Ethiopia has secured a €110 million (about $130 million) loan from the European Investment Bank (EIB) to support a large-scale rural development initiative aimed at expanding access to finance for underserved communities.
The funding will back the Rural Finance and Development Project, which focuses on improving credit availability for micro, small, and medium-sized enterprises (MSMEs) operating in rural areas. The project is designed to strengthen rural livelihoods, boost agricultural productivity, and promote inclusive economic growth.
Under the agreement, the Development Bank of Ethiopia will manage and on-lend the funds to rural financial institutions, including microfinance providers and cooperatives. These institutions are expected to expand lending to farmers, agri-businesses, and small rural enterprises that traditionally struggle to access formal financing.
The project is co-financed by several development partners. The International Fund for Agricultural Development (IFAD) is contributing both grant and loan financing, while the European Union is providing additional grant funding and technical assistance through IFAD to support implementation and capacity building.
Ethiopia’s government sees improved rural financial access as critical, as nearly four-fifths of the population lives in rural areas and depends heavily on agriculture and related activities. Limited access to credit, combined with climate-related pressures, has constrained productivity and income growth in these regions.
The EIB loan aligns with Ethiopia’s broader reform agenda, which seeks to strengthen financial inclusion, support small businesses, and enhance resilience in rural economies through long-term development financing.
