ADDIS ABEBA – Ethio Lease, the first foreign-owned leasing company in Ethiopia, has signed an agreement with the government to lease agriculture equipment for farmers’ mechanization centers.
The company’s board chairman, Girma Wake, signed the collaborative memorandum of understanding with the state minister of Agriculture Sani Redi and director of Agricultural Transformation Agency Chimbo Anchala.
Ethio Lease is a subsidiary of Africa Asset Finance Company Inc. (AAFC), a US-headquartered firm that owns and operates a group of companies that provide asset-backed lending (ABL) and leasing services throughout Africa.
Ethio Lease began operations in August 2019 after receiving a license from the National Bank of Ethiopia (NBE).
When asked how this collaborative agreement will impact the agriculture sector, the State Minister of Agriculture Sani said “a smallholder farmer cannot afford to buy agro-mechanization equipment by himself”.
“Lease financing brings solutions through agro-mechanized service providers,” he added.
Ethio Lease board chairman Girma said the latest agreement would enable the company has been able to provide its service for the first time.
“Leasing equipment to the mechanization centers has the potential to positively impact the agriculture sector, increase productivity among farmers and ensure significant financial gains for Ethiopia,” the former CEO of Ethiopian Airlines Group told reporters on Friday.
Ethio Lease was formed to address the equipment and forex shortages in Ethiopia by providing capital goods financing and a wide range of leasing services for multiple sectors including agriculture, healthcare, energy, among others.
Ethio Lease will initially work with most of the ATA-sponsored 10 mechanization centers for the pilot phase.
“The collaborative agreement has the potential to reach over 60 centers in the next two to three years, with Ethio Lease providing over 150 million dollars’ worth of agriculture equipment to ultimately support smallholder farmers,” said Girum Tsegaye Ethio Lease CEO.
The latest agreement would have a significant impact on smallholder farmers in deploying agriculture equipment such as tractors, combiners, and implements in significant numbers.
Ethio Lease decides what equipment to purchase and lease to the centers based on a needs assessment conducted in collaboration with ATA.
It will also oversee the maintenance and proper use of the equipment throughout the lease period, providing the lessee with the option to buy the equipment for a symbolic price, at the end of the lease period.
Since its launch, Ethio lease has signed leasing agreements with more than 46 lessees, and this week delivered 9 tractors to various farmers, in the country.