Addis Ababa, February 28th, 2020 – Ethio Lease, the first foreign-owned leasing company signed a collaborative Memorandum of Understanding (MOU) with the Ministry of Agriculture (MOA) and the Agricultural Transformation Agency (ATA) to lease agriculture equipment to ATA sponsored farmers’ mechanisation centres. The MOU was officially signed by the State Minister of Agriculture, His Excellency Ato Sani Redi, ATA’s Senior Director Dr. Chimbo Anchala and Ethio Lease Board Chairman, Ato Girma Wake, during a press conference held at the Ministry of Agriculture, in the presence of Ethio Lease CEO Ato Girum Tsegaye, CEO of AAFC Mr. Frans VanSchaik, Ethio Lease Board Member Ato Gabriel Negatu, among other key government officials and relevant stakeholders.
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 licence from the National Bank of Ethiopia.
When asked how this collaborative agreement will impact the agriculture sector, the State Minister of Agriculture, His Excellency Ato Sani Redi said “A smallholder farmer cannot afford to buy agro-mechanization equipment by himself. Lease financing brings solutions through agro-mechanised service providers.”
During the press conference, Ethio Lease board chairman Ato Girma Wake stated, “This is the first time that a company has been able to provide this kind of support. Leasing equipment to the mechanisation centres has the potential to positively impact the agriculture sector, increase productivity among farmers and ensure significant financial gains for Ethiopia.”
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 such as agriculture, healthcare, energy, food processing (coffee processing), and manufacturing, among others verticals.
Talking about the significance of the collaborative agreement, Ethio Lease CEO, Ato Girum Tsegaye indicated “Initially, we will be working with most of the 10 mechanisation centres for the pilot phase. The collaborative agreement has the potential to reach over 60 centres in the next two to three years, with Ethio Lease providing over 150 million dollars’ worth of agriculture equipment to ultimately support smallholder farmers, with support from the Ministry of Agriculture and ATA.”
According to AAFC CEO and Ethio Lease Vice Chairman, Mr Frans VanSchaik who stated, “Provided that the various government agencies do not create too many hurdles, this MOU will have a significant impact on smallholder farmers; by deploying agriculture equipment such as tractors, combiners and implements in significant numbers, we will be able to have a meaningful impact on the lives of farmers and their families. This agreement will not only benefit farmers, but is an efficient and practical solution to address the current equipment challenges in the agricultural sector.”
Since its launch, Ethio Lease has provided leasing services to address equipment shortages in the agriculture, healthcare, energy and food processing sectors, including some in manufacturing. To date, Ethio lease has signed leasing agreements with more than 46 lessees, and this week delivered 9 tractors to various farmers, in the country.
Ethio Lease decides what equipment to purchase and lease to the centres based on a needs assessment conducted in collaboration with ATA and will 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.