Map of Ethiopia

Economic Growth and Trade

DuPont Pioneer, the world’s leading developer and supplier of advanced plant genetics, will provide high-quality seeds to farmer
DuPont Pioneer, the world’s leading developer and supplier of advanced plant genetics, will provide high-quality seeds to farmers in Ethiopia.
Robert Sauers, USAID Ethiopia

The Ethiopian Government has developed comprehensive agricultural and economic development plans that have contributed to the country’s substantial growth in agriculture, industry and services. There has also been tremendous growth in the number, diversity and market share of private businesses in the Ethiopian economy. However, basic challenges such as unskilled labor, high transport costs, limited availability of financial and telecommunications services, and land tenure insecurity require further attention.

Private Sector Development

USAID's mission in Ethiopia works to advance an environment that supports increased private sector investment and growth. In the past five years, Ethiopia has experienced substantial growth in all three major economic sectors (agriculture, industry and services). However, investments by the private sector lag far behind those of government and the country continues to rank lowest in the region for the World Bank’s Ease of Doing Business Index.

USAID endorses private sector development within core Feed the Future activities along with stand-alone activities and the New Alliance for Food Security and Nutrition to create the necessary environment for private sector growth. USAID works with producers, processors and suppliers to build private sector capacity and competitiveness. USAID also fosters private sector development by enabling a more stable and inclusive financial system. This is achieved by promoting discussion between private and public institutions and improving business development services for small and medium enterprises.

Launched in 2012, the New Alliance for Food Security and Nutrition ushered in a new phase of global investment in food security and nutrition, building on previous G8 efforts. The New Alliance is a shared commitment to achieve sustained and inclusive agricultural growth and globally raise 50 million people out of poverty over the next 10 years.

Development Credit

Ethiopia’s farmers lack access to finance, which they need to modernize their practices and purchase or lease machinery. Ethiopian banks generally require collateral valued at a minimum of 100 percent of the value of the loan, plus interest, which is unattainable for most farmers. Since all Ethiopian land belongs to the government, farmers cannot use the land they lease as collateral and banks do not accept crops or other farm stock as collateral.

USAID encourages growth of the private sector and microenterprises in Ethiopia by improving access to finance and credit for underserved populations. USAID’s development credit portfolio focuses on women, diaspora and local entrepreneurs engaged in small- and medium-sized business activities in agriculture and health.

To expand access to credit in the agricultural and health sectors in Ethiopia, USAID established a loan portfolio facility shared by seven private commercial banks. For agriculture, the program supports the banks in extending credit to agricultural cooperatives, livestock marketing groups, private sector agro-processors, and private sector commercial horticulture producers. In health, with funding provided by the President's Emergency Plan for AIDS Relief, USAID will increase lending to private health sector enterprises, particularly those providing HIV/AIDS and TB services. Loans will enable private clinics, pharmacies and hospitals to make quality improvements and expand services to more people living with HIV and TB.

Activities Include

  • African Alliance for Improved Food Processing in Ethiopia (AAIFP): Increase the competitiveness of the Ethiopian wheat-processing sector and expand availability of affordable and nutritious foods in Ethiopia. A public-private partnership between TechnoServe and Partners in Food Solutions (General Mills, Cargill, and DSM), and USAID.

  • Commercial Farm Services Program: Develop six private, retail input supply and farm service businesses and one wholesale supply cooperative to serve as an innovative model for scaling up private farm supply and service networks.

  • Development Credit Authority: Increase access to short-term marketing credit and medium-term investment capital for local business owners, diaspora, women-owned businesses, and the agriculture sector.

  • Ethiopia Sustainable Agribusiness Incubator: Incubate and strengthen private enterprises whose profit will be derived from the farm to market chains, which incubatees will develop, extend and grow.

  • Multi Donor Fund for Private Sector Development: Build the capacity of the private sector in Ethiopia and raise its level, competitiveness and importance. This, in turn, triggers economic dynamism, enhances productivity, and contributes to poverty reduction.

NEW ALLIANCE FOR FOOD SECURITY AND NUTRITION

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Last updated: August 21, 2014

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