, as this aligns with our mandate to maximize social impact. Our approach is collaborative and consultative. We engage only when there is consensus and a clear need, ensuring we do not impose solutions but instead work closely with all stakeholders to address priorities effectively.
