ADDIS ABABA – Ethiopia and United Nations agency have signed a new 305.7 million US dollars financial agreement which will support 13 million farmers who are “most vulnerable” to climate change.
The agreement finances the Rural Financial Intermediation Program 3 that will increase and diversify the farmers’ incomes by creating access financial services and build their resilience in rural areas, according to International Fund for Agricultural Development (IFAD).
The financing agreement was signed on Wednesday between Gilbert F. Houngbo, President of IFAD, and Ambassador Zenebu Tadesse, Permanent Representative of Ethiopia to the UN Food and Agriculture Agencies in Rome.
“Access to finance is crucial for rural people – particularly those whose incomes are threatened by a changing climate – to expand their businesses, and to take advantage of new emerging livelihood opportunities along agricultural and agro-industrial value chain,” said Ulaç Demirag, Country Director for Ethiopia.
“This new program will provide financial products and services to poor rural people in the least developed areas to promote poverty reduction and livelihood risk mitigation,” he said.
RUFIP III will build on the lessons and experiences of the first two phases of the program.
It will now scale up delivery of rural financial services tailored to the needs of the most vulnerable smallholder farmers, particularly women and young people, according to IFAD.
The UN agency also said the program will strengthen the capacity of the rural finance institutions to deliver an expanded range of financial products and services to a large number of rural poor people.
The funding includes a $35.1 million grant and $4.9 million loan from IFAD, with significant co-financing from international development partners and from national financial institutions.
The Government of Ethiopia’s contribution is $51.9 million and $0.9million from the beneficiaries themselves.
Since 1980, IFAD has invested $795.5 million in 20 rural development programs and projects in Ethiopia worth a total of $2.1 billion. These have directly benefited around 12 million rural households.