Financing’sesame’ production’in’ northwest’Ethiopia
To get more insights on the finance dynamics and mechanisms in the sesame sector in northwest Ethiopia, the Support Programme undertook a study on credit and production costs of sesame producers. This report demonstrates that the sesame sector consists of a variety of different credit providers, both formal and informal, which all play their role in their own specific way to enable sesame production and marketing. The costs of credit contribute significantly to the overall costs of production, what leads to a lesser income for the sesame producer.
It is estimated that the formal credit system, which now represents 1.1 billion ETB (50.million.euro), requires an additional capitalization of 400 million ETB (19.million.euro) to replace the informal credit system. The effects of this could be spectacular since the costs related to credit are now around 15% of the total production costs, of which the majority goes to the informal sector. Yet we should realize that different producers have different credit modality needs.
Read the full study in the link