ADDIS ABEBA – The U.S. Agency and Awash Bank have announced a new partnership that will make up to $6.4 million US dollars in financing available to agricultural businesses in Ethiopia.
Under a USAID Development Credit Authority (DCA) agreement, this program will expand commercial bank lending to microfinance institutions as well as small- and medium-sized businesses working in underserved areas.
IT will also provide the private capital needed to help farmers and businesses intensify production, and support Ethiopia’s efforts to modernize its agricultural sector.
Private capital sources are essential to enable local microfinance institutions to expand lending to individuals and small businesses, particularly smallholder farmers and Productive Safety Net Program (PSNP) clients.
In addition, this partnership will also support Awash Bank’s direct lending to small and medium enterprises in the agriculture sector, where access to credit remains low despite contributing 34 percent of Ethiopia’s GDP and employing approximately 70 percent of the total labor force.
“When we talk about smart investments and getting the most value for our money, investments in Ethiopia’s agricultural sector do exactly that,” said USAID Deputy Mission Director Sonila Hysi.
“We can accelerate economic growth on a macro level while creating a ripple effect that benefits farmers and their families at the same time,” said the Deputy Mission Director added.
Tsehay Shiferaw, Awash Bank’s CEO, said the partnership with USAID will “strengthens the bank’s ability to provide loans to enterprises operating in the agriculture sector.
“In a bid to support the agricultural sector and align with the government’s strategic focus areas, Awash Bank has also made a significant reduction in the lending interest rate of agricultural loans,” Tsehay said.
US embassy in Addis Abeba says Awash Bank S.C. has been a USAID Development Credit Authority (DCA) partner on previous financing projects, which were accomplished successfully without any defaults on loans.
Image caption: USAID Deputy Mission Director Sonila Hysi and Awash Bank CEO Ato Tsehay Shiferaw sign the partnership agreement for credit opportunities to agricultural enterprises in Ethiopia.