Addis Ababa : The Government of Ethiopia and the International Fund for Agricultural Development (IFAD) have launched a new 305.7-million-USD program to help the most vulnerable farmers increase their resilience.
The third phase of the Rural Financial Intermediation Program (RUFIP III) was launched in a meeting held today.
According to a press statement issued by IFAD, the funding includes a 35.1 million USD grant and 4.9 million USD loan from IFAD, with significant co-financing from international development partners and national financial institutions.
The contribution of the Government of Ethiopia is USD 51.9 million, and USD 0.9 million from the beneficiaries themselves.
Ethiopia’s agriculture sector, which employs 80 percent of the population, continues to suffer from frequent droughts aggravated by climate change when in 2017, for instance, insufficient rainfall during the rainy season led to catastrophic crop and livestock losses and left an estimated 8.5 million people in need of humanitarian assistance.
National Bank Vice Governor, Solomon Desta said on the occasion “the Rural Financial Intermediation Program (RUFIP) I and II made major contributions, not just in including 5 million customers in microfinance institutions, but also in improving regulatory capacities in microfinance, banking and lease finance supervision.”
According to him, RUFIP showed that microfinance is a better strategy for financial inclusion of the vulnerable poor, by comparison there are 5 million microfinance institution borrowers as against only 0.3 million in banks.
This third phase of the program will scale up delivery of rural financial services tailored to the needs of the most vulnerable smallholder farmers, particularly women and young people.
UN Resident Coordinator to Ethiopia, Catherine Sozi said on her part RUFIP III is also part of the UN response to COVID-19, helping to support smallholder farmers in accessing rural financial services.
Through the project, rural finance institutions will be able to deliver an expanded range of financial products and services to a large number of rural poor people.
It will also support the uptake of these products by rural savings and credit cooperatives and microfinance institutions through financial literacy training and develop insurance products through the rural finance institutions to allow smallholder farmers to mitigate the risks related to climate change.
IFAD Country Director for Ethiopia, Ulaç Demirag stated that “RUFIP III is really about people ― it is not to simply make credit available to the rural population, to strengthen the microfinance sector in Ethiopia and to promote agro-industrialization, but to bring 13.5 million vulnerable rural households on a sustainable path to prosperity.”
IFAD is a key UN agency in Ethiopia, having made more than 750 million USD of investments so far and reaching 7 million vulnerable households.
Source: Ethiopia News agency