Ethiopian farmers set to benefit from climate-smart initiatives

Addis Ababa, 8 May 2023: Against a backdrop of multiple shocks, the International Fund for Agricultural Development (IFAD) and the Federal Democratic Republic of Ethiopia, today, signed the Participatory Agriculture and Climate Transformation Programme (PACT) grant agreement for US$ 106.54 million. The programme will support rural households to sustainably improve their incomes and food and nutrition security and help them build their resilience.

Poverty levels in Ethiopia reduced from 45.5 per cent in 1994 to 19 per cent in 2020. Despite the positive trend and the economic progress achieved over the years, poverty and food insecurity, as well as decent employment remain a challenge due to multiple crises affecting the country.

The agriculture sector in Ethiopia accounts for about 45 per cent of the country’s GDP and 90 per cent of its exports. Agriculture provides employment to approximately 80 per cent of the population, the majority of whom live in rural areas.

The country’s vulnerability to food insecurity is strongly linked to climate change. Small-scale farmers, who produce the bulk of the country’s food, depend on rainfall to grow their crops. Unfortunately, due to increasingly unreliable rainfall and the escalating cost of inputs, their production capacity has been reduced significantly. The situation is made worse by their low coping capacities.

“The grant comes at a critical time for the country, to build the resilience of smallholder farmers to multiple shocks and safeguard food and nutrition security. This grant offers us the opportunity to build on IFAD’s previous work in the country to facilitate farmers’ access to rural finance, technologies and markets, and to scale up these interventions that have a multiplier effect on building resilience of food systems in Ethiopia,” said Sara Mbago-Bhunu, IFAD Regional Director, East and Southern Africa Division.

PACT will be implemented over a seven-year period and aims to benefit 750,000 rural people in 6 regional states – Amhara; Oromia; Southern Nations, Nationalities and Peoples’ Region; Sidama; Somali; and South western Ethiopia – with a focus on women (50 per cent of project participants), youth (40 per cent) and people with disabilities (5 per cent). Additional financing, to expand the geographic area to the rest of the country, is being negotiated with other financiers.

To achieve its goal, the grant will support community-led, climate-smart initiatives that aim to improve productivity through equitable and sustainable access to natural resources and market-led production. The project will also promote agribusiness development to strengthen farmers’ and pastoralists’ capacity to access remunerative markets and rural finance.  

The PACT grant is funded by IFAD (US$ 78.2 million), the European Union (US$ 17.84 million) and ASAP (US$ 10.5 million).

Since 1980, IFAD has invested US$ 829.83 million in 21 rural development programmes and projects in Ethiopia worth a total of US$ 2.3 billion. These have directly benefited around 11.5 million rural households.

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Press release No.: IFAD/40/2023

IFAD is an international financial institution and a United Nations specialized agency. Based in Rome – the United Nations food and agriculture hub – IFAD invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition and strengthen resilience. Since 1978, we have provided more than US$24 billion in grants and low-interest loans to fund projects in developing countries.   

A wide range of photographs of IFAD’s work in rural communities are available for download from its Image Bank.