ETHIOPIA: Improving access to finance for Ethiopian agricultural SMEs

Agriculture, the backbone of Ethiopia's economy is facing a bottleneck; the low investment capacity of smallholder farmers and the small and medium-sized enterprises (SMEs) which provides these farmers with goods and services (input and technical training) and purchases their products for processing, marketing and exporting.

While large companies are the core target of commercial banks, SMEs’ often find few appropriate financial solutions from financial institutions. This is mostly due to the lack of financial products adapted to the needs of farmers. 

Credit risk analysis  by financial institutions perceive SMEs as a high-potential, but very risky customer segment due to the poor quality of financing requests made by  SMEs, whose records are often unsatisfactory (weakness of financial statements, incomplete justifications, etc.).

This project is structured into 3 components:

• Business development skills strengthening for agri-SMEs through Agrihub, a platform delivering business development services to SMEs adapted to their scale, maturity and needs;
• Supporting access to finance for agri-SMEs through adapting financial services to agri-SMEs through incentive mechanisms including credit guarantees;
• Development of a sustainable economic model for Agrihub to ensure the sustainability through the documentation of efficient methodologies and tools.

By improving capacity building and access to finance for agri-SMEs, the project aims at:

• Increasing the capacity to develop of agricultural SMEs, enabling them to diversify their economic model and reduce their vulnerability;
• Developing activities that create sustainable employment, particularly in rural areas;
• Improving farmers' access to services and markets necessary for their development;
• Supporting financial institutions in the development of dedicated strategies to finance agricultural SMEs;
• Developing partnerships between ATI on the one hand and the financial and business sector on the other.