World Bank subsidiary provides funds for Ethiopia Commodity Exchange's loan scheme
Addis Ababa, Ethiopia — The World Bank’s private sector subsidiary, the International Finance Corporation (IFC), has released 1.7 million dollars for technical assistance to setup the system of lending facility for farmers that are working with the Ethiopian Commodity Exchange (ECX).
A few weeks ago both parties announced that they will work together over the next two years to design financial instruments and advocate for any required regulatory and legal changes.
The organisations also agreed that they will work together to increase the capacity of banks to extend loans based on the receipts.
Subsequently, to commence the actual lending service through local banks, the corporation financed 1.7 million birr to facilitate the pre-arrangement of the system, Eleni Gebre Medhin (PhD), Chief Executive Officer (CEO) of ECX, told Capital.
In the middle of August, IFC and ECX will arrange a forum with stakeholders about the issue.
According to a source, the actual lending fund will start money in October to the banks. The farmers are to get loans using the exchange’s warehouse receipts as collateral, according to the ECX plan. The creative loan provision is designed to attract new farmers to work with the exchange. Previously, small scale farmers did not have an opportunity to acquire loans without collateral.
Since ECX officially launched in April 2008, it has been trading maize, wheat and pea beans. A few months ago it included coffee and sesame, which earn the bulk of the country’s foreign currency.
In the near future, the exchange has a plan to add haricot beans to its trading regime.
- By Muluken Yewondwossen | Capital Ethiopia
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