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Ethiopia and Germany Partner in €30 Million Grant to Boost Agriculture and Private Sector Growth

Addis Ababa, Ethiopia — The Federal Democratic Republic of Ethiopia has solidified a pivotal partnership with Germany through a €30 million grant agreement, marking a renewed commitment to spurring agricultural innovation and supporting small and medium enterprises (SMEs). The agreement, formalized in collaboration with the KfW Development Bank, will fund two transformative initiatives: the Fund for Increasing Productivity through Innovation in Agriculture II and the Promotion of Ethiopian Private Sector II (SME Credit Line). This initiative aims to catalyze economic growth across Ethiopia’s agricultural and private sectors, a crucial step as the country aims for middle-income status by 2030.

Enhancing Agricultural Productivity

The first initiative, a second-phase project, will channel resources into agricultural mechanization through lease financing, addressing the barriers Ethiopian farmers face in accessing modern machinery. Through this fund, Ethiopian farmers will gain access to equipment like combine harvesters and tractors—vital tools for increasing crop yields and driving efficiency.

H.E. Semereta Sewasew, Ethiopia’s State Minister of Finance, expressed optimism about the initiative’s potential to uplift the agricultural sector, stating, “By improving agricultural productivity through access to modern machinery, we are equipping our farmers to thrive in a competitive market, ultimately driving economic growth.” This investment is expected to empower farmers with advanced, durable equipment, enabling them to operate more efficiently and sustainably.

Empowering Ethiopian SMEs for Inclusive Growth

The second project, which focuses on Ethiopia’s private sector, aims to enhance financial accessibility for micro, small, and medium enterprises (MSMEs) through commercial banks and microfinance institutions. The project will particularly target enterprises owned by women and youth, extending opportunities to those in conflict-affected regions. According to State Minister Sewasew, “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.”

The commitment to bolstering Ethiopian MSMEs highlights Ethiopia’s strategy of moving toward a private-sector-driven economy. By enabling easier access to capital, the government aims to foster innovation and create a business environment where small and medium enterprises can flourish and contribute to national economic resilience.

A Strong Foundation of Partnership and Development

On behalf of Germany’s Federal Ministry for Economic Cooperation and Development (BMZ), KfW Development Bank has extended over €1 billion in development support to Ethiopia to date. KfW’s contributions have been instrumental across multiple sectors, from environmental conservation to vocational education, benefiting over 100,000 young Ethiopians through vocational training programs. KfW’s Chief Financial Officer, Mr. Bernd Loewen, underscored Germany’s commitment to Ethiopia’s development, remarking, “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.”

This partnership strengthens the German government’s ongoing support of Ethiopia’s ambitions for economic development. The agreement, signed by H.E. Semereta Sewasew, KfW CFO Bernd Loewen, and Christoph Tiskens, KfW’s Director for Eastern Africa, marks a step forward for Ethiopia’s vision of a self-sustaining, inclusive economy powered by private enterprise.

As Ethiopia continues on its path to achieving middle-income status, the collaboration with Germany offers a promising avenue to support vital sectors of the economy, reinforcing Ethiopia’s goal of a prosperous, resilient future.

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Habtamu Alemu

Habtamu Alemu is a seasoned journalist and the editor-in-chief of Ethio Eyewitness News.

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