Italy has adopted an integrated approach to strengthening Ethiopia’s coffee value chain. By bringing in a diverse range of partners and combining technical assistance with blended finance, Italy has strengthened national institutions and unlocked investment. These efforts have helped build the long-term resilience of a sector that sustains millions of livelihoods, despite persistent challenges in financing, quality and climate adaptation that limit its ability to upgrade.
Italy’s partnership‑based approach to supporting Ethiopia’s coffee sector
Abstract
Coffee is Ethiopia’s most important export commodity, serving as a cornerstone of foreign exchange earnings, and supporting the income of roughly 25 million smallholder farmers. However, the sector also faces several structural barriers, including restricted access to finance, weak quality infrastructure and mounting climate risks that threaten smallholder livelihoods and export earnings, alongside emerging sustainability and deforestation-free requirements in key export markets. These challenges are not unique to the coffee sector but rather mirror systemic constraints across agricultural value chains in low-income countries. Italy is well placed to respond to these challenges by leveraging its long-standing engagement in the country and deep links to global coffee markets, allowing it to attract an array of strong technical partners – public, private and multilateral.
Italy’s integrated approach aligns with Ethiopia’s national coffee strategy and builds on more than 15 years of bilateral engagement, ensuring national ownership, as well as continuity and trust with both national institutions and local actors. Key measures include:
Multistakeholder partnerships to develop Ethiopia's coffee sector. The Coffee Training Centre (CTC), established in 2021 under the Ethiopian Coffee and Tea Authority (ECTA), benefits from a strategic partnership between the Italian Agency for Development Co-operation (AICS), the United Nations Industrial Development Organisation (UNIDO), Illycaffé and the Ernesto Illy Foundation. Leveraging private sector expertise, the CTC integrates research, training, laboratory and quality-control services, and market development across the entire coffee value chain.
Blended finance support. In March 2025, Italy provided a EUR 10 million revolving credit line, co-designed with the Commercial Bank of Ethiopia. This blended finance facility reduces risk for borrowers lacking collateral and enables co‑operatives, producers, processors and exporters to invest in upgraded equipment, improve quality and adopt climate-resilient practices. Additional contributions are under discussion with the Africa Finance Corporation, which has committed at least EUR 10 million to be added to the current credit line.
Enabling local actors to ensure sustainability. The targeted support to co‑operatives strengthens community-based structures, helps enhance local ownership and catalyse broad-based benefits.
In summary, Italy’s approach helps retain higher-value functions of the coffee value chain domestically in Ethiopia, moving beyond primary commodity trade towards sustainable income growth and long-term sector resilience.
Italy’s integrated approach has delivered tangible improvements across Ethiopia’s coffee value chain by addressing both technical and financial constraints, thereby supporting:
Enhanced market access and skills development. The CTC has become a national reference point for strengthening quality control, skills development and compliance with international standards, enabling Ethiopia to access higher-value market segments.
Empowered co‑operatives and farmers, including women. The EUR 10 million revolving credit line has supported 11 successful applicants to date, including major co‑operatives representing 2 million farmers – 30% of them women – who invested in upgraded equipment, improved processing and climate-resilient practices previously inaccessible due to collateral barriers. Approved loans currently amount to EUR 6 million and are being finalised and disbursed as a first tranche.
The potential leveraging of additional financing. Italy’s catalytic role is reflected in interest from the World Bank, the African Development Bank Group for co-financing, and the increasing involvement of Italian companies in sustainable sourcing and value-chain upgrading in Africa.
Potential to scale. Plans to replicate the CTC model in Jimma and Sidama, and to explore additional financing opportunities – such as through the Italian Climate Fund – aim to expand climate‑resilient value‑chain investments.
Strong institutional anchoring and long-term engagement are critical: Positioning the CTC under ECTA ensured national ownership, alignment with Ethiopia’s coffee strategy and long-term sustainability, while Italy’s 15-year experience in Ethiopian coffee regions has built trust and helped adapt interventions to local realities.
Early private-sector involvement ensures market relevance: Collaboration with UNIDO, Illycaffé and the Ernesto Illy Foundation helped ensure that interventions are market-driven and aligned with global quality and sustainability benchmarks.
Blended finance can help overcome key barriers: The revolving credit line addressed collateral constraints, enabling investments in quality improvement and climate‑resilient practices.
Focus on co‑operatives strengthens local ownership: Targeting community-based structures enhanced participation, social cohesion and durable livelihood gains.
Integrating market development into quality institutions boosts competitiveness: Embedding market-facing services – such as cupping, certification and buyer engagement – within the CTC strengthened Ethiopia’s ability to meet international standards and access higher-value export segments.
Demand-driven delivery enhances sustainability: Ensuring that quality and market services respond to producer and buyer demand – and are valued and ultimately paid for by users–can strengthen long-term viability and local ownership.
Coffee Training Center Ethiopia, https://ctc.et/ (accessed on 18 February 2026).
Ethiopian Coffee and Tea Authority, https://ethiocta.gov.et (accessed on 18 February 2026).
Ethiopian Coffee and Tea Authority, Comprehensive Ethiopian Coffee Strategy 2019-2033, https://www.technoserve.org/wp-content/uploads/2022/06/Comprehensive-Ethiopian-Coffee-Strategy.pdf.
OECD (forthcoming), OECD Development Co-operation Peer Reviews: Italy 2026, OECD Publishing, Paris.
OECD (2024), “Private sector engagement”, TIPs Fundamentals, Development Co-operation TIPs ∙ Tools, Insights, Practices, https://www.oecd.org/en/publications/development-co-operation-tips-tools-insights-practices_be69e0cf-en/private-sector-engagement_3153a116-en.html.
To learn more about Italy’s development co-operation, see:
OECD, Italy, Development Co-operation Profiles, OECD Publishing, Paris, https://www.oecd.org/en/publications/development-co-operation-profiles_04b376d7-en/italy_53431c59-en.html.
More In Practice examples from Italy are available on Development Co-operation TIPs • Tools Insights Practices.
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Photo © AICS Addis Ababa, Inauguration of the Coffee Training Centre in Addis Ababa, Ethiopia, 2021.
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