WB Provides $350 mn to Improve Ethiopia's Agriculture

With the objective of increasing agricultural productivity and enhance market access for smallholder farmers in more than 150 of rural districts, Ethiopia secured $350 million lending from the World Bank (WB).

The government signed the financing agreement with the Bank in the capital Addis Ababa. The new financing, from the Bank’s highly-concessional lending agency - the International Development Association, is expected to further boost the development potential of Ethiopia’s agriculture industry, which accounts for 45 percent of the country’s total output and occupies nearly 80 percent of the nation’s labour force. It is also a major contributor to export earnings.

According to the World Bank's 2014 Poverty Assessment for Ethiopia, agricultural growth was a key driver of the impressive rate of poverty reduction over the past decade.

The financing that will be used for the Second Agricultural Growth Project (AGP2) will operate in 157 woredas (districts) in Amhara, Oromia, SNNPR, Tigray, Benishangul-Gumuz, Gambella and Harari regional states as well as Dire Dawa city administration. The project will directly benefit 1.6 million smallholder farmers, who live in areas with the highest potential for agricultural growth, according to the WB.

It is indicated that the project builds upon the impact of an on-going AGP1 project by increasing its geographical coverage and incorporating the lessons from the original project.

"We are encouraged by the positive results achieved under AGPI, which is helping to improve the livelihood of smallholder farmers and their communities. The new financing will further empower smallholder farmers, especially women and young people, to define the support they need to raise their productivity and get better access markets" said Guang Zhe Chen, World Bank Country Director for Ethiopia.

Increasing access to agricultural public support services, increasing the supply of agricultural technologies through support to agricultural research and increasing access to and efficient use of irrigated water as well as connecting smallholder farmers to markets are among the goals of AGP2. The lending was initially approved at the end of March by the WB Group’s Board of Executive Directors.