The U.S. Agency for International Development (USAID) and Awash Bank have announced a new partnership that will make up to $6.4 million in financing available to microfinance institutions and small- and medium-sized agricultural businesses in Ethiopia.
Under a USAID Development Credit Authority (DCA) agreement, this program will expand commercial bank lending into 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.
“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.
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.
This is despite of the sector 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,” said USAID Deputy Mission Director Sonila Hysi.
Private capital sources are essential to enable local microfinance institutions to expand lending to individuals and small businesses.
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.
Awash Bank, a leader in small and medium enterprise banking in Ethiopia, plans to continue to grow its customer base as it aims to become one of the top ten private commercial banks in East Africa.