Cotton cultivators in Ethiopia would soon be able to avail credit facility for harvesting, collecting and ginning of the crop.
In view of the cotton harvesting season that is to begin in about two weeks time, the Commercial Bank of Ethiopia (CBE) and the Construction and Business Bank (CBB) would dole out up to 350 million Br in loans.
The credit facility would be similar to that given for pre-shipment export, in which manufacturers get loan on the condition that it would be paid back when the transaction is completed, with the Development Bank of Ethiopia (DBE) standing as a guarantor.
Under the new loan facility, cotton growers must submit the proof of their contractual agreement with textile and apparel companies prior to acquiring the credit, according to Esayas Bahre, President of DBE and a representative of the Ministry of Agriculture (MoA).
The past performance of the cotton growers in production and export would also be considered while distributing the credit, Mr. Bahre said.
However, the cotton cultivators said the conditions put by the DBE would take away their bargaining power with textile and garment factories.
The decision to allow credit to cotton growers was taken after a series of high level meetings attended by the Presidents of the CBE, CBB, the Central Bank and the MoA.
Fibre2fashion News Desk - India
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