By Yetneberk Tadele
The current situation, which sees different regions implementing different strategies, is problematic in meeting farmers‘ demands
The Ministry of Agriculture (MoA) is issuing a directive for credit sales of agricultural inputs through microfinance institutions.
Currently, different regions have their own approaches to selling inputs to the farmers. Tigray offers credit sales to any farmers that cannot afford it, while Amhara does it only for those farmers in dry areas. The Southern region requires 25pc to 50pc down payments, while Oromia accepts only cash.
“Such different strategies create many problems in meeting the farmers’ demands and collecting money,” Teshome Lakew, agricultural inputs marketing directorate director, told Fortune.
The draft document states that the inconsistent credit system has made it difficult for farmers to use inputs appropriately.
The directive will end cooperatives and their unions involvement in credit schemes, although they will continue to be involved in assessing demand and supply of inputs, in collaboration with the wereda agriculture bureaus.
According to the directive, the microfinance institutions of each region will take the responsibility of giving the credit. They will allocate the money for this purpose and, if they have a shortage, they will get more from the Commercial Bank of Ethiopia (CBE). The private banks are also encouraged to participate in providing the credit, the bill states.
The MoA is currently working with the Oromia Cooperative Bank, in order to be engaged in the service, according to Seyfu Assefa, agricultural inputs loan senior expert at the MoA.
Oromia, Tigray, Amhara and South saving and credit institutions will be in charge of the new credit scheme, says Seyfu The Cooperative Bank of Oromia is trying the scheme as a pilot project, in Bokoji and Assasa, Oromia region, according to Belete Wakbehka, credit relationship management director of the bank. The bank, according to him, gives the credit for this purpose, at 12pc interest, if the farmers have land and can have a savings account at the bank.
“The new credit system will enable regions to not have to engage in such kind of responsibility,” Teshome said. “It will also enable unions to focus only on distributing the inputs, rather than the cash flow.”
“It is a great relief for us,” Kassa Mame, a farmer from Adama town, in Oromia Region, told Fortune. “Getting the inputs on credit helps us to use all our resources and improve productivity.”
Buying fertiliser, chemicals and improved seeds in cash is a big challenge on farming activity, he says.
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