World Bank Supports Coffee Farmer Initiative in Ethiopia

Coffee farmers in the country to benefit from greater access to credit facilities, training and management skills in new development partnership .

Coffee farmers in Ethiopia will soon benefit from greater access to credit facilities, training and management skills. In a joint venture, The World Bank Group’s private sector lending arm, the International Financial Corporation (IFC), will assist Ethiopia’s NIB International Bank increase its lending capacity in order to reach more small scale farming co-operatives in the country. The two groups are also to collaborate with Technoserve, a non-profit organization that provides technical assistance to entrepreneurs and small businesses.

The programme is set to target the Ethiopian Coffee Initiative, a project run by Technoserve and funded by the Bill & Melinda Gates Foundation. The initiative supports 160 coffee cooperatives that represent about 90,000 farmers. The initiative covers three other East African countries including Kenya, Tanzania and Rwanda.

Small coffee farmers in Ethiopia rely on cooperatives to access price information, capital, transportation and a national voice to rally support from the Government. Due to various risks involved in small scale farming, the agricultural sector is often considered a high risk area for banks and this venture seeks to address this problem.

According to the IFC, the proposed agreement will enable NIB bank to provide an estimated 8.5 million US$ credit to Ethiopian co-operatives within the 2010 coffee season. The programme is expected to continue to 2013, providing an estimated sum of $21 million over the three year period.

TechnoServe will collaborate with coffee farmer cooperatives in Ethiopia by providing training and business management so as to improve the quality of the coffee production in the country. Farmers will also be assisted to get farm machines and processing equipment like wet mills expected to raise the washing capacity per hour to 2.4 tons per hour from the current 1.0 tones per hour.

A large segment of the Ethiopian population is involved in the coffee industry either as framers or employees in the processing of coffee beans. An estimated 200,000 to 250,000 tons of coffee is produced in Ethiopia every year, with fluctuations due to the climate, prices and the seasonal nature of coffee plants.

The IFC in Ethiopia is currently focusing on development led projects in key sectors of the economy in order to assist small and medium scale enterprises gain access to finance and other business support services.

Photo by Rytc