Establishing a bank dedicated to agriculture and enhancing the engagement of the private sector are crucial to speed up the country’s agricultural transformation, according to Ethiopian Agricultural Transformation Institute (ATI).
Institute Deputy CEO, Yifru Tafesse told ENA that with regard to accessibility of finance for the sector, the loan disbursement to the agricultural sector is below 10 percent.
The biggest contributor of foreign currency is the agricultural sector, but its loan share is extremely low, he noted.
According to him, there are of course initiatives by the National Bank of Ethiopia to increase access of the sector to finance by using movable collateral.
Commending the regulation as a big improvement, however, Yifru added that it is not still enough for a sector that remains critical to Ethiopia’s economy, accounting for about 40 percent of its Gross Domestic Product (GDP).
The deputy CEO revealed that Ministry of Agriculture has embarked on reforming the sector, one of which is finance.
So,“we are considering having a dedicated specialized bank to agriculture to support this sector.”
Yifru further pointed out that the sector has been exposed to many challenges, including access to foreign currency, input, and fertilizer, despite its immense contribution to the national economy.
About 80 percent of Ethiopia’s population live in rural areas and agriculture is the sector that provides most people with a living.
Moreover, he stated that the participation of the private sector in agriculture is low.
As a result, the government has been the biggest player in the economy but it should be very selective, the deputy CEO elaborated.
Therefore, “I really encourage the participation of the private sector in agriculture, particularly in the production and distribution of inputs such as fertilizer, agro-chemical, and seed.
Source: Ethiopian News Agency