aemfi and the microfinance sector
TRANSCRIPT
AEMFIs vision is to be a world class innovative network providing value added services in building an inclusive financial system in Ethiopia.
AEMFIs Mission is to enhance the capacity of microfinance institutions and financial cooperatives to deliver financial services to urban and rural households through technical assistance, human capital development, knowledge management, research, networking and advocating and promoting the industry with mutual cooperation from its members, practitioners and key stakeholders.
Help build multifaceted capacity of MFIs in Ethiopia mainly through training;
Study the status, problems, and prospects of existing MFIs in Ethiopia and assess the feasibility of forming new ones;
Help improve the national policy and regulatory environment in favor of the MF industry and its beneficiaries in Ethiopia;
Help MFIs pool loan and equity funds from domestic and foreign sources;
Help formulate and disseminate resolutions and best practices related to the MF industry in Ethiopia
Help appraise and improve the performance of MFIs by serving as the industry’s self-monitoring and database forumFacilitate collaboration, experience-sharing, and information exchange among MFIs in Ethiopia and the rest of the world
Provide MF related information resources for use by policy makers, donors, lenders, continental and international networks, researchers, mf beneficiaries, and the general public
Advocate about the mf industry in Ethiopia through media and publication and
Stimulate exceptional contributions of individuals and organizations to the mf industry by creating an incentive system
Goal 1: Enhance AEMFIs Functional Accountability and Transparency
Goal 2: Enhance Efforts towards Achieving the Financial Sustainability of AEMFI
Goal 3: Ensure AEMFI Generates High Quality Research and Support
Goal 4: Enhance the Capacity and Efficiency of AEMFIs Human Capital
Goal 5: Promote an Inclusive Financial Sector Goal 6: Enhance the Capacity of the Industry
General Assem bly
Board of Directors
Executive D irector
Training Unit
SACCO s Unit
Research &
Publications Unit
Performance
M onitoring Unit
M IS Unit
Admin Assistant
Accountant
Support Staff
Administration & Finance Unit
Program M anagement Unit
EIFTRI
Social Performance Unit
Research &
Publications Unit
THE DEVELOPMENT OF MICROFINANCE THE DEVELOPMENT OF MICROFINANCE INSTITUTIONS (MFIS) IN ETHIOPIAINSTITUTIONS (MFIS) IN ETHIOPIA
1. Development of deposit-taking MFIs 2. Growth and outreach 3. Performance of MFIs 4. The role of the government and AEMFI 5. Major achievements 6. Challenges, opportunities and threats 7. Proposed interventions
Credit scheme in Ethiopia started in the late 1980s, as part of NGO relief and development programs.
Proclamation for licensing and supervision of microfinance businesses in 1996 to separate charity and finance. NGOs are prohibited from delivering finance
The microfinance Proclamation was revised in 2009 (Proclamation 626 of 2009)
MFIs are allowed by law to mobilize public savings. 31 MFIs registered by the National Bank of Ethiopia Microfinance is a tool of the government to implement
development policies and programs
DEVELOPMENT OF DEPOSIT TAKING MFIS IN DEVELOPMENT OF DEPOSIT TAKING MFIS IN ETHIOPIAETHIOPIA
Loan productsLoan productsAgricultural loansAgricultural loansMicro and small enterprise loansMicro and small enterprise loansHousing loansHousing loansEquipment leasing loanEquipment leasing loanLoan for trade and other servicesLoan for trade and other servicesConsumption loanConsumption loan
Saving productsSaving productsCompulsory savingCompulsory savingVoluntary saving from membersVoluntary saving from membersVoluntary saving from non-members Voluntary saving from non-members
Insurance productsInsurance productsMoney transferMoney transferOther products such as paying pensioners, Other products such as paying pensioners, collection of taxescollection of taxes
FINANCIAL PRODUCTS OF MFISFINANCIAL PRODUCTS OF MFIS
Outreach: over 2.6Outreach: over 2.6 million million active active borrowers (49.8% Women)borrowers (49.8% Women)
Outstanding loan balance: Birr Outstanding loan balance: Birr 9.9 9.9 billion. (556 million USD) billion. (556 million USD)
Balance of savings: Birr. 6.1 billion Balance of savings: Birr. 6.1 billion (336 million USD) (74% Voluntary (336 million USD) (74% Voluntary Savings)Savings)
Outreach of MFIs as of March 2013Outreach of MFIs as of March 2013
GROWTH OF MFI OUTREACH IN ETHIOPIAGROWTH OF MFI OUTREACH IN ETHIOPIA
IndicatorIndicator Dec, 2003 Dec, 2003 March, March, 20132013
% of % of GrowthGrowth
Active Active borrowersborrowers
755,073755,073 2,609,0602,609,060 345%345%
Loan Loan outstandinoutstandingg
593,978,86593,978,8633
9,998,273,9,998,273,225225
1683%1683%
Saving Saving balancebalance
325,028,67325,028,6700
6,053,312,6,053,312,925925
1862%1862%
OUTSTANDING LOANS & SAVINGS OUTSTANDING LOANS & SAVINGS ( December 2003 – December ( December 2003 – December
2012)2012)
FINANCIAL PERFORMANCEFINANCIAL PERFORMANCEFinancial Structure Financial Structure
Financial Performance Financial Performance
Efficiency and Productivity Efficiency and Productivity
Risk and Liquidity Risk and Liquidity
Indicators 2003 20101 Return on Assets
-5% 1.1%2 Debt to Equity -8% 2.1%
3 Operational Self-Sufficiency
104% 138%
4 Financial Self-Sufficiency 77% 113%
5 Operating Expense/Loan portfolio
20% 10%
6 Cost per Borrower 129 177
7 Borrowers per Loan Officer 383 423
8 Portfolio at Risk > 30 Days 6% 7%9 Loan Loss ratio 5% 1%
Increase access to finance to 67% Provide financial services to MSE operatorsAvail 11 billion Birr of loan to 2.2 million MSE operators
Provide financial services to the productive poor in agriculture
Provide financial services to chronically food insecure households
Mobilize savings Transform MFIs from credit-led to saving led institutionsAt least 80% of the loans should be financed from saving mobilization
Regulation (protect solvency of deposit taking MFIs) and creating an enabling policy environment
Providing capacity building support Providing loan capital through RUFIP Direct investment or establishing finance providers owned by government or government as major shareholder
Implementing government programs through MFIs Providing credit guarantee through regional governments
Influence interest rate setting and other features of financial products
Tax exemptions Disclosure requirements
Support the creation of an enabling policy and regulatory environment through consultative process
Build the capacity of MFIs and other inclusive finance providersEstablished the Ethiopian Inclusive Finance and Training and Research Institute (EIFTRI)
Create forums to discuss the critical issues of inclusive finance providers
Monitor the financial and social performance management
Promote inclusive finance in Ethiopia, including innovations in the industry
Research Knowledge management
Strong focus on the excluded population (farmers and MSE Strong focus on the excluded population (farmers and MSE operators) and on productive activitiesoperators) and on productive activitiesIncrease in outreach Increase in outreach MFIs have mobilized significant amount of savingsMFIs have mobilized significant amount of savingsTransforming from credit-led to saving-led institutionsTransforming from credit-led to saving-led institutionsImprovements in operational and financial sustainability Improvements in operational and financial sustainability Transparency of MFIs, efforts to be rated Transparency of MFIs, efforts to be rated An enabling policy and regulatory environment and strong and positive relationship between regulators and practitionersValue adding support of the governmentStrong network
High unmet demand and lack of loan capital High unmet demand and lack of loan capital Weak MISWeak MISLimited outreach, particularly womenLimited outreach, particularly womenLimited capacity in terms of skilled manpowerLimited capacity in terms of skilled manpowerUneven coverage and penetration of the regions in the Uneven coverage and penetration of the regions in the country country Limited financial products and innovations Limited financial products and innovations Limited opportunities to access foreign capital and Limited opportunities to access foreign capital and inadequate donor funding inadequate donor funding Limited interventions to provide financial services to Limited interventions to provide financial services to pastoralistspastoralistsLack of solid interventions to promote financial Lack of solid interventions to promote financial literacyliteracyGovernance problemsGovernance problemsLimited donor supportLimited donor support
Clear legal frameworkClear legal frameworkHuge unmet demandHuge unmet demandExistence of general government supportExistence of general government support Development of telecommunication and power services in Development of telecommunication and power services in rural areasrural areasTransformation of MFIsTransformation of MFIsCompetitionCompetitionGrowing interest of banks, postal services, social Growing interest of banks, postal services, social investors, private sectorinvestors, private sectorJoining WTO and other regional trade organizationsJoining WTO and other regional trade organizations
Production and marketing risksProduction and marketing risksDistortions of financial markets by Distortions of financial markets by donors, government, etc programsdonors, government, etc programsInflationInflationPoliticizing microfinancePoliticizing microfinanceHIV/AIDsHIV/AIDsOver-regulation Over-regulation