The Commercial Bank of Ethiopia, the country’s largest lender, has launched a new agricultural credit programme aimed at directly financing smallholder farmers and pastoralists, expanding access to finance in an economy where agriculture remains the dominant employer.

Ephrem Mekuria, acting president of the Commercial Bank of Ethiopia and executive vice-president for corporate services, said the facility is designed to provide credit to farmers and pastoralists organised individually or in groups. He said the loans will support crop production, livestock rearing, warehouse receipt financing, dairy and dairy-related activities, horticulture and floriculture, as well as the purchase of agricultural machinery and equipment.

Ephrem said the bank has historically prioritised the agricultural sector by extending low-interest loans to large, medium and small-scale agricultural projects, including foreign currency financing for fertilisers, inputs, machinery and agricultural chemicals. He said the newly launched programme differs by targeting smallholders and pastoralists directly, rather than primarily financing commercial agricultural investors.

The bank said the initiative is intended to strengthen rural economic activity by improving productivity, widening access to credit and supporting agricultural value chains.

The Commercial Bank of Ethiopia said it will work with relevant institutions to ensure effective implementation of the programme and to monitor loan utilisation across rural areas.

The launch comes against a backdrop of persistent structural constraints in Ethiopia’s agricultural finance sector. Agriculture currently receives less than ten percent of domestic bank credit, while insurance coverage remains below 0.4 percent. Formal financial institutions meet only about two percent of the sector’s estimated credit demand, leaving many smallholders reliant on informal lending or limited microfinance options.