BY ABEBE WOLDEGIORGIS
Supplying food items to consumers; providing employment and income for the majority of the population; providing inputs to the agro-industry and playing pivotal role in forex earnings; agriculture has continued being backbone to the Ethiopia’s economy.
However, the sector is facing several challenges including climate change, land degradation, and low productivity. To address these challenges, it is essential for Ethiopia to allocate substantial finance to the agriculture sector in a bid to ensure sustainable development and food security.
To this end, the Ethiopian Agricultural Transformation Institute, in collaboration with the Ministry of Agriculture and the National Bank of Ethiopia, organized a discussion forum recently focusing on access to finance for micro, small and medium enterprises engaged in agriculture.
Attending the forum, the Minister of Agriculture, Girma Amente (PhD) noted that the sector is supplying food to the rapidly growing population; creating job opportunities for millions and supplying inputs to the manufacturing industry and yet it has untapped potential.
Therefore, transforming the sector through coordinating land and water resources, technology, and capital as well as creating market linkage is vital. So far, aiming to support the sector, the government has allowed five hundred items of agricultural inputs to be imported tax free. It has also worked hard to provide farmers with substantial services.
The Minister further said that Ministry of Agriculture has identified that access to finance as a key pillar in its 10 years perspective development plan by creating enabling environment for the sector’s growth. Adding, he said that even though the contribution of the sector is immense for the nation’s economic growth, its access to finance is negligible. Hence, investing in agriculture can help to increase productivity and improve food security.
This includes investing in research and development to improve crop varieties, soil usage practices, and water management systems. Additionally, investing in irrigation infrastructure, storage facilities, and market linkages can help to improve the efficiency of the agricultural value chain and increase farmers’ income.
Furthermore, investing in sustainable agriculture practices can help to address environmental challenges such as soil erosion, deforestation, and desertification. This includes promoting agro forestry, conservation of agriculture, and sustainable land management practices that enhance soil fertility and reduce greenhouse gas emissions. Investing in rural infrastructure such as roads, electricity, and communication networks can help to improve access to markets and services, empowering rural communities and stimulating economic growth.
Underlining the importance of allocating substantial finance to the agriculture sector in Ethiopia, he noted that the sector is the largest employer in the country, employing around 70 percent of the population, and contributes about 35 percent of the country’s Gross Domestic Product (GDP). However, the sector has been facing several challenges, including low productivity, climate change, soil degradation, and distorted market value chain.
One of the main ways to address these challenges is selecting targeted investment in the sector. This includes investment in research and development to improve the quality and yield of crops, as well as in irrigation and water management systems to ensure consistent and reliable water supply for agriculture. Investment in rural infrastructure such as roads, electricity, and communication networks can improve access to markets, facilitate the movement of goods, and enhance the delivery of services to rural areas.
Moreover, investing in sustainable agriculture practices can lead to several benefits, including soil health improvement, increased biodiversity, and carbon sequestration. This can in turn contribute to climate change mitigation and adaptation efforts, as well as to the conservation of natural resources.
The Chief Executive Officer Agricultural Transformation Agency of Ethiopia, Mandefro Nigussie (PhD) on his part said that despite significant effort by the government and development partners to improve the sector, access to finance and financial market is underdeveloped in Ethiopia. As a result, it is suffering from shortage of finance which hampers its inertia for multi-dimensional development.
Director, Banking Supervision Directorate National Bank of Ethiopia, Solomon Desta for his part said that proclamation had been ratified that enable farmers to utilize their movable properties such as cattle and crops as collateral to get access to finance from banks.
The National Bank has issued directions to all public and private banks as per the proclamation to allocate five percent of their loan disperse to the agriculture sector. Investment in the agriculture sector can help to promote rural development and reduce poverty. By creating employment opportunities and increasing farmers’ income, investment in agriculture can contribute to poverty reduction and food security, which are fundamental components of sustainable development.
To further expand on the importance of allocating substantial finance to the agriculture sector in Ethiopia, it is worth noting that the sector is not only essential for food security and poverty reduction, but also for the country’s overall economic growth. Agriculture is the largest sector in the country, and its development has a significant impact on the economy as a whole.
Investing in the agriculture sector can lead to several economic benefits, including increased export earnings, foreign exchange savings and job creation. Ethiopia has significant potential to increase its agricultural exports, particularly in high-value crops such as coffee, flowers, and fruits. Investment in agricultural research and development can help to improve the quality and quantity of these crops, making them more competitive in the global market.
It also can contribute to the development of agro-industrial value chains, which can create additional employment opportunities and increase income for farmers and rural communities. This in turn can lead to more diversified and resilient rural economies, reducing the dependence on agriculture alone.
It helps to address social issues such as gender inequality and youth unemployment; enhance women’s role in agriculture in the rural part of the country and can support empowering women and promote gender equality. Additionally, investment in the sector can create opportunities for youth employment, reducing the migration of young people to urban areas in search of employment.
Allocating substantial finance to the agriculture sector is crucial for sustainable economic growth, food security, and poverty reduction. Supporting the sector to get financial access can lead to increase agricultural productivity, improve rural infrastructure, and the development of agro-industrial value chains. It contributes to addressing social issues such as gender inequality and youth unemployment, creating a more inclusive and sustainable economy.
Responding how the government can ensure that investment in the agriculture sector benefits smallholder farmers the deputy National Bank Governor underlined that smallholder farmers are the backbone of Ethiopia’s agricultural sector, and it is crucial to ensure that investments in the sector benefit these farmers. Smallholder farmers often lack access to credit and financial services, which can limit their ability to invest in their farms. The government can work to provide financial services and credit facilities to smallholder farmers, enabling them to invest in their farms and improve productivity.
They often face challenges in accessing markets due to poor infrastructure and limited market information. The government can work to improve market access for smallholder farmers by investing in rural infrastructure such as roads and communication networks. Additionally, the government can establish market information systems that provide smallholder farmers with information on prices, demand, and supply.
They also lack access to modern agricultural technologies and practices. The government can work by increasing provision of extension services and training programs that informs smallholder farmers how to adopt modern agricultural technologies and practices, improving productivity and income.
The absence of land tenure security limits their ability to invest in their farms and access credit. The government can work to ensure land tenure security for smallholder farmers, providing them with greater certainty and security over their land. Land certification can be cited here as the case in point.
Smallholder farmers often lack bargaining power and face challenges in accessing credit and markets individually. The government can work to support the formation of cooperatives, enabling smallholder farmers to pool their resources and negotiate better prices and bargaining in a better position with buyers and financial institutions.
Summing up, investment in the agriculture sector benefits smallholder farmers and requires a multi-faceted approach that focuses on access to finance, markets, technology transfer, land tenure security, and support for cooperatives. By exerting efforts to address these challenges, the government can support smallholder farmers and promote sustainable agricultural development.
THE ETHIOPIAN HERALD FRIDAY 23 JUNE 2023
