Agricultural businesses in Ethiopia will be eligible for as much as €40 million in financing as a result of an agreement between the European Investment Bank Group’s development arm, EIB Global, and domestic lender, Zemen Bank SC. Under the accord, EIB Global is providing a credit line of €20 million to Zemen Bank, which will in turn match the sum. This is the first direct loan to a commercial bank extended by EIB Global in Ethiopia.
The deal involves on-lending by Zemen Bank to Ethiopian small and medium-sized enterprises (SMEs) licensed to operate in the country and export primarily in the agriculture sector. There will be a 30% focus on businesses that promote climate action and environmental sustainability. Gender is also a feature of the initiative, with at least 30% of the overall funding to be directed towards SMEs that are owned or led by women or provide employment, products and services for women.
The agreement was announced in Addis Ababa at a European Union-Ethiopia Business Forum attended by European Commissioner for International Partnerships Jozef Sikela and Ethiopian officials. Agriculture accounts for more than a third of Ethiopia’s gross domestic product (GDP).
“Agriculture is a key driver of Ethiopia’s economic growth, contributing to GDP, export earnings and employment,” saidEIB Vice President Ambroise Fayolle. “By extending credit lines to local commercial banks, with a focus on climate action and environmental sustainability, we act as a catalyst for the mobilisation of private capital for the whole agricultural value chain.”
The financing is part of a wider European Union programme for Africa called the “Green Agri Value Chain”, which seeks to improve the commercialisation of agriculture to promote export of products including coffee and horticultural products like vegetables, fruits and herbs that provide the country with foreign exchange.
The credit line advances a global initiative called 2X Challenge to promote investment in the world’s women and an EIB initiative known as “Women for Stronger Communities and Growth” that seeks to mobilise €1 billion to increase women entrepreneurs’ access to finance and capacity building globally.
Zemen Bank is a private commercial lender with 141 branches and over 1,800 employees across Ethiopia.
“We are proud to partner with European Investment Bank in mobilizing €40 million to support Ethiopia’s farming enterprises. This initiative reflects our shared commitment to strengthening agricultural productivity, empowering farmers, and driving inclusive economic growth,” said Dereje Zebene, Chief Executive Officer of Zemen Bank. He extended Zemen Bank’s compliment to EIB for strong partnership and their trust and collaboration in advancing sustainable development in Ethiopia.
Zemen is enrolled in an EIB technical assistance programme – GFS Fund – to help financial institutions as well central banks and supervisors build climate-resilient systems. The bank is also receiving technical assistance from the African, Caribbean and Pacific (ACP) Trust Fund of the European Commission to support implementation of environmental and social management systems.
“This €40 million investment into Ethiopia’s agriculture will help businesses export more, create jobs and keep more value in the country,” said European Commissioner for International Partnerships, Jozef Sikela. “Together with the European Investment Bank and Zemen Bank, we are giving SMEs real access to finance, with a clear focus on women and climate-resilient production, creating concrete opportunities for young people across Ethiopia.”
The EIB Global credit line to Zemen Bank advances the EU’s “Global Gateway” strategy to support African agri-food systems, biodiversity, climate resilience and sustainable growth. It is also well aligned with Ethiopia’s own climate and gender goals.
The country recently completed and operationalised a national digital coffee traceability system to comply with forthcoming EU deforestation regulations, safeguarding access to its largest export market.
Ethiopia has shown a strong commitment to being a middle-income country. EIB Global has so far invested €577 million in support of sectors ranging from Renewable Energy, Water, Transport, Telecommunications, Private Sector SME financing and more.
