The Federal Democratic Republic of Ethiopia has signed a Grant Agreement with the Federal Republic of Germany, represented by KfW Development Bank, for two significant initiatives: the Fund for Increasing Productivity through Innovation in Agriculture II and the Promotion of Ethiopian Private Sector II (SME Credit Line). The total funding for these projects amounts to €30 million (approximately 3.96 billion ETB).
The first initiative, now in its second phase, focuses on enhancing agricultural mechanization through lease financing. This approach aims to tackle financial access challenges in Ethiopia by facilitating the importation of durable and suitable agricultural machinery, including combine harvesters and tractors. Semereta Sewasew, State Minister of Finance, emphasized, “By improving agricultural productivity through access to modern machinery, we are equipping our farmers to thrive in a competitive market, ultimately driving economic growth.”
The second project seeks to improve access to finance for micro, small, and medium enterprises (MSMEs) through commercial banks and microfinance institutions, with a special emphasis on supporting women-owned and youth-owned MSMEs. Semereta Sewasew added, “Empowering our MSMEs is crucial for economic recovery, especially in conflict-affected regions. This initiative will create jobs, foster inclusive growth, and ensure that every Ethiopian has the opportunity to contribute to our nation’s prosperity.”
On behalf of Germany’s Federal Ministry for Economic Cooperation and Development (BMZ), KfW Development Bank has committed over €1 billion to date to enhance development opportunities in Ethiopia. The bank’s initiatives have spanned various sectors, including reforestation, conservation of natural areas, and vocational education, benefiting over 100,000 young people through investments in vocational schools and teacher training. Bernd Loewen, CFO at KfW, stated, “Our investment in Ethiopia reflects a strong commitment to sustainable development and the empowerment of its people, which is essential for a stable and prosperous future.”
These agreements are integral to the German government's support for Ethiopia’s strategy to achieve middle-income status by 2030 and to transition toward a private-sector-driven economy. The Agreements were signed by Semereta Sewasew, State Minister of Finance; Bernd Loewen, Chief Financial Officer at KfW and Christoph Tiskens, Director for Eastern Africa at KfW Development Bank, representing the Federal Democratic Republic of Ethiopia and the Federal Republic of Germany, respectively.