Ethiopia's Awash Bank and the U.S. Agency for International Development (USAID) entered a partnership deal to avail up to $6.4 million in financing for microfinance institutions and small-to-medium sized agri-businesses in Ethiopia.

Part of the USAID Development Credit Authority (DCA) agreement, the program aims to expand commercial bank lending into underserved areas. This, it was noted, provide such areas with much needed private capital so the farmers and businesses can intensify production, thereby supporting Ethiopia's efforts in modernizing the agricultural sector.

Local microfinance institutions also stand to benefit from private capital resources as lend to individuals and small businesses, smallholder farmers and clients of the Productive Safety Net Program (PSNP) in particular. Moreover, this partnership will support Awash Bank’s direct lending to small and medium enterprises in the agricultural 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. We can accelerate economic growth on a macro level while creating a ripple effect that benefits farmers and their families at the same time,” Sonila Hysi, USAID Deputy Mission Director, remarked.

Tsehay Shiferaw, Awash Bank's CEO, said, “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,” the CEO added.

The U.S. is the largest bilateral donor to Ethiopia, investing approximately $4 billion in development and humanitarian assistance over the past five years "to help people across the country lead healthier and more prosperous lives."

Founded in 1995, Awash Bank is the first private bank in Ethiopia.

Source: FBC