DCA Loan Guarantee Ethiopia - Impact Brief

Ethiopia is blessed with approximately 107,600 square kilometers of arable land (about 11 percent of its territory); yet, it has struggled for many years to feed its people. 

One problem Ethiopia’s farmers face is lack of access to finance, which they need to modernize their practices and purchase machinery. Ethiopian banks generally require collateral valued at a minimum of 100 percent of the value of the loan plus interest, which is unreachable for most farmers. Since all Ethiopian land belongs to the government, farmers cannot use the farmland they lease as collateral and banks do not accept crops or other farm stock as collateral. As of June 2000, agricultural lending made up only 8 percent of the total value of outstanding loans in Ethiopia.

Friday, August 9, 2013 - 1:30pm