Ethiopia receives World Bank loan for irrigation

The World Bank has approved a loan of US$100 million to help increase agricultural productivity, accelerate growth and reduce rural poverty in Ethiopia.

The Ethiopia Irrigation and Drainage project is the first in a series of Nile investments under preparation, totaling more than $700 million. The Irrigation and Drainage project represents the bank’s first re-engagement in new irrigation development in the Nile Basin for about 3 decades.

The project aims to increase irrigated agricultural output in the Megech and Ribb schemes located in the Lake Tana sub-basin of the Blue Nile basin. The proposed program will develop an incremental total area of up to 20,000 hectares.

By providing more reliable access to water, agricultural productivity is expected to rise. In addition, farmers will be able to move into higher value products. Through intensification and diversification of agricultural production, the project aims to support more inclusive growth that translates into rural poverty reduction. The project will also accelerate the existing land certification program, encourage private investors in agro-processing, marketing, input supply and service provision.

“The Irrigation and Drainage project will introduce irrigation in areas that are mostly cultivated by subsistence smallholder farmers that currently depend on unreliable rainfall. The introduction of irrigation will not only reduce risks associated with climate variability, but will also help farmers transform their production systems and capture benefits from linkages with markets,” said IJsbrand de Jong, the WB leader of the project.

Specifically, the irrigation project will develop about 20,000 hectares of ground and surface water infrastructure and ascertain future irrigation potential in 80,000 hectares. This component will directly benefit participating households, expected to number 12,600.

The agricultural and market development aspect aims to promote sustainable intensification and commercialization of agriculture on the irrigation systems financed by the project. It will help establish linkages between irrigated agriculture and markets so that expanded irrigation benefits a wide share of the affected population.

The irrigation management part of the project will enhance the efficiency and the financial sustainability of irrigation infrastructure. Accountable and transparent irrigation management through private operators is expected to improve the quality of service.

The terms of the loan terms are a commitment fee of 0.5 percent, a service charge of 0.75 percent, and a maturity of 40 years, including a 10-year period of grace.

World Bank