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Country Facts
|
Population (millions) |
68.6 |
|
Gross domestic savings (% of GDP) |
2% |
|
% Population under $2/day (PPP) |
80.7% [1999-00] |
|
Regulated microfinance institutions |
Commercial banks; savings and credit cooperatives; and microfinance institutions |
|
Predominant informal finance mechanisms (ROSCAs, tontines, etc.) |
ROSCAs, funeral societies |
General Approach to Regulating
Based on the Comparative Database on Microfinance Regulation by the IRIS Center of the University of Maryland|
|
Commercial Banks |
Savings and Credit |
Microfinance |
|
Definition or description of institution |
Provide financial services |
Minimum of 20 members with common occupation or residence per cooperative; established by individuals on voluntary basis to collectively solve and manage their economic and social problems. |
Extend credit, in cash or in kind, to peasant farmers or urban small entrepreneurs, the loan size of which shall be fixed by the Bank. |
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Guidelines & restrictions on financial services: |
Permitted: Basic financial services |
Permitted: Savings and credit to members only |
Permitted: Credit, savings, demand and time deposits, pension fund management, money transfers, purchase of T-bills and some other instruments |
Informal Savings: Iqqub, Iddir and SACCOs (241 KB, PDF)
Taken from: "Factors Impeding the Poverty Reduction Capacity of Micro-credit: Some Field Observations from Malawi and Ethiopia', 2003
By: Sunita Pitamber
In Ethiopia, there are a number of commonly found community based indigenous savings and credit groups, which are also widely used by women. One of the Community Based Organisations (CBOs), known as iqqub is an informal, ad-hoc association organized by members for the purpose of pooling their savings in accordance with rules established by the group. Members agree to deposit monthly or weekly contributions of a fixed sum with an elected treasurer or, where accessible, in a bank. Lots are drawn weekly or monthly by turns and members in need can purchase the winner's lot by paying a premium.
Iddir is an informal association whereby savings are made primarily for the purpose of covering the cost of funerals or weddings. CBOs play a significant role in savings and beneficiary mobilization, and are considered to be effective ways of targeting clients as some of the CBOs are uniquely controlled and owned by women.
Savings and Credit Cooperatives (SACCOs) are almost entirely urban based with membership largely drawn from salaried employees and generally people who share a common purpose and locality. Currently there are about 670 urban SACCOs with approximately 150,000 members. Reportedly, these SACCOs have consistently performed quite well largely due to their politicaland financial independence. Most of the SACCO members are men. Members are required to save 3% to 5% of their salaries on a monthly basis. Borrowers are charged 1.5% per month and savers paid the regular bank savings rate, which is currently around 6% per annum. All cooperative societies, including SACCOs, are governed and supervised by the Regional Cooperative Promotion Bureaus.
ACSI (Amhara Credit and Savings Institution) and DECSI (Dedebit Credit and Savings Institution)
ACSI started operations in 1995 as a department of a local NGO. Today it is one of the largest MFIs in Africa with more than 400,000 borrowers and around 200,000 voluntary savers (600,000 in total). ACSI's main source of funding has been savings (US $21m). ACSI has been profitable since 2002 and recorded its highest net profit of US$3.7m, equivalent to 24.4% of equity, in December 2004. ACSI is currently in the process of (re)building the infrastructure, modernizing the sub-branches and improving security in order to create a good image of the institution and attract more savings.
The raising of savings turns out to be a success for DECSI too. Such an evolution can be explained by a positive perception of the savings product offered by DECSI: security, availability and quality of the service attract depositors.
See also:
Regulating Microfinance in Ethiopia: Making it More Effective, 2005, Gobezie, G.
Review of Microfinance Industry in Ethiopia: Regulatory Frameworks and Performance, 2000, Wolday, A.
Zoom Microfinance, DECSI, Ethiopia, 2000.
Livelihoods Through Micro-enterprise Services, Assessing Supply and Demand Constraints for Microfinance in Ethiopia, 2005, Gobezie, G.