Frank Digest's First Edition!

Welcome to the first edition of Frank Digest!

Your Weekly Brief on all things Finance and Investing. Quick, Enjoyable Reads for Busy Professionals in 5 minutes or Less.

Topics this week:

• Understanding Development Banks

• Mastering Inflation: Strategies for Success

Thanks for reading!

What is a development bank and why does Ethiopia have one?

Banking

Development banks play a crucial role in fostering economic growth and development in countries around the world. These financial institutions provide long-term funding for projects that aim to improve infrastructure, support small and medium-sized enterprises, and promote sustainable development.

What does a development bank specialize in?

As a financial institution, a development bank specializes in providing financial and technical assistance to support the economic development of a country.

(Yes, countries need banks too!)

These banks typically focus on funding projects that have a positive impact on society and the environment, such as renewable energy initiatives, affordable housing projects, and infrastructure development.

What role does the Development Bank of Ethiopia play?

The Development Bank of Ethiopia (DBE) was established in 1909 with the primary objective of promoting economic development in Ethiopia.

• DBE provides long-term financing for projects in key sectors such as agriculture, manufacturing, and infrastructure.

• As of 2021, DBE has disbursed 10.1 Billion Birr with Financial Services, Manufacturing and Agriculture taking the top spots

• DBE also reported that this disbursement of funds has contributed to the creation of 8,045 employment opportunities

• DBE plays a crucial role in supporting small and medium-sized enterprises (SMEs) by providing them with access to affordable financing.

The bank also focuses on promoting sustainable development by funding projects that have a positive impact on the environment.

Overall, the Development Bank of Ethiopia plays a vital role in driving economic growth and development in the country by providing financial support to key sectors and promoting sustainable initiatives.

With its focus on long-term financing and support for SMEs, DBE is a key player in Ethiopia's economic development landscape.

Fun fact: The world’s largest development bank is the China Development Bank with a total asset of over $2.5 trillion!

How to Battle Inflation and Win

Personal Finance

Inflation is indeed a sneaky adversary, constantly eroding the value of our money. Should we be concerned about earning rather than saving? Should we focus on boosting our income rather than trying to save every ሳንቲም? In Ethiopia, absolutely! We say this because inflation rates have hovered around 30% for the past 3 years which is much higher than the saving rates or time deposits offered to you by your bank so keeping cash stashed away is like holding water… ጠብ ጠብ.

There are various earning opportunities that can help you combat inflation and secure your financial future:

• Start a small business with like-minded friends, family or colleagues, around your spare time. With a growing consumer market and increasing demand for various crafts, goods and services, finding the right product and partners can be an avenue for additional income.

• Invest in regulated businesses such as banks, insurance companies, microfinance institutions, etc. Some of these pay annual dividends of up to 30% and opportunities to reinvest at par value for existing shareholders. The upcoming stock market will also open many sectors of the economy for retail investment.

• Freelance based on an asset you already have such as ride-hailing, AirBnB or couch-surfing. It can also be a skill you picked up along your career path that you can offer such as book-keeping, website development, interior design, etc. With the rise of digital platforms and technology, there are ample opportunities to leverage your skills.

Acquire assets, if you have spare cash, such as properties which have proven to catch up well with inflation over the past years. This requires a careful study of the market such as property taxes, rental control, frequent title deed transfer freeze and property rights.

Once you found ways to boost your income, it's equally important to monitor your expenses:

• Embrace DIY for simple home or tech repairs

• Master the art of bargaining. This might involve negotiating better deals with service providers or comparing prices before making purchases

• Keep track of where your money is going. Consider setting up a detailed budget that distinguishes between essential and non-essential expenses. This will allow you to better allocate your funds towards necessities while also enjoying some discretionary spending.

Remember, by diversifying your sources of income you can take proactive steps to battle inflation and come out on top. Understanding your expenses is key to managing them effectively to make informed financial decisions and direct your hard-earned money to make more money. So, dive into that financial data, empower yourself, and take charge of the nasty inflation like a true financial warrior!