ETHIOPIA – The first foreign-owned leasing company, Ethio Lease, signed a Memorandum of Understanding (MoU) with the Ministry of Agriculture and the Agricultural Transformation Agency (ATA) enabling it to lease agriculture machineries to ATA sponsored farmers’ mechanisation centres.
Ethio Lease is a subsidiary of Africa Asset Finance Company Inc. (AAFC), a US-headquartered firm that owns and operates a group of companies that provide asset backed lending (ABL) and leasing services throughout Africa.
Under the new agreement, Ethio Lease will import and deliver machineries and equipment worth 150 million dollars over the next three years.
Ethio Lease was formed to address the equipment and forex shortages in Ethiopia by providing capital goods financing and a wide range of leasing services for multiple sectors such as agriculture, healthcare, energy, food processing (coffee processing), and manufacturing, among other verticals.
Ethio Lease CEO, Girum Tsegaye indicated that initially the company will be working with most of the 10 mechanization centres for the pilot phase.
“The collaborative agreement has the potential to reach over 60 centres in the next two to three years, with Ethio Lease providing over 150 million dollars’ worth of agriculture equipment to ultimately support smallholder farmers, with support from the Ministry of Agriculture and ATA,” Girum said.
Ethio Lease decides what equipment to purchase and lease to the centres based on a need assessment conducted in collaboration with ATA and will oversee the maintenance and proper use of the equipment throughout the lease period, providing the lessee with the option to buy the equipment for a symbolic price, at the end of the lease period.
AAFC CEO and Ethio Lease Vice Chairman, Mr Frans VanSchaik stated that if the various government agencies do not create too many hurdles, the MOU will have a significant impact on smallholder farmers.
“By deploying agriculture equipment such as tractors, and combiners in significant numbers, we will be able to have a meaningful impact on the lives of farmers and their families,” VanSchaik said.
To date, Ethio lease has signed leasing agreements with more than 46 lessees, and this week delivered 9 tractors to various farmers in the country.
Ethio Lease is a subsidiary company of African Asset Finance Company Inc (AAFC), which was launched in 2017 to address Africa’s underserved market for equipment leasing and asset-backed lending, with Ethiopia as its first market.