Sunday, April 21, 2024
NewsAgricultural credit hoped to grow as Ministry certifies 25mln plots

Agricultural credit hoped to grow as Ministry certifies 25mln plots

Certificates valid as loan collateral

The authorities have granted certificates of land-use rights for more than half of the estimated total 50 million farm plots presumed to be agriculturally productive in Ethiopia.

The Ministry of Agriculture has led the initiative since it began a few years ago, registering and certifying farm plots under the Second-level Land Certification (SLLC) program. Officials hope the certification will help improve farmers’ livelihoods by enabling them to use their land as collateral for loans, while the registration of plots is hoped to mitigate and prevent land disputes and conflict, as well as streamline government tax collection.

The initiative and previous second-level land certification programs like it have been a key area of support from development partners including the World Bank, USAID and the governments of the UK, Sweden, and Finland.

Tigistu Gebremeskel, executive of Land Use and Administration at the Ministry, told MPs his office has granted certificates to 30 million agricultural plots presumed to be active in the country.

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A total of seven million households received the certificates, which detail the ownership, location and size of the farms. Tigistu told Parliament the certificates would be valid collateral for credit.

“This will be a momentous thing for banks and insurance companies,” he said.

The certification program ties in to the Rural Land Administration and Use proclamation that experts at the Agriculture Ministry have been working on for the last 10 years. The draft was on the discussion table in Parliament last week.

The officials behind the draft want to see it open access to finance for farmers by enabling them to put up their rights to use a plot of land for up to a decade as a guarantee.

If approved, the proclamation would see the establishment of a central farmland database under the Ministry, filled with information collected from local and regional administrations. The data would be availed to interested parties, such as banks.

Microfinance institutions and banks are presently accepting the land use right certificates granted to farmers by the Ministry as collateral. Close to 2.2 billion birr in credit has thus far been disbursed using the certificates as collateral, according to Ministry officials.

More than a third of the loan recipients are women, and more than a dozen microfinance institutions have participated in the scheme through 300 branch offices, according to Tigistu.

“The farmers are buying pumps, tractors, and various materials for their farming, as well as engaging in other businesses,” Tigistu said. “The more we educate, the more the demand increases through time.”

 

He reported the certification is helping improve tax collection from the farms, with the tax amount determined using the information tied to the certificates.

“The primary goal behind the proclamation is to bolster economic capacity for rural landholders,” said Tigistu. “Beyond certification, the farmers will now have access to more resources.”

[speaker]
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