NATIONAL AGRICULTURAL FINANCE IMPLEMENTATION

ROADMAP - SUMMARY
2025-30 (NAFIR)

DRAFT FINAL OUTPUT DOCUMENT V5

10 APRIL 2025

Prepared for National Bank of Ethiopia by Adam Gross (Consultant)

NBE National Agricultural Finance Roadmap (NAFIR) – Draft Final Output Document v5 - SUMMARY 10/04/25

NOTICE

This document is confidential, and not for publication or distribution in whole or in part without the
express prior permission of the National Bank of Ethiopia (NBE).

The document contains a draft summary of the National Agri-Finance Implementation Roadmap and
is circulated for consultation purposes only. It does not represent any final opinion or decision by NBE
or any other institution.

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NBE National Agricultural Finance Roadmap (NAFIR) – Draft Final Output Document v5 - SUMMARY 10/04/25

PURPOSE AND METHODOLOGY

The National Agri-Finance Implementation Roadmap (NAFIR) is a project of the National Bank of
Ethiopia (NBE) under the National Financial Inclusion Strategy (NFIS) to coordinate the scale-up of
agri-finance in Ethiopia. NAFIR proposes a package of transformative solutions that will integrate and
energise Ethiopia’s emergent agri-finance landscape through a five-year implementation framework.
NAFIR supports the achievement of key policy objectives under NFIS and the Homegrown Economic
Reform Agenda 2.0 (HGER): the deepening of financial inclusion in the agricultural sector; the
modernisation of Ethiopian agriculture; the strengthening of sectoral linkages between agriculture
and industry; value addition and export growth. Key outcomes linked to these policy objectives include
improved farmer incomes and livelihoods, strengthened food security, economic growth, job creation,
climate resilience, gender equality and digital transformation, contributing to multiple UN Sustainable
Development Goals and African Union Agenda 2063 Priorities.
NAFIR has been developed using a mixed methods approach involving quantitative and qualitative
analysis. Quantitative analysis has been performed on demand and supply-side data. Data has been
sourced from official sources and peer-reviewed research. The official data is highly aggregated,
comprising reporting by FIs on overall agri-finance loan disbursement and loans outstanding.
However, the potential agri-finance demand/supply gaps may not only be quantitative but also
cyclical, distributional and qualitative. Therefore to supplement the official data with a deeper
understanding of the cyclical, distributional and qualitative performance of agri-finance in Ethiopia,
and to systematically engage stakeholders on their perspectives, experiences and ideas, two rounds
of stakeholder consultation have taken place:
• Direct stakeholder engagement – a round of meetings and workshops held in November 2024,
and some additional meetings thereafter (see Annex I); and
• Stakeholder survey – survey instruments were distributed in January 2025 by NBE to licensed
financial institutions and development partners; and through survey interviews conducted across
Ethiopia with a sample of agricultural producer cooperatives (APCs), rural savings and credit
cooperatives (RuSACCOs) and agro-processors (see Annex II).
A third round of stakeholder consultation will take place for purposes of validating the draft NAFIR
output document prior to finalisation.

CONTEXT
Agriculture is under-financed in Ethiopia despite its critical contribution to the national economy
and society as a whole. In 2023-24, credit flows to agriculture represented 8% of loans disbursed by
banks (24%, including CBE fertiliser finance1) and 18% of loans outstanding from microfinance
institutions (MFIs). This compares with the 32% contribution that agriculture makes to Ethiopia’s gross

1 NBE defines agricultural credit as lending to “business that includes cultivating soil, producing crops, raising livestock, bee-
keeping, fishery and other related activities”(NBE Directive No. MFI/24/2013). The large-scale fertiliser financing scheme
funded by the Commercial Bank of Ethiopia (CBE) is one major source of financing the ‘other related activities’. Under this
arrangement, significant quantities of fertiliser are imported and distribued to rural areas through regional governments and
cooperatives. Without this scheme, farmers may not have access to fertiliser. However, the scheme does not result in the
provision of credit to primary producers as the end farmer still has to pay cash for the fertiliser or find credit from another
source. However, this finance accounts for nearly 70% of total reported agri-loan disbursement for 2023/24. For purposes
of the analysis in this document, the report quotes agri-finance statistics that may include or exclude the CBE fertiliser
finance, according to context, and as stated in the text. It is emphasised, the same underlying official data has been used in
all cases, and any difference versus official NBE data and publications stems from the statistics in which the CBE fertiliser
finance has been excluded.

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domestic product (GDP), 64% to employment and 79% to exports. As of 2023-24, just 2% of total
national demand for agri-finance was fulfilled – Ethiopian Birr (ETB) 52 billion per annum (ETB 125
billion, including CBE fertiliser finance) was supplied as against ETB 2,582 billion demand2.
However, the demand-supply gap for agri-finance in Ethiopia is not merely quantitative, but also
cyclical, qualitative and distributional. Agri-finance must be tailored to fulfil key agricultural ‘use
cases’ at the right time of the season: inputs, irrigation, mechanisation, livestock, outputs and
insurance. Fulfilment of these use cases drives productivity gain, farm size expansion, post-harvest loss
(PHL) reduction, diversification, livelihood strengthening, and resilience. Agri-finance is also necessary
to enable efficient aggregation and supply of agricultural raw materials to downstream agro-industries,
and to mitigate the high structural risks faced by the sector.
The causes of agricultural under-financing in Ethiopia are multi-faceted. Financing agriculture
involves higher cost and risk compared with other sectors. Loan sizes are small, reflecting the
smallholder-predominant modes of production across Ethiopia’s agricultural value chains. The cost of
providing finance is high, driven by geographic distance, infrastructure gaps, low bank presence,
financial illiteracy, and challenges complying with regulation and documentary requirements. High
structural risks emerge from seasonality, cyclicality and the volatilities of climate, price and financial
sector credit availability, which remain difficult to mitigate, while agricultural borrowers tend to lack
possession of the types of collateral typically accepted by financial institutions (FIs). Many FIs do not
have the specialised knowledge or offer tailored products required to sustainably finance the sector.
Significant investments have been made over recent years by government, development partners
and private sector to address these challenges and build Ethiopia’s agri-finance landscape. Registries
have been developed by NBE and the Ministries of Agriculture (MoA), and of Trade and Regional
Integration (MoTRI) so that agricultural assets can serve as loan collateral to fulfil key agri-finance use
cases. The value of loans disbursed against agricultural assets registered in the National Rural Land
Administration Information System (NRLAIS), the National Warehouse Receipt System (NWRS) and the
Movable Property Securities Registry (MPSR) has grown significantly. However, agricultural assets
remain a small fraction – less than 1% – of total registered assets.
Regulations and cross-cutting financial and digital infrastructure have been introduced. These
include the credit reference bureau (CRB), the national identity scheme, and frameworks for capital
goods financing, contract farming and integrated agro-industrial parks (IAIPs). The Ethiopian
Cooperatives Commission (ECC) has worked to strengthen rural FIs, supported by the Agricultural
Transformation Institute (ATI) which has launched an extensive array of initiatives to build foundations
for access to agri-finance and rural financial inclusion. Significant multistakeholder programmatic
efforts have improved agricultural and livestock insurance in the country. However, while the coverage
value of livestock and floriculture insurance policies have grown significantly, agro-insurance remains
at similar levels to 2016/17. Agri-finance has also been positively impacted by the emergence of
agriculture finance technology (‘agfintech’) platforms such as Lersha and Kifiya which help FIs to
overcome the physical barriers of financing agriculture, as well as digital platforms that connext
farmers to essential services, such as MasterCard FarmPass.

2 Agri-finance demand has been calculated during the development of NAFIR based on a granular quantification by value
chain according to each of the five main ‘use cases’ identified in the document – inputs, irrigation, mechanisation, livestock
and outputs – based on unit costs of input and equipment per hectare/animal head, hectarage/animal heads per crop, and
output values derived from official statistics and peer-reviewed research. By these calculations, ETB 2,582 billion per annum
total demand breaks down into ETB 330 billion for inputs, ETB 69 billion for irrigation, ETB 86 billion for mechanisation, ETB
911 billion for livestock (annual cost and stock replenishment), and ETB 1,186 billion for outputs.

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PROBLEM STATEMENT AND RATIONALE FOR NAFIR

However, even when these investments come to maturity, key constraints are likely to hold back
the scale-up of agri-finance to meet policy ambitions. These include: quantitative and cyclical
constraints to the loanable funds available for FI agri-lending; disincentives driven by the high costs
and risks of financing agriculture compared with other sectors; compliance bottlenecks as producers
struggle to meet regulatory requirements for documentation3; pervasive borrower financial illiteracy;
under-developed agricultural risk management frameworks; and weak linkages between banks and
rural FIs.
As Ethiopia rebalances its economy towards greater private sector participation, the outlook looks
challenging with current trajectories trending negative. Agri-lending by the ‘traditional’ private banks
– those established prior to 2020 – has remained range-bound within 1-3% of total credit supply. There
has been a significant fall in the proportion of credit provided to agriculture by the microfinance sector
from 30% to 18% in just four years. The drop was even more pronounced for those MFIs which
converted to become banks between 2020-22, experiencing a fall in the proportion of lending to
agriculture from 57% to 32% in just one year.
Charts: Agricultural Loans, 2020-24 (ETB millions, %) – Banks, Converted Banks, MFIs

Source: NBE

Despite the importance of agri-finance, and the sizable challenges it faces to scale up, no over-arching
strategy is in place to coordinate stakeholder actions across Ethiopia’s agri-finance landscape.
Initiatives are fragmented under the auspices of different institutions. There is limited data captured or
monitored to provide insight on the evolving status of agri-finance in the country. And there has not
been a systematic effort to coordinate actions across the different stakeholders involved.

3
Financial institutions that have engaged in pilot smallholder and MSME agri-financing schemes report a large
amount of laborious groundwork when banking farmers. Farmer loan applications can take many weeks or
months, requiring repeat visits either by the bank to the borrower, or by the borrower to the bank. Key
challenges include: obtaining documents from regional and woreda administrations, which often entails delays,
inconsistencies, system challenges and lack of understanding; use of various local languages; variant spelling
within and across these languages; obtaining consistent signatures; different naming conventions; different
marital structures; inefficient document renewal regimes; requirement for Tax Identification Numbers (TIN)
numbers which most farmers do not have; the high number of documents and contracts that a borrower – often
facing literacy and awareness challenges – needs to sign; and the need to obtain and navigate NBE exemptions
and waivers for various parts of the above.

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In this context, the rationale for developing a national agri-finance implementation roadmap is
therefore to:
1. Develop an over-arching strategy to integrate and energise Ethiopia’s emergent agri-finance
landscape by resolving remaining constraints through transformative ‘game changing’ solutions;
2. Build a comprehensive database to establish a baseline of relevant indicators and monitor
progress going forward towards national policy targets; and
3. Put in place a coordinating mechanism for joined-up multistakeholder action.

VISION AND SOLUTIONS

Drawing on African and international experience, three ‘game-changing’ solutions are proposed as
the pillars of NAFIR for short-term impact:
• National Agri-Finance Accelerator (NAFA): a refinancing and risk-sharing vehicle that makes
available loanable funds earmarked specifically for agriculture and provides incentives for FIs to
scale-up agri-finance.
• Farmer Credit Card (FCC): an efficient interface for FIs to access farmer information, and for the
farmer to access credit, streamlining compliance and reducing the cost of lending to the sector.
• Agri-Finance Centre of Excellence (CoE): a hub for integrating financial literacy, FI capacity-
building, institutional linkages and agricultural risk management efficiently and cost-effectively
into NAFIR implementation through strategic and coherent long-term frameworks.

The framework that emerges offers a holistic, incentives-based approach across its three pillars. NAFA
increases loanable fund availability and reduces the risk of lending to agriculture. The FCC streamlines
compliance and reduces the costs of financing the sector. The CoE builds the financial literacy of
borrowers and the institutional capacity of lenders, addressing both the demand- and supply-sides of
the agri-finance landscape.

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A new policy instrument for mandated minimum lending to agriculture may be considered subject to
further assessment and progress review as NAFIR is implemented4. A vision of how NAFIR may work in
practice in provided in Annex III.

Pillar I - NAFA: The refinancing component of NAFA is designed to make available a new source of
loanable funds for FIs. NAFA would act as a conduit for pooling resources from government,
development partners and private sources. It would channel the pooled resources to ensure not only
that they reach agriculture, but also that credit is available where it is needed – use cases, value
chains, regions, borrower types, gender, and insurance – to make sure that no-one gets left behind.
This approach is structured to crowd in and scale up private sector funding for agriculture, in line
with the HGER policy emphasis for Ethiopia’s transition to a private sector-led growth model. When
a FI originates a qualifying agri-loan, it refinances the loan by selling a portion of it to NAFA. That
portion of the loan capital is then received back by the FI and becomes available for originating new
loans. In return, NAFA acquires the right to the equivalent share of the interest, creating an income
stream for NAFA to sustain itself and organically scale-up. The result is a risk-sharing arrangement in
which NAFA bears the risk for the portion of the loan that it refinances, and for loans provided to high
priority or otherwise under-served segments takes a defined first loss position on the remainder. FI
agri-finance performance would be monitored by NAFA, with high-performers and innovators
recognised in an annual awards ceremony and rewarded with preferences in government and
development partner project opportunities.
NAFA would be integrated closely with the existing components of Ethiopia’s agri-finance landscape
for a coordinated scale-up of credit to meet policy ambitions. NAFA Integration and Scalability Plans
would be developed by the registries, initiatives, and programmes driving each agri-finance use case.
These would set out the actions required to build the necessary capacity to support more farmers,
more transactions, more locations and more value chains.
NAFA would be accompanied by longer-term measures to further increase loanable funds available
for agriculture. A ratings system for FIs and the cooperative sector would create transparency and
strengthen readiness for taking on agri-finance-earmarked credit lines. Agro securitisation would be
developed via the Ethiopian Securities Exchange (ESX) to facilitate access to funds from the capital
markets.
The combination of refinancing with risk-sharing through NAFA has been recommended over other
possible approaches. Alternatives include: an agri-bank, which may result in the monopolisation of
agri-credit supply, crowding out private sector and dampening the dynamism and innovation that
results from competition, as well as sectoral concentration challenging risk management and prudent
operation; a national risk-sharing facility, which as a standalone approach would not address the
constraint in loanable fund access that holds back the scaling up of FI credit flow to agriculture; and
relying on FIs to source their own credit lines and risk-sharing facilities, which is important and will be
supported through NAFIR, but would not – as a short-term standalone measure – result in a systematic

4 This would take note that, while there is a 5% minimum requirement for lending against movable assets already in place,
less than 1% of assets registered in Ethiopia’s Movable Property Security Registry (MPSR), are agricultural assets. Leaning
lessons from international experience, it is recommended that a minimum agri-credit lending requirement, if introduced,
would create maximum flexibility in how FIs could fulfil the requirement. FIs may on-lend through other FIs. They may provide
credit that is intermediated via, for example, cooperatives, offtakers, agro-dealers, aggregators, warehouse operators,
commodity exchanges, mobile money and agfintech platforms. They may purchase loans from other FIs whose loan value
exceeds the requirement and have surplus. This would create a market-based incentive for FIs to aim as high as possible with
their agri-loans and not stop once they reach the minimum requirement, spurring some FIs to specialise in agri-finance and
boost rural presence, knowing these investments would be rewarded.

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and coordinated solution to ensure sufficient capital is raised to meet national policy targets or that
credit reaches where it is needed to make sure that no one gets left behind.

Pillar II - FCC: The FCC is a physical credit card which stores farmer data and enables farmers to pay
on credit for agricultural goods and services up to a defined credit allowance. It would be linked to a
named farmer, Fayda ID number, farm plot and/or tagged livestock, cellphone number, and a digital
wallet the farmer may use for savings and to facilitate digital payments. Presentation of the FCC by a
farmer to a FI would allow the FI immediate access to all relevant information it requires to issue a
loan to the farmer, per NBE regulatory franeworks to be updated. The aim is to cut out entirely the
need for farmers to submit compliance documentation to the FI, eliminating large amounts of
paperwork, processing effort, and time delay.
The credit allowance would be defined by algorithm, jointly developed by the FIs under NBE
auspices, based on farmer need (e.g. farm size, crop selection, input cost, market price) and past
performance. The allowance would be sub-allocated to different use case ‘windows’ for inputs,
irrigation, mechanisation, livestock, outputs and insurance, and pre-cleared for NAFA refinancing and
risk-sharing to closely link farmer access with FI incentive. Gender-intentionality would be
incorporated into the credit allocations, recognising the specific needs and challenges facing women
farmers.
As a condition of access to credit through the FCC, agro- or livestock insurance would automatically
be taken. This would enable insurance to be bundled with credit, refinanced by NAFA on a risk-sharing
basis, and repaid out of the farmer’s sales proceeds along with other credit the farmer takes via the
FCC. As a result, agro- and livestock insurance would become more affordable for the farmer and
create the conditions for significant growth in farmer uptake, with the economies of scale and
efficiencies of distribution driving reduction in premium cost.
Also as a condition of access to credit through the FCC, the farmer would need to use the card when
making or receiving digital payments related to agro-input, mechanisation and output transactions.
• The use of the FCC for procuring agro-inputs and mechanisation equipment or services would
provide assurance that the farmer is using credit for the intended purposes and create an audit
trail of the farmer’s input and equipment use over time.
• The use of the FCC to receive the sales proceeds from the farmer’s output marketing would enable
loan repayments to be deducted from the farmer’s sales proceeds and create an audit trail of the
farmer’s marketable surplus and income over time.
With the farmer’s output marketing transactions systematically recorded, the FCC would create
traceability of the flow of goods along the value chain. In so doing, the FCC would also serve to deter
and detect ‘side-selling’ against contract farming commitments, providing a stimulus for contract
farming and related value chain finance (VCF)-based lending. This would help to strengthen value
chain relationships, integrate farmers into the formal economy, and provide opportunities for
digitalising revenue collection by government linked to the ‘Digital Ethiopia 2025’ national digital
transformation strategy. To strengthen sectoral linkages between agriculture and industry, as well as
value addition and export growth, a special provision for NAFA refinancing and risk-sharing would be
made for loans to offtakers that participate in contract farming arrangements and IAIPs.
Data from the FCC would feed into a National Agri-Finance Database (NAFID), building a
comprehensive profile for each farmer to drive bankability and a surge in farm-level investment.
This profile would comprise farmer identity, farm data, marketing track record, and financial history.
Over time, on-farm monitoring to measure farm performance (productivity, water efficiency, PHL,

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etc), would also feed into NAFID, enabling comprehensive tracking of progress towards agricultural
modernisation by value chain and region.

Pillar III – CoE: The CoE is intended as a hub for stakeholder coordination, implementation and
monitoring in the areas of financial literacy, FI capacity development, agricultural risk management
and FI linkages. Its purpose is to supersede approaches which in the past may have been fragmented,
small-scale and program-specific with strategic and coherent frameworks which are systematic,
coordinated and have long-term continuity, backed by a technical assistance facility. The CoE would
be tasked with four action areas:
National Agri-Finance Literacy (NAFIL) Framework: The CoE would oversee development and
delivery of a national framework for agri-financial literacy, under the National Financial Education
Strategy (NFES). NAFIL would include, among others, a segmented stakeholder needs assessment, a
gap analysis, and the scoping and development of relevant content necessary to build the financial
literacy of producers and cooperatives to successfully absorb and put to effective use agri-finance
across the different use cases and value chains. NAFIL would be delivered smartly to farmers and
cooperatives by integrating it with the roll-out of NAFA and FCC, in partnership with MoA, ECC and
ATI, to improve efficiency, inclusivity and cost-effectiveness.
FI Capacity Development: The CoE would develop best practice principles, guidelines and templates,
backed by training and capacity-building services, to support FIs introduce specialised agri-finance
products and their IFB equivalents, and to guide them in building up their in-house specialised agri-
finance capability.
Hub for Agri-Finance Institutional Linkages (HAFIL): The CoE would build improved access for
Ethiopian FIs to credit lines from international sources, and for MFIs and RuSACCOs to credit lines and
on-lending facilities from banks. A further linkage facilitated by HAFIL would be between FIs and DFS
solutions providers, including mobile money and agfintech platforms, to drive forward digital
transformation in agriculture. The CoE’s role would be to facilitate partnerships, disseminate
information, study and share best practices, and monitor progress
Agriculture Risk Management: An Agriculture Risk Management Permanent Working Group under
the CoE would be formed with two broad objectives:
✓ To integrate agro- and livestock insurance within the NAFA/FCC framework. This would enable
insurance to be bundled with credit, refinanced by NAFA, and repaid out of the farmer’s sales
proceeds along with other credit the farmer takes via the FCC. As a result, agro- and livestock
insurance would become more affordable for the farmer and create the conditions for improved
farmer uptake.
✓ To develop and implement a national strategy for agricultural risk management, including
components on agro- and livestock insurance and price risk management. The initial focus will be
to continue scaling up agro- and livestock insurance, building on the four Dialogue Platform
Meetings that took place under the JICA ICIP project between May 2022 and January 2024, while
linking to ongoing initiatives such as IRFF (MoA/UNDP) and ARC (ATI/WFP). The medium-term
focus would be developing a framework for price risk management. This would involve
development of an agriculutural price risk management strategy under which solutions would be
introduced and piloted linked to instruments offered by domestic and international commodity
exchanges, as well as actuarial instruments. Based on piloting experiences, a national programme
framework for price risk management would be developed before the end of the first NAFIR
period in 2030.

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IMPLEMENTATION
NAFIR will be implemented in close partnership with the institutions supporting the key
components of Ethiopia’s agri-finance landscape. NAFA will be funded through a resource
mobilisation strategy coordinated with MoF. The FCC will be implemented in partnership with MoA,
ATI, ECC and National ID, and interface with digital platforms (e.g. FarmPass, agfintech platforms),
with regulations for credit provision through the FCC defined under NBE directive. NAFID would link
with the CRB, National ID, and asset registries operated by NBE, MoA and MoTRI. The CoE will be
delivered in partnership with the Ethiopian Institute for Financial Studies, MoA, ATI and ECC, and in
collaboration with global centres of excellence.
Governance of NAFIR implementation is recommended to take place through a steering committee
comprising NBE, MoA, MoF, MoTRI, ECC, ATI, and National ID. The steering committee would in turn
oversee a project management unit that would be housed within the NBE. This approach convenes
the key institutional actors supporting agri-finance in Ethiopia and is intended to drive a whole-of-
government approach. A NAFIR consultative body would also meet with demand- and supply-side
stakeholders, as well as experts from development partners, academia and technical institutions, on
a regular basis to review the progress of NAFIR and identify enhancements.
Funds for NAFA implementation may be sourced from government, development partners and
private sources, and may encompass in-kind as well as cash contributions. These may include
agricultural goods and services currently provided on a grant-funded basis by government and
development partners. By transitioning from grant-funding to in-kind contribution, this funding
becomes catalytic for private sector credit flows under the NAFIR framework.
The key NAFIR target is the Ten-Year Development Plan (TYDP) objective of ETB 881 billion per
annum credit flow to agriculture by 2030. Further scale-up to fulfil larger portions of total agri-finance
demand may be considered for a second NAFIR covering the period 2031-2035. A full results
framework and implementation plan has been developed and will be updated based on pre-
implementation feasibility studies.
NAFA resource mobilisation will scale incrementally based on ‘test and learn’ cycles targeting
identified agricultural sub-sectors and regions. To achieve the policy target, based on high-level
estimate, NAFA funds under management would need to reach ETB 250-300 billion (USD 1.9–2.3
billion) by 2030. Additional capitalisation of ETB 8-10 billion (USD 60-75 million) is proposed to provide
a refinancing and risk-sharing facility for loans to offtakers that enter into contract farming
arrangements and participate in IAIPs, to incentivise uptake and strengthen sectoral linkages between
agriculture and industry, and stimulate value addition and export growth. Implementation costs,
including a technical assistance facility linked to the CoE, are estimated at ETB 8-10 billion (USD 60-75
million).

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ANNEX I – STAKEHOLDER ENGAGEMENT

Session Attendees Email Address

NBE Bilateral Ato Temesgen Zeleke (Director, Financial [email protected]
Discussion Inclusion Secretariat)

NBE Bilateral Mr Frezer Ayalew (Director, Bank [email protected]

Discussion Supervision Directorate)

NBE Bilateral Mr Belay Tulu (Director, Insurance [email protected]

Discussion Supervision Directorate)

NBE Bilateral Mr Zerihun Necho (Principal Examiner of [email protected]

Discussion Microfinance Institutions, MFI
[email protected]
Supervision Directorate)

NBE Bilateral Mr Fikremarkos Abebe (Financial [email protected]

Discussion Infrastructure Coordinator, Credit
[email protected]
reference and movable collateral registry
directorate)

DBE Bilateral Mr Samson and Mr Tefera (rural area and [email protected]

Discussion related financing)

Siinqee Bank Mr Morkena Ousu (Deputy VP-Micro [email protected]

Bilateral Discussion Finance Service)

Bilateral Discussion Ato Melaku Kebede (Project Manager, [email protected]

FSD)

Cooperative Bank of Mr Yohannes Ambisa, VP of Agriculture Yohannes.Ambisa@coopbankor

Oromia/Rabo Bank and Cooperatives relation omiasc.com
Bilateral Discussion
Mr Corne de Louw (Program Director [email protected]
Advisoru Services, Rabo Bank) and
[email protected]
Beatrice Githinji (Africa Lead- Advisory
Services, Rabo Bank)

Vision Fund MFI Mr Taye Chimdessa, CEO [email protected]

Bilateral Discussion

Wasasa MFI Bilateral Dr Amsalu Alemayehu, CEO [email protected]

Discussion m

Farmers and Farmers and Cooperatives roundtable

Cooperatives
roundtable

Nyala Insurance Mr Solomon, Inclusive Insurance Division [email protected]

Bilateral Discussion Manager

Kifiya Financial Mr Albert (Rural Financial Services), Mr [email protected]

Technology Melkachew (Agri Insurance), Mr
Yegermal (Agri MSME Finance)

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Session Attendees Email Address

Dashen Bank Mr Tadesse Kassahun: Director of MSME tadesse.kasahun@dashenbanksc
Bilateral Discussion Banking Dept .com

Mr Wondimagegn: Senior Manager wondimagegn.getachew@dashe

Micro and Small businesses nbanksc.com

Mr Tilahun Girma: Senior Manager KYC [email protected]

and CDD (for the onboarding process) om

IFAD Mr Mawira Chitou, Lead Technical [email protected]

Specialist in Water and Rural
Infrastructure

Lersha Mr Abrhame Endrias, Fouder and [email protected]

Managing Director

CBE Bilateral Mr Asegahegn Dagne, Director of Credit [email protected]

Discussion Appraisal

Ministry of Mr Tigistu (Rural Land Administration [email protected]

Agriculture Use), Dr Hadgu (Livestock Traceability
[email protected]
System Lead), Dr Bula

ATI Mr Solomon Legesse (AgriHub Project [email protected]

Team Leader) and Mr Henok Mesfin
[email protected]
(Director - Private Sector in Agribusiness
and Market Development) [email protected]

Roundtable Mr Tedla Hailegiorgis (EMA board [email protected]

discussion with president),
[email protected]
Ethiopian Millers
Mr Abinet Tarekegn (Oromia Federation
Association and
President)
Oromia Federation

World Bank Mr Elliot Mghenyi, Lead Agricultural [email protected]

Economist

Safaricom MPESA Ms Elsa Muzzolini, CEO Safaricom MPESA [email protected]

Mobile Financial Services

Ethio Telecom Mr Bruk Adhane Haile, Chief Mobile [email protected]

TeleBirr Money Officer

Ethiopian Stock Mr Tilahun Kassahun, CEO [email protected]

Exchange

Fayda National ID Mr Yodahe Zemichael, Director – [email protected]

Stakeholder Engagement and Use Case

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ANNEX II – SURVEY RESPONDENTS

Banks MFIs Other FIs APCs Unions SACCOs Agro-

Processor
Abay Aggar Kaza CGF Amhara Amhara Amhara Amhara
Addis Intl Amal Awash Abasem Admas Abeba Tsehay
Awash Amba Awra Insurance Abchkli Merkeb Dulecha Edible Oil
Berhan Busa Gonofa Lion Alefa Union 4 Abebech Unison
Insurance Andinet Edible Oil
Bunna Debo Awuramba Wedera
Nyala Dirmara
CBE DECSI Bagunan
Insurance Oromia
CBO Dynamic Banetu Oromia Fikir
Oromia MuluRata
Dashen Elsabi Insurance Barekat Berke Gojjam Ber
Alelitu Tadila Dina
DBE Eshet Denebe
Enat Harar Fakuwa Hetosa Wena Birhan Geda
Reya Wenjetta Kebie Flour
Gadaa Harbu Fana
Kajawa Wuha Sahy Milki
Goh Lefayda Gerba
Betoch Reya Yemisrach Shari Kik
Lideta Gulawenz Wekana Sra
Hibret Liyu Hamus Yesanqa
Lion Gebeya Edget
Meftihe
SNNP SNNP
Nib Metamamen Kilaj
Malik Oromia Aste Fayen
Shabelle Nisir Liben
Ababo Kedja na
Sidama Success Sendeka Betesebwa
Sidama Abdi Waqa
Siinqee Tana Shendena Lindet
Nuli Biftu
Siket Vision Fund Shumata Kolite Zeman
Ganama
Tsedey Wasasa Siya Denba Sidama Boki
Tsehay Yegna Yimali Chalal Sidama
Bonsu
Wegagen Yemisrach Boqona Hayat
Zamzam Yeshewabirhan Oromia Somali Boonsa MK
Zemen Abdii Tawakal Burkitu Yamlak Sra
Gudina
Busa Gonofe
Arrabbi Tigray Care Walkite Somali
Bekie Enderta Faaya Boru Durdur
Bucha Jira Flour
Danbaa Gudeta
Medebay Gudetu Liban Food
Bura Adalee Complex
Mereb Hawi Gudina
Buriqitu
Alkasa Ifa Boru
Cilaaloo Iteya
Dabala Jitu
Adaree

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Banks MFIs Other FIs APCs Unions SACCOs Agro-

Processor
Galama Lalistuu
Genata Lelise
Gonda Liqqi
Fincaama Metemamen
Haxee Misoma
Ondoode Toora
J Qullensa Raya
Jammo Waligala
Galamaa Shala
Lensho Chubete
Wabbee Sokoru
Qacama Tashoma
Qona Mara Tokuma
Alaltu
Wagee
Bucho
Qona Mara Walii
Danaba Wasasa
Qona Mara
Booru SNNP
Jaawii
Alah
Qona Mara Yashnan
Odaajilaa
Ashabe
Qona Mara Women
Bulchaana
Selem
Sanyi
Tgagezut
Bayiftu
Lencho
Wabe Sidama
Segni Tesfa Edget
Bayistu Tulu
Deneba
Somali
Sero
Anketo Bilan
Shaaqi Halgan
Shararaa Horseed
Tokkuma
Sagure Tigray
Molee
Debri
Tullu Deremeyti
Dannabaa
Dedebit
Enderta

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Banks MFIs Other FIs APCs Unions SACCOs Agro-

Processor
Wirtu Fana
Qacama Fana
Xamasaa Mekelle
Hibret Hade
SNNP Mekelle
Dagmawi Meseret
Tewodros Mizan
Quiha
Sidama Adeday
Bisetam & Wegahta
Akebabi Wukiro
Hudana Maray
Galo

Somali
Wacays

Tigray
Debre
Harnet
Debry
Selam
Shewit
Alamata
Shimta
Temesgen
Werie

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ANNEX III – NAFIR IN PRACTICE

This Annex sets out an illustration of how NAFIR could work in practice, looking at three prospective
financing scenarios.

Scenario 1: Direct FI-Provided Credit

In this scenario, a bank, MFI or RuSACCO provides credit direct to the farmer via the FCC and receives
refinancing and risk-sharing from NAFA. The financing is secured against the farmer’s land via the SLLC
registered in NRLAIS or a pastoralist’s animal(s) registered in EthLITS, with these assets in turn being
registered in the MPSR collateral registry. Agro- or livestock insurance is taken automatically after the
first draw-down by the farmer. If the farmer stores goods in the warehouse and takes WRF against
the stored goods, the WRF proceeds may be used to repay the input and equipment loan, and the
transaction is secured against the warehouse receipt issued either by the NWRS or ECX and registered
in the MPSR collateral registry.
Table 10: Activity Flow under Direct-FI Provided Credit via FCC and NAFA
No Activity Description
1 Credit-Score FCC algorithm sets farmer credit allowance based on farmer needs and track record
2 Approach The farmer approaches an FI – a bank, MFI, or RuSACCO – for credit
3 Presentation The farmer presents the FCC to the FI at the branch, to a field agent, or online
4 Validation The FI validates the cardholder’s identity via Fayda National ID
5 Access The FI scans/swipes the FCC in a device and accesses the farmer’s information 5
6 Approval The FI approves the credit same day, against the FCC-defined credit allowance
7 Allocation Credit is loaded onto the FCC and allocated to different ‘use case’ windows6
8 Recordal The loan is recorded in NAFID, and specified as the Direct FI-Provided modality
9 Lien A lien is registered in MPSR, NRLAIS and EthLITS over the farmer’s SLLC and animals
10 Insurance Agro- or livestock insurance7 is automatically taken to cover the farmer’s production
11 Draw-down The farmer proceeds to use the FCC, at the appropriate time of the season, to:
✓ Pay for inputs / feed / animal health products at approved8 agro-dealers
✓ Pay for equipment9 (e.g irrigation, farm implements) with approved providers
✓ Pay for mechanisation services with approved providers
✓ Use storage at an WRS-approved warehouse and receive 70% of the goods’ value
✓ Use for miscellaneous items for household purposes up to a maximum limit
12 Refinancing Each draw-down is recorded in NAFID. The applicable refinancing ratio is applied,
returning the equivalent portion of loan principal from NAFA to the originating FI.
13 Risk-Sharing Once refinancing takes place, risk sharing starts to apply
14 Sale The farmer markets their produce and receives payment onto the FCC
15 Claim If the insurance conditions are triggered, the payout is received on the farmer’s FCC
16 Repayment The repayment amount due to the originating FI and NAFA is deducted from the FCC
and transferred to the originating FI and NAFA
17 Recovery If sales proceeds are not received or insufficient, initial recovery efforts are made via
Woreda-level authorities through direct engagement with the farmer
18 Enforcement If initial recovery efforts fail, NAFA sends notice of enforcement on behalf of itself
and the originating FI to applicable registries and agencies

5 This includes all farmer profile necessary for loan approval per updated NBE regulations (i.e. national ID number, NRLAIS
farm data, EthLITS livestock data, required Woreda-level systems data), plus data extracted from NAFID including farmer
identity, farm plot, marketing track record, and financial history.
6 I.e. inputs, irrigation, mechanisation, outputs, insurance, non-farm purposes
7 Subject to FI preferences, other insurance – e.g. life and health cover – may also be applied
8 Each use case window would only be permitted to be spent with an approved provider of the relevant services
9 Equipment would not be purchased each year but for the expected lifetime of the asset

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Scenario 2: FCC-Based Value Chain Finance via Offtaker linked to Contract Farming Arrangement

In this scenario, the FI provides credit to a contracted farmer via the offtaker based on the value chain
relationship, a specialised agri-finance product known as value chain finance (VCF). As above: the FI
receives refinancing and risk-sharing via NAFA; the loan would be secured against the farmer’s land
via the SLLC registered in NRLAIS or a pastoralist’s animal(s) registered in EthLITS, with these assets in
turn being registered in the MPSR collateral registry; and agro- or livestock insurance is automatically
taken with the first draw down.

If the offtaker permits deferred delivery, then the farmer may store the goods in a warehouse and
take WRF against the stored goods. As above, the WRF proceeds may then be used to repay the input
and equipment loan, and the transaction is secured against the warehouse receipt issued either by
the NWRS or ECX and registered in the MPSR collateral registry, pending sale and delivery of the goods
to the offtaker.

Table 11: Activity Flow under FCC-Based Value Chain Finance linked to Contract Farming
No Activity Description
1 Credit-Score FCC algorithm sets farmer credit allowance based on farmer needs and track record
2 Agreement An offtaker enters into agreement with an FI prior to contracting with farmers
3 Disbursement The FI disburses funds to the offtaker.
4 Presentation The farmer presents the FCC to the offtaker at the depot, to a field agent, or online
5 Validation The offtaker validates the cardholder’s identity via Fayda National ID
6 Access The offtaker scans/swipes the FCC in a device and accesses the farmer’s information
7 Contracting The offtaker enters into a contract with the farmer, specifying the goods and services
to be financed and their value, and the farmer’s obligation to deliver outputs
8 Recordal The contract is recorded in NAFID, and specified as the Offtaker-Provided modality
9 Purchase The offtaker purchases inputs and equipment at the appropriate time of the season
10 Provision The offtaker provides the farmer, at the appropriate time of the season, with:
✓ Inputs / feed / animal health products
✓ Equipment
✓ Services
✓ Miscellaneous items for household purposes up to a maximum limit
All up to the total value of the credit allowance under each ‘use case’ window
11 Insurance Agro- or livestock insurance10 is automatically taken to cover the farmer’s production
12 Lien A lien is registered in MPSR, NRLAIS and EthLITS over the farmer’s SLLC and animals
13 Draw Down The farmer’s receipt of goods and services, and their value, is recorded on the FCC
against the farmer credit allocation under each ‘use case’ window
14 Refinancing Each draw-down is recorded in NAFID. The applicable refinancing ratio is applied,
returning the equivalent portion of loan principal from NAFA to the originating FI.
16 Risk-Sharing Once refinancing takes place, risk sharing starts to apply
17 Sale The farmer delivers outputs to the offtaker and receives payment onto the FCC
18 Claim If the insurance conditions are triggered, the payout is received on the farmer’s FCC
19 Repayment The repayment amount due to the originating FI and NAFA is deducted from the FCC
and transferred to the originating FI and NAFA.
20 Recovery If sales proceeds are not received or insufficient, initial recovery efforts are made via
the offtaker through direct engagement with the farmer
21 Enforcement If initial recovery efforts fail, NAFA sends notice of enforcement on behalf of itself
and the originating FI to applicable registries and agencies

10 Subject to FI preferences, other insurance – e.g. life and health cover – may also be applied

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Scenario 3: FCC-Based Intermediated Credit

In this scenario, the FI provides credit to a farmer via one or more intermediating entities. Variants of
this arrangement could include:

✓ an agro-dealer or AOSS (ATI) that provides famers with inputs, feed or animal health products on
credit;
✓ an equipment vendor or mechanisation service provider that provides goods and services to the
farmers on credit;
✓ a warehouse operator that disburses WRF to the farmer on behalf of the FI;
✓ a cooperative, aggregator, ACC (ATI), agfintech platform or commodity exchange that provides
various financial products and services to farmers.

In some cases – such as a cooperative, aggregator, ACC, agfintech platform or commodity exchange –
all the agri-finance use cases may be fulfilled by agri-finance products and services provided through
the entity.

In other cases – for example, through an agro-dealer, equipment vendor, mechanisation service
provider or warehouse operator – one or several but not all the use cases may be fulfilled by agri-
finance products and services provided through that entity. Accordingly, it may be that the farmer
receives finance via multiple intermediating entities.

In the table below, these entities are referred to as intermediaries, as they are intermediating the
provision of agri-finance. However, this terminology is not intended to imply they are intermediating
the purchase of outputs from the farmer.

Table 12: Activity Flow under FCC-Based Intermediated Credit

No Activity Description
1 Credit-Score FCC algorithm sets farmer credit allowance based on farmer needs and track record
2 Agreement The intermediary enters into agreement with an FI
3 Disbursement The FI disburses funds to the intermediary to purchase stock/equipment/services
4 Presentation The farmer presents the FCC to the intermediary
5 Validation The intermediary entity validates the cardholder’s identity via Fayda National ID
6 Access The intermediary scans/swipes the FCC in a device and accesses the farmer’s
information
7 Contracting The intermediary enters into a contract with the farmer, specifying the goods and
services to be financed and their value
8 Recordal The contract is recorded in NAFID, and specified as the Intermediary-Provided
modality
9 Purchase The intermediary purchases applicable inputs, equipment and/or services at the
appropriate time of the season
10 Provision The intermediary provides the farmer, at the appropriate time of the season, with
goods or services on credit:
✓ Inputs / feed / animal health products
✓ Equipment
✓ Services
✓ Miscellaneous items for household purposes up to a maximum limit
All up to the total value of the credit allowance under each ‘use case’ window
11 Insurance Agro- or livestock insurance11 is automatically taken to cover the farmer’s production
12 Lien A lien is registered in MPSR, NRLAIS and EthLITS over the farmer’s SLLC and animals

11 Subject to FI preferences, other insurance – e.g. life and health cover – may also be applied

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No Activity Description
13 Draw Down The farmer’s receipt of goods and services, and their value, is recorded on the FCC
against the farmer credit allocation under each ‘use case’ window
14 Refinancing Each draw-down is recorded in NAFID. The applicable refinancing ratio is applied,
returning the equivalent portion of loan principal from NAFA to the originating FI.
16 Risk-Sharing Once refinancing takes place, risk sharing starts to apply
17 Sale The farmer markets their produce and receives payment onto the FCC
18 Claim If the insurance conditions are triggered, the payout is received on the farmer’s FCC
19 Repayment The repayment amount due to the originating FI and NAFA is deducted from the FCC
and transferred to the originating FI and NAFA.
20 Recovery If sales proceeds are not received or insufficient, initial recovery efforts are made via
the intermediary through direct engagement with the farmer
21 Enforcement If initial recovery efforts fail, NAFA sends notice of enforcement on behalf of itself
and the originating FI to applicable registries and agencies

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