Awash Bank, USAID to help small Agribusinesses in Ethiopia

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Under a USAID Development Credit Authority (DCA) agreement, the program will expand commercial bank lending into underserved areas in Ethiopia.

The U.S. Agency for International Development (USAID) and Awash Bank announced a new partnership of $6.4 million to finance microfinance institutions and small- and medium-sized agricultural businesses in Ethiopia.

Under a USAID Development Credit Authority (DCA) agreement, the program will expand commercial bank lending into underserved areas in Ethiopia. It will also provide private finance needed to help farmers and businesses increase production, as well as support Ethiopia’s efforts to modernize the agricultural sector.

Through private capital sources, local microfinance institutions are able to expand lending to individuals and small businesses, mostly smallholder farmers and Productive Safety Net Program (PSNP) clients. This partnership will also support Awash Bank’s direct lending to SMEs in the agriculture sector, where access to credit remains low despite contributing 34 per cent of Ethiopia’s GDP and employing about 70 per cent of the total labour workforce.

“When we talk about smart investments and getting the most value for our money, investments in Ethiopia’s agricultural sector do exactly that. 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 USAID Deputy Mission Director Sonila Hysi.

“We believe that the current engagement with USAID strengthens the bank’s ability to provide loans to private Ethiopian microfinance institutions and small and medium-sized 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,” said Awash Bank’s CEO, Ato Tsehay Shiferaw.

Awash Bank has been a USAID Development Credit Authority (DCA) partner on previous financing projects. Awash Bank, cognizant of the potential of the small and medium-enterprise (SME) segment for the overall development of Ethiopia’s economy. The bank established the SME Banking operation unit under a directorate level.

Over the last five years, the United States has been the largest bilateral donor to Ethiopia through USAID and has invested about $4 billion in development and humanitarian assistance to help people across the country live healthier and more prosperous lives.

 

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