• Ethiopia and the European Investment Bank signed a €110 million ($130 million) loan agreement for rural development financing.

• The project targets micro and small enterprises through rural financial institutions nationwide.

• IFAD and the European Union co-finance the initiative with grants and additional loans.

Ethiopia and the European Investment Bank signed a €110 million loan agreement, equivalent to about $130 million, to finance the Rural Finance and Development Project. The Ethiopian Ministry of Finance announced the agreement on Wednesday, February 4, 2026.

The project aims to improve access to finance for micro and small enterprises across the country. The initiative seeks to promote sustainable agricultural and economic practices in all regions. The Development Bank of Ethiopia will channel the funds to rural financial institutions, including microfinance institutions and cooperatives.

The project also relies on co-financing from international partners. The International Fund for Agricultural Development will provide a $35.1 million grant and a $4.8 million loan. The European Union will contribute a $10 million technical assistance grant and an additional $9.6 million grant, which IFAD will implement.

“The signing of this historic financing marks a significant strengthening of the long-standing partnership between Ethiopia and the European Investment Bank,” the Ethiopian Ministry of Finance said.

According to World Bank data, nearly 80% of Ethiopia’s population lives in rural areas, where climate change and instability increasingly threaten incomes and food security.

In parallel, the Ethiopian government has expanded structural reforms to improve rural finance. In June 2025, Ethiopia announced the creation of its first Rural Finance Services Unit in partnership with international stakeholders. The unit aims to remove systemic market barriers that limit access to rural credit and agricultural insurance for millions of smallholder farmers.

Ethiopia has collaborated for several years with the European Union and IFAD on financing programs in agribusiness, the bioeconomy, and rural development. Authorities seek to improve access to finance for rural households and strengthen economic resilience across the countryside.

This article was initially published in French by Lydie Mobio

 Adapted in English by Ange J.A de Berry Quenum