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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Somalia has just now cleared its debt with IFAD through member-state support.

“Today, the situation of millions of Somalis is heartbreaking,” said Lario. “Five consecutive seasons of rains have failed, devastating their lives and their ability to cope, which has been further eroded by conflict, climate shocks, desert locust outbreaks and high food, fuel and fertilizer prices. We must provide humanitarian assistance to save lives now, but it is equally important that we lay the foundation today to ensure a brighter future.”

He added: “Solutions exist. It is inhumane to keep people living in cycles of crises. We must invest today in long-term solutions. And this means rural development.“

Later, during a press conference, Hassan Sheikh Mohamud, the President of the Federal Republic of Somalia, emphasized the importance of IFAD’s renewed commitment: “This re-engagement is an opportunity for a new dawn for Somalia to address many food security priorities in the country,” he said. “The re-engagement of IFAD is the beginning of the process of transition from humanitarian to development and it helps a lot – it is opening doors, and other organizations will follow suit.”

Lario announced that IFAD is immediately making US$11.6 million available and mobilizing resources for a new US$50 million agricultural development project, providing seeds, irrigation, farming and veterinary services, small microfinance loans, training in climate smart and adaptation technics to improve crop and livestock production.

“We must help small-scale farmers and pastoralists adapt to climate change and build their resilience so that they can cope with future shocks,” said Lario. “They need funding and training.”

According to the Integrated Phase Classification, 5.6 million Somalis are currently experiencing high levels of acute food insecurity, including 214,000 people considered in a catastrophe situation due to an unprecedented drought, not seen in decades. Projections show that as many as 8.3 million Somalis could face high levels of acute food insecurity between April and June 2023. The 2023 Somalia Humanitarian Response Plan aims to assist 7.6 million people across Somalia this year. This includes preventing loss of life of approximately 6.7 million of the most vulnerable people.

IFAD’s renewed direct investments are now made possible thanks to Belgium, Germany, Italy and Sweden which supported Somalia in clearing its arrears to IFAD. The arrears prevented Somalia from benefiting from IFAD’s highly concessional loans and grants since 1991, when the civil war started in Somalia.

“Germany’s clearing of Somalia’s outstanding debts with IFAD allows the Fund to resume its important role in supporting rural development and sustainable climate-resilient agriculture in Somalia. We have taken this rather unusual bilateral step in order to boost Somalia’s efforts to withstand economic and climatic shocks and in order to strengthen institutions and ownership in times of crisis so as to leverage further financing for climate-resilient agriculture,” said Jochen Flasbarth, State Secretary, Federal Ministry of Economic Cooperation and Development of Germany.

“The climate crisis has severe consequences on agriculture and food production in the world’s poorest countries. It is urgent that we strengthen the resilience of rural populations in these countries,” said Ambassador Pierre-Emanuel De Bauw, Belgium’s Governor to IFAD. “Belgium is honoured to be one of the first countries to have contributed to clear Somalia’s debt to IFAD, enabling the country to benefit from IFAD funding to help small-scale farmers adapt to climate changes and tackle land degradation.“

Despite the arrears and the suspension of loans, IFAD has been actively mobilizing grants from donors to Somalia and channeling resources for rural development projects in the country. Since the early 1990’s, IFAD has channeled about US$40 million to Somalia. There are two ongoing projects at the moment.

A project in Puntland helps pastoralists and agro-pastoralists rehabilitate irrigation systems, improve livestock health, use drip irrigation, restore degraded rangelands and use solar energy. IFAD also provides extraordinary support to Somalia under its Crisis Relief Initiative to help the country withstand the impacts of the war in Ukraine by responding to urgent needs for seeds, fertilizers, goats and sheep, irrigation and renewable energies, and rehabilitation of water sources, thus protecting the livelihoods of about 72 000 people.

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