Discussion forum highlights the successes and legal challenges of the land-certification-linked loan programme for farmers

Discussion forum highlights the successes and legal challenges of the land-certification-linked loan programme for farmers
[Header image: Participants from governmental and finance sectors at the March discussion forum in the Top Ten Hotel, Addis Ababa.]

On March 15, 2019, key stakeholders from the federal and regional governments, the National Bank of Ethiopia and microfinance institutions (MFIs) attended a discussion forum in Addis Ababa on the use of second level land certification (SLLC) as a loan guarantee. SLLC-linked loans were first made available by MFIs in October 2016 and provide the opportunity for landholders to use their land use rights as collateral to obtain individual loans. The forum was organised by the Land Investment for Transformation (LIFT) programme as a chance for implementing partners to discuss the successes brought about by this new loan programme as well as the challenges yet to be overcome.

Participants from all the land and financial sectors shared the lessons learned thus far, including the importance and value of SLLC in driving other market interventions such as loans and land rental. The forum concluded that the SLLC-linked loan product has significantly benefited both MFIs and rural households. However, several participants identified policy changes that are needed to further develop these loan products for a larger market. A critical policy requirement will be to amend the rural land proclamations and associated implementing directives to accommodate the new loan product, as with Amhara’s 2017 land proclamation.

The forum’s call for changes to the legal framework to scale up SLLC-linked loans attracted media attention to the issue. In follow-up interviews with the Ethiopian News Agency, Tigistu Gebremeskel, the Director of the Rural Land Administration and Use Directorate (RLAUD) of the Ministry of Agriculture, and Menberu Allebachew, LIFT’s Deputy Programme Manager, reiterated the concerns of forum participants regarding the legal issues that prevent farmers effectively using their land use rights to access loans.

Thanks to the combined efforts of LIFT, the Ethiopian government, financial institutions and the media, there is increasing support to overcome the legal barriers for SLLC-linked loans to meet the growing demand from farmers.

Latest update: Following the March forum, key stakeholders including LIFT were included in a land law amendment workshop organised by the Ministry of Agriculture at Debre Zeit in May 2019. As a result, revision of the federal Land Administration and Use Proclamation is now underway. The RLAUD Director affirmed in his July 2019 interview with the Ethiopian News Agency that the amended proclamation has been submitted for approval. It has incorporated provisions to address the key legal issues discussed during the March forum, to allow it to support an expansion of the SLLC-linked loan programme for farmers.

For more information, contact the LIFT communications team at info@liftethiopia.com