Despite struggling with a lack of financing, cooperatives and unions have only utilised less than half of the 800 million Br credit allocated to them by the National Bank of Ethiopia to mitigate the impacts of the COVID-19 pandemic on their business activities. The cooperatives cite the "high" interest rate levied on the loan coupled with the short repayment period stipulated as the factors behind their lack of interest so far.

The financial support, approved by the central bank just two months after the pandemic came into the picture, is part of the two billion Birr stimulus package implemented by the government to reduce the impacts of the outbreak on marginal economic actors, including small and medium enterprises and cooperative unions. The loan was provided through the Development Bank of Ethiopia (DBE) with an annual interest rate of seven percent.

There were 1,145 registered cooperatives in the country at the end of the first quarter of the current fiscal year. Almost 1,700 agro-processing industries were registered under these cooperatives, which had traded commodities worth 3.5 billion Br over the first nine months of the fiscal year.

So far, just 51 cooperatives have managed to take 341 million Br in loans after fulfilling the requirements, which demand having a capital higher than their outstanding credit and presenting an audit report as well as a business plan. An additional three are waiting for the approval of 77.7 million Br in loans from the DBE, according to the Federal Cooperative Agency.

"The majority of the cooperatives are already indebted and they were not able to qualify for the loan," said Demelash Gebeyehu, a senior expert of credit and commodity trade at the Agency. "There is a large chunk of money that they can still borrow."

Even before a Coronavirus case was reported in Ethiopia, cooperatives, especially those established by farmers, had been under pressure due to low bargaining power resulting from the presence of intermediaries, inflationary pressure, and shortage of finance to buy inputs, although they are among the entities that got relatively better support from government agencies, in terms of the loan. COVID-19, however, has exacerbated things with the disruption of supply chains following the reports of the country's first positive case in March last year.