financial services emma
TRANSCRIPT
FINANCIAL SERVICES EMMA
Contents Executive summary or brief ....................................................................................................................................................................... 3
Context ................................................................................................................................................................................................................. 5
Methodology ...................................................................................................................................................................................................... 6
Selected market systems .............................................................................................................................................................................. 7
Financial services Market Map system .................................................................................................................................................. 8
Key findings – results of the financial service provider assessments .................................................................................... 10
Commercial Banks key finding ........................................................................................................................................................... 10
Microfinance Institutions and AEMFI key finding ..................................................................................................................... 12
RUSSACO/SACCOS key finding ........................................................................................................................................................... 16
Multipurpose cooperative union ....................................................................................................................................................... 17
Index Based Livestock Insurance ...................................................................................................................................................... 18
Micro and Small Enterprise Agencies .............................................................................................................................................. 19
Main recommendations and conclusions ........................................................................................................................................... 20
Annex 1. Financial Services Seasonal calendar ................................................................................................................................ 28
Annex 2. Financial service Contact list ................................................................................................................................................ 29
Executive summary or brief Finance is one of the key elements in addressing development issues in Ethiopia. It is even
considered to play a leading role in guiding development interventions in the country.
Whatever development strategies or programs (poverty reduction strategy, rural development
strategy, etc.,), we propose for PRIME operation areas; there is a need for finance and financial
systems to implement the development programs. If the objective is to deliver financial services
to the excluded and develop an inclusive financial system in the regions, there is a need to have
well-functioning financial systems and institutions in place. Moreover, non-financial services
such as the provision of technical skills, Business Development Services (BDS) and financial
literacy are needed to address social and financial exclusion. In order to increase outreach,
expansion of branches, efficiency, inclusiveness, appropriateness, innovations and
sustainability, there is a need for interventions/supports at Bank, microfinance and
RUSSACOs/SACCOS providers and client levels.
For this reason, access and appropriate finance is the blood of all the activities of PRIME project
such as Dairy, Livestock, Input supplier etc. So, this requires a special form of financial
institutions that conform to access and appropriate financial service such as Islamic principles
and at the same time that can work within the diverse and intricate institutional, socio-
economic, ecological, and technological constraints. First, the existing financial institutions have
to modify their mode of services to serve the pastoralist communities. Second, new forms of
financial institutions need to be introduced in these areas. One of the advisable of way of
addressing the issue surrounding the problem of rural financing is through organizing saving
and Credit Cooperatives and linking to MFIs.
The targeted spots of the assessment were all three clusters of PRIME project operational areas
which are Somali, Oromia and Afar regional states of Ethiopia, the specific operational area
which these project targets suffer from recurrent external shocks that result in unpredictable
levels of production, restricted mobility and access to markets, and widespread under-
investment in risk-mitigating or productive opportunities, keeping vulnerable households
forever on the precipice of hunger and disease prevent households, communities and market
systems from better preparing for, coping with and recovering from natural shocks. It not
secret that Lack of available and access to appropriate financial services is one of the main root
causes of these vulnerabilities.
Therefore the team from different institution started assessing available financial services
providers such as Banks, Micro finances, MSE, RuSACCO, SACCOs, etc in all clusters of the
PRIME project as well as to analyze deeply how these services providers help the community
particular the pastoralist to cope with external shocks and quickly recover their livelihoods.
At this end, the potential demand for financial service in the regions assessed by the team,
particularly, free interest loan products, Micro-insurance products, convenient saving
instruments and money transfer are enormous. However, the existing supply of financial
services to the poor in urban, pastoralist and MSE is very limited and absent in many Districts in
the Afar region and Somali Region except the newly established Somali MFI reached small
number of remote Districts where there is no any financial service providers. The EMMA
assessment focused primarily to identify the existing financial service providers especially the
Banks, MFI and RUSSACOs?SACCOs in Afar Region, Dire Daw Administration, Harari City, Somali
Region and in Oromia Region especially in Yabelo, Moyale and Negele respectively. The
assessment aim is to develop innovative financial system in within the next five years of project
life. This will expand and improve the delivery of quality and diverse financial services to the
excluded by focusing on sustainability, accessibility and appropriateness.
The EMMA assessment team of finance acknowledged that PRIME access finance will create
opportunities to increase wealth by increasing agricultural, livestock production and
productivity, reducing vulnerability, ensuring food security, enhancing new and existing
business activities (private sector development), increasing the supply of goods and value chain
linkages, promoting competition, attracting investors, generating employment and increasing
income for low-income households in rural and urban areas.
In this regard, the assessment team identified that Lack of access and appropriate to financial
services, the absence of appropriate loan products, Micro-insurance products, leasing products,
convenient saving instruments, money transfer and various other financial instruments such as
limited institutional capacity of MFIs, banks, NBE, AEMFI and RUSSACOS are major constraints
limiting the access of finance to the poor people in urban and pastoralist and the development
of indigenous micro and small enterprises as the financial service providers stated in assessed
regions.
At this end, the assessment team strongly recommends that PRIME intervention areas of
Finance should be to enhance the capacity of the existing financial service provider particularly
the following points:
1. Strengthening and Building the institutional capacity of MFIs , Commercial banks, NBE
and AEMFI
2. Provide Capacity Building to the clients ( Demand side)
3. Provide Capacity building, Strengthening, Expanding & Linking of SACOS/RUSACOS
4. Provide capacity building on Micro and Small enterprises agency
5. Introduce innovative micro insurance product and services to pastoralist
Context As in most developing countries, markets are generally poorly organized. Particularly, the
capital and factor markets in the rural and pastoralist areas of Ethiopia are mostly missing.
Specifically, these markets are entirely missing in the pastoralist and agro-pastoralist areas of
the country. In these areas, the products markets that are relatively developed in rest parts of
the country are generally poorly functioning in the pastoralist areas and the markets for many
agricultural products are even missing for many reasons.
Pastoralist and agro-pastoralists of Ethiopia are not only sparsely distributed over a very wide
remote areas of the country, the climatic condition of these areas are also very harsh for
human being. The global climate change is not only making the areas harsher than ever before,
it is also, compounded by many other interrelated socio-economic and institutional problems,
increasing the scarcity of the natural resources of water, pasture and forests. As a result of this
growing scarcity of these natural resources, pastoralists have to freely move across a wide
range of areas to attain their livelihood. But the increasing demand for mobility of pastoralists
coupled with the growing demand for similar resources by other groups is increasing the
competition for natural resources in the pastoralist areas. As a result, pastoralists are facing a
lot of pressure internally and externally. In addition to these special problems, the property
right regime (including land tenure), the institutional environment and the poor infrastructural
and technological developments pose a lot of difficulty to the development of markets in
general.
All these intricate problems raise the costs of delivering financial services to the pastoralists and
agro-pastoralists communities. Thus, in generally providing small financial services to small and
subsistent pastoralist which are scattered over wide remote and infrastructure deficient areas
remained difficult. The overall situation not only the moral hazard and adverse selection
problems raise the risk costs of providing financial services in these areas, it also raise the
operation costs administering small financial services in these areas. As a result, providing
credit and insurance services to pastoralist households remained unprofitable and unattractive
to formal financial institutions such as banks, insurance companies and even micro-finance
institutions. In addition, the cultural and religious situations require financial institutions to
revise their current approach and procedures to conform to the Islamic principles. Due to all
these facts, financial are generally missing. Improving the livelihood and the resilience capacity
of pastoralists cannot be achieved without introducing and expanding financial markets.
This requires a special form of financial institutions that conform to Islamic principles and at the
same time require a different approach that can meet the special demand of pastoralists and
that can effectively operate within the diverse and intricate institutional, socio-economic,
ecological, infrastructural and technological constraints. First, the existing financial institutions
have to modify their mode of services to serve the pastoralist communities. Second, special
forms of financial institutions need to be introduced in these areas. One of the advisable of way
of addressing the issue surrounding the problem of financing pastoralist economic activities is
through organizing saving and Credit Cooperatives. Yet other options need to be sought to
expand the financial service to the wider community.
Methodology The Financial service team is one of the groups among organized team to assess the actual
market mapping in the three PRIME impact geographic regions (southern, Eastern and Afar
clusters). Its rationale is that a better understanding of the existing financial service providers
whether its accessibility and appropriateness to the pastoralist, agro-pastoralist and urban
community and to see how is the coverage of financial service providers in regions and how
would leveraging the existing financial service provider align with PRIME program and in the
way that to design a broad range of responses options across the regions.
The financial service team was made up of 5 staff members from 4 organizations including:
Mercy corps (Lead), CARE-Ethiopia, PC and Haramaya University. The team has equipped with
the basic training on EMMA tools for five days before engaged in the field assessment and has
also the related experience in the area of finance services product both at the ground level and
in the respected institutions.
Field work primarily took place in Afar (Semer, Awash, Gewane), Eastern cluster (Diredawa,
Shinile , Erer, Harar, Jig-Jiga, Hartisheck and Wajale) and Southern cluster (Moyale, Yabelo, Filtu
and Negel Borena) and Addis Abab, with secondary sources and desk-based research used to
maximize use of available information. Key informant interview and Focus Group Discusion
were held with key players in the financial institutions like Commercial banks, MFIs, and MSEs,
as well as support players like the, Insurance, AEMFIs, RUSACOS and SACOS, Cooperative
promotion agencies, Livestock traders and individuals were also contacted. Challenges that
were experienced by the financial service team included: 1) the existing few MFI and MSE in the
regions is focusing and working more in the urban areas and lack experience with pastoralist
area; 2) the financial product what the institution currently providing is not aligned with Muslim
product and no experience; 3) there is no MFIs and functional MSE in Afar regions; 4) Lack of
bank service in the Liban zone of Somali Region. Thus the team has focusing on the
recommendation that would help to potentially facilitating the establishment of financial
service product in addressing the huge demand at the rural areas and linkage with pastoralist
community.
Selected market systems Financial services, especially credit in its many different forms are the life-blood of all market
system. From safe savings to investment capital, all actors in the livestock value chain and
support markets rely on access to capital to pursue innovation. There is currently a lack of
financial service products and institutions appropriate for pastoral areas, considering both the
seasonality of production, the nature of their assets (livestock are not valid collateral) and
cultural practices. The PRIME will work at all level to address these gaps across the regions. In
order to restore the financial market system performance in the pastoralist, agro-pastoralist
and urban areas the PRIME will consider providing loans or revolving fund through directly to
market actors.
The provision of financial services, particularly to the excluded, can increase income in the
wider economy by mobilizing savings and providing loans which can be used to support the
creation of small business in the pastoralist areas. The development of inclusive finance in
pastoralist areas can also play an important role in reducing risk and vulnerability from the
current climate change, and in increasing the ability of low income sections of the population to
access basic services like health and education through financial intermediation, thus making a
more direct impact on growth, employment, reduced burden on natural resource depletion and
well protected natural resource management and poverty reduction.
In this regards, the selected financial markets that exists in the assessed regions in general,
there are seven major sources of loan and other financial services in the regions: These are:
Commercial banks, Microfinances, C-operatives (Savings and credit cooperatives and
multipurpose cooperatives), Semi-formal finance (Iquib, Iddir, Hagbad etc), Informal finances
(Money lenders, Traders, Suppliers’’ credit, friends, relatives), NGOs and Donors and
Government projects and programs. Thus, the team after they have discussion in different ways
and due to short period of time of the assessment decided to focus only three financial services
providers that most have direct effect on the community such as Banks, MFIs and
RUSSACO/SACCOs. This assessment report refers to the financial service key players in the
market but the findings are logically allied with those of the livestock traders, input suppliers,
MSE agency and cooperative promotion agency etc. The Key Analytical Question that this
assessment addresses is:
1. Do existing financial service providers creates and assures access and appropriate financial
service to the community?
2. What are the main constraints of the financial service provider to offer appropriate inclusive
finance to excluded community particularly pastoralist?
3. How accessible and appropriate financial service can be developed to the excluded
community and pastoralists?
Financial services Market Map system The figure below describes the loan, savings and insurance flows. While the light blue color
shows flow of loans and savings. The orange arrows show the source of fund of the institutions
and the black arrow displays the premium of insurance. There are two sources of funds: foreign
and domestic. The foreign sources comes in the form of aid, grant, long term and short term
loans, etc. which flow through National Bank of Ethiopia (NBE). The other sources are parts of
income that is saved in the banks and hoarded under the mattress. The vast majority of
pastoralists save most of their money at home for various reasons: limited access to financial
institutions, absence of suitable financial institutions for the Islamic community, limited
knowledge about modern financial systems. The most of investment fund comes from formal
financial institutions such as banks, insurance companies and MFIs. In addition, very small
portion of investment fund comes from semi-formal financial institutions such as
SACCOs/RuSACCOs and Cooperative Unions. However small, this last sources of investment
fund has a potential to grow in the future. While the main collateral system of formal financial
institutions are fixed assets, MFIs use various forms of collaterals such as group collateral,
government/municipality budget, and some fixed assets. The dominant collateral systems of
semi-formal financial institutions remain social capital built from social relationships and
networks.
In addition to the loan/saving services, the figure portrays the insurance services. Unlike credit/saving
services, insurance services nearly absent in the pastoralist areas. The infrastructural, institutional,
socio-economic and legal environments increase the transaction costs of proving insurance services to
pastoralist communities. The moral hazard and adverse selection problems that arise from information
asymmetries raise the transaction costs of insurance services. In addition, the unit operation costs are
also very high. As a result, livestock and other insurances services are not profitable to conventional
insurance institutions. Moreover, the common risk hazards such as drought and diseases are not only
large in scale, they also affect the whole community simultaneously. Due to this, pastoralists have not
been able to develop some informal forms of insurances. In sum, both formal and informal insurance
services are absent in the pastoralist areas.
Despite these undesirable situations, International Livestock Research Institutions (ILRI) designed an
innovative approach called Index Based Livestock Insurance (IBLI) and has implemented a pilot project in
Borena Zones. IBLI is livestock insurance systems that use a uniform community wide index threshold
level to measure the occurrence of the risk. The purpose of the index is to eliminate the transaction
costs associated with moral hazard and adverse selection problems which are common in the
conventional insurance systems.
Key findings – results of the financial service provider assessments
The key finding of this part focussed more on the constraint and opportunities of the financial
services providers that exist in the PRIME operation areas. In addition the assessment identified
the access and appropriateness of the existing financial services providers. This will aim at
expanding and improving the delivery of quality and diverse financial services to the excluded
by focusing on accessibility and appropriateness.
Commercial Banks key finding The Capacity of the conventional banking sector in the country to serve the needs of the poor is weak.
The number of commercial banks operating in the country reached fourteen, out of which eleven are
privately owned commercial banks. Moreover, most of the branches of these financial institutions are
concentrated in relatively larger towns and cities. Many of the districts in the regions done this
assessment do not access their services. For example only 11.5% of the districts in the Somali Region
have branch banks. Even if there are banks in these Districts, there is poor limited access to conventional
banks due to high collateral requirements (land or physical assets) and the livestock traders and other
traders in the regions do approach to get access of credit due to fear of the interest issue. The
commercial banks in the region failed to serve both the poor and other people to give appropriate
service both saving and credit.
One of the major problems of people face in the rural and urban areas in the regions is lack of capital.
Even though, it is clear that the importance of credit and saving in the lives of the people, the majority
of the people are excluded from the service of formal financial institutions like banks. Commercial Banks
are generally unwilling to engage in activities which are perceived as financially unprofitable. In addition,
these institutions have a number of standard procedures and policies, which limit access to credit
service by the people.
In this regard, there are around 12 commercial banks in Dire Dawa and Jig-Jiga. As mentioned earlier
Out of these two big commercial banks owned by Government, i.e. Commercial bank of Ethiopia and
Business and Construction bank and the remaining banks are owned by private sectors. The services
these banks provide to communities are credit services, saving service, remittance services, Foreign
exchange service. The Commercial bank of Ethiopia is governed and implements the government
strategies, the major focus areas of credit service are mainly concentrated three sectors: Agricultural
investment, Export and Industrial.
Commercial banking systems have with the limited capacity, no obvious ability to resolve this in the
short to medium-term loans. The other factor that devastating the commercial banks credit service is
based on conventional system with interest and as the official commercial banks told, its challenging
issues and no appropriate product for Muslim community which consist the majority of the population
in eastern cluster. The commercial banks main focus areas are mobilizing at public large both rural and
urban and doing door to door saving strategy.
The commercial banks cannot satisfy and fulfil the huge demand of financial service of the societies and
not willing to focus and serve the excluded poor people due their high cost administration and small
loan size. The assessment team was found that Commercial bank of Ethiopia is not willing to provide
access and appropriate finance to excluded pastoralist to benefit the formal financial service and the
poor people in the urban areas and their major focus areas as stated earlier, are big agricultural
investment, Export and industries. It also found that the big livestock trader, investor and big trader
from these regions are unable to get access credit from commercial banks due to the fear issue of
Interest which became big challenge for this community.
The Cooperative Bank of Oromia is one of the commercial banks operating in the eastern cluster. The
Major services that this institution provides to the community are credit services, savings, and local
money transfer and international remittance with collaboration of different Hawala’s
The Cooperative Bank of Oromia provides and offers loans without collateral to cooperatives and MSE,
as the DD branch manager told to the assessment team in the eastern Oronia regions, their loan
collateral system based on the viability of the business. The loan size of the OCB ranges from1000 and
above and their loan term are from 1year-10 years. The Cooperative Bank of Oromia also working kind
of facilitation of value chains financing and linkage of Bajaj supplier (Red Star International Trading). The
Institution uses loan system which mostly similar to cost plus mark-up principles, the Cooperative Bank
of Oromia procures Bajaj from Re d Star International Trading and hand over to their customer putting
the costs some mark-up of 10.5% which they are using as Interest. It was realized that, this loan system
is exclusive only for Cooperative Banks of Oromia. The other private commercial banks are not flexible
like this institution.
During our discussion with branch managers of Cooperatives bank of Oromia in Dire Dawa, Jig-jiga and
Wajale they clearly state that their main challenge that hampered their business in the eastern part of
the country is the issue of the interest and to work and, operate with this system their hindrance is lack
of skilled and experienced persons in the areas of Islamic banking system. Finally the EMMA assessment
team, identified that the Cooperative Bank of Oromia to be one of selected bank in the future that we
can work closely due to their short term loan and medium loan term which address to poor and middle
level income, offering loan without collateral that can allow easily to access loan particularly to livestock
traders etc, in terms of coverage the Cooperative bank of Oromia has branches most of our operation
areas and willing to operate and open branch in the other regions as the Chief Executive officers told us
and etc.
Thus, the two important key finding that hampered the most of the commercial banks in the region to
operate with free interest banking system as the assessment team identified are:
The assessment team realized one of the bottleneck and challenges that the commercial
banks do not start to run and open free interest banking system is lack skilled and
experienced staff and the free interest banking window require to start with initial capital
that do not contaminated with interest, for this reason, the commercial banks have limited
or Lack of uncontaminated fund.
Lack of appropriate financial services products both saving and credit, Lack of attitude
change of the community towards the credit and saving, Poor saving cultures of the
community and Lack of appropriate linkage among banks, traders and pastoralist
Microfinance Institutions and AEMFI key finding The major barrier to access to credit service by the poor are high and rigid collateral requirements which
the poor cannot afford, high transaction cost associated with small size loans and unwillingness by
formal financial institutions to consider them, complicated and lengthen loan processing procedures.
These facts should lead MFIs and saving and credit Cooperatives to design and respond to the failure of
traditional banking system to serve the financial needs of the small farmers, pastoralist, and agro-
pastoralist and MSE operators. The delivery of financial services to the poor requires financial systems
that reach the poor coupled with an innovative appropriate targeting methodology and a credit delivery
mechanism that helps identify and attract only the poor who can initiate and sustain productive use of
loans.
In this regard, Lack of access and appropriate to financial services, the absence of appropriate loan
products, Micro-insurance products, leasing products, convenient saving instruments, money transfer
and various other financial instruments are major constraints limiting the accumulation of assets by the
poor people in urban and pastoralist and the development of indigenous micro and small enterprises in
assessed regions. Access and appropriate to finance empowers the financially excluded population in
the regions and creates opportunities to increase wealth by reducing vulnerabilities, enhancing business
activities, generating employment and increasing income for low-income households and enterprises.
At this end, the potential demand for financial service in the regions assessed by the team, particularly,
free interest loan products, Micro-insurance products, convenient saving instruments and money
transfer are enormous. However, the existing supply of financial services to the poor in urban,
pastoralist and MSE operators is very limited and absent in many Districts in the Afar region and Somali
Region except the newly established Somali MFI reached small number of remote Districts where there
is no any financial service providers. Thus, the team assessed the existing financial service providers
especially the MFI in Afar Region, Dire Daw Administration, Harari City, Somali Region and In Oromia
Region especially in Yabelo, Moyale and Negele as stated here under.
The Afar regional state is one of the pastoral dominant livelihoods in the country. Like any other
pastoralists. Afar region was also neglected from developmental activities and services like
microfinance institutions. Among the pastoralist sample, a substantial number of participants
were found with high potential need for microfinance services at the same time with lack of
awareness as how to diversify income generating activities.
At this end, till now the regional MFI is still under the process to establishments. The existing financial
service system and structures is not functioning and benefiting the pastoralist and urban community.
However, the government sectors head like BOFED, MSE agency are struggling to have their own MFI
and ready towards the establishment of the financial institutions that would have appropriate product
for the community and marginalized groups. As per commercial business law of Ethiopia, a minimum
number of shareholders that can establish a company are five. To this end, based on that the Afar MFI
was organized and envisaged five shareholders before years but failed to get license from National Bank
of Ethiopia due to the number of requirement as per the Proclamation of MFI. The Shareholders of Afar
MFI were Afar Regional Sate, Two local NGO, Women Association and Afar youth Association. The role
of private sector participation is very important to harmonize power of the government but in the Afar
MFI case the involvement of this sector is non-existence or nil.
So, the assessment team found that there is huge demand of MFI services in Afar region but the factor
contributed the establishment to delay were: due to lack of skilled and experienced person from Afar
region that can fulfil the NBE requirement, due to the unwillingness of competent and qualified person
to work in Afar regions, due to lack of commitment and awareness about MFI from the government.
The Dire Daw Administration is located in the eastern part of the country. The major economic
base of Dire-Dawa city is trade and services followed by industry and small-scale manufacturing
while agriculture is the main livelihood to the rural people. While employment opportunities are
already scarce, lack of skills has become additional constraints to job seekers. This indicates that
skill training programs for the unemployed and provision of credit contributes significantly to
reducing unemployment in the Region.
Thus, to response, the above mentioned the Dire MFI was established May 2003 and started operation
in April 2004. The MFI operates Dire Dawa City and its surrounding 38 peasant Association kebele.. In
distribution of shares, 97% of the share is owned by the government while the remaining 3% is owned
by private sector and women associations. The institution has nine branches in urban mean in the city
and four branches in rural areas.
The institution’s loan based conventional system at its starting operation but now the institution opened
free interest window for Muslim community even though, it is not started operation yet. The major
services of the institution are credit service, saving services both voluntary and compulsory and pension
payment.
The interest on loan and saving was the most challenging issue observed in Dire MFI. All of the clients of
Muslim community see interest from religious point of view. For sustainable approach, serving without
interest is not viable in the conventional MFIs. For this reason, Dire MFI started and finalized the process
of establishing free interest micro financing without experience. The free interest micro financing
window is ready to operate in two branches in city and four branches for surrounding 38 peasant
associations. At this end, the assessment realized that Dire MFI main weakness that to be addressed are
lack of staff capacity building such as training particularly Islamic financial system and exposure visit.
The Harai MFI operates in Harar city and its surrounding peasant associations. Like Dire MFI, the
unemployment is very high both the city and rural. For these reason, the MFI established to
response this unemployment. The demand of the financial service is enormous particularly the
poor but the existence MFI cannot afford the huge demand of the community due to limited
loanable fund, due to limited capacity of the staff of the institutions and due to lack of
appropriate financial service product to community. The major services Harari MFI offer to
clients are like Dire MFI credit services and saving services. The assessment team found that
there is huge demand of Interest free product in the region, lack of appropriate and diversified
development product, lack management information system and lack of MSE financing loan.
The Somali Micro Finance Institution Share Company (SMFI) was established by Somali regional
government, some of pioneer business private sector and local NGOs with collaboration and
support of Mercy Corps RAIN program. The company is duly registered on January 31st, 2011 by
the National Bank of Ethiopia and it is owned by seven shareholders. Somali MFI has 16
branches including in remote areas of the region where there is no banks. This is the only MFI in
Ethiopia that is based on loan Shari compliance.
The assessment team found that the loan modalities of Somali MFI are based on shari compliance due
to the appropriate loan product of the MFI the repayment rate is 100% and the PAR is zero which is
surprising: The institution has both the credit and saving appropriate product that based on the
principles of shari such as Murabaha Sale; (cost plus markup sale contract), Ijarah; (leasing contract and
Mudaraba; (profits are shared according to a predetermined ratio). The team has realized that the
Somali MFI Experience must duplicate to other regions in order to solve the big challenges regarding the
issue of interest in all the country particularly in Afar etc.
As the team had discussion with Somali MFI Manager, shinile branch and Tog wajale branch, it was
found that the major constraint is lack of loanable fund, as the branches managers told there is huge
demand of credit service but due to limited capital they are only doing saving mobilization and money
transfer, the other challenges encountered the Somali MFI are: Lack of appropriate product for
pastoralist, Lack of Management Information system, Shortage of skilled manpower, Limited Capacity of
the staff, Infrastructure like telecommunication, internet network, roads electricity etc, Shortage of
logistics( Vehicles and motorbikes), There is also lack of appropriate and well-structured diversification
of Islamic loan and saving product and Lack of loanable fund
The other financial service providers that exists and operating in Yabelo and Moyale wareds is
Oromai credit and Saving Share Company (OCSSCO). The OCSSCO has gotten legal personality to
offer microfinance services in National Bank of Ethiopia and commenced its operation in August
1997. OCSSCO is one of the leading microfinance institutions in Ethiopia which possess six area
office and 202 branches with more than half million clients. The main objectives of OCSSCO is to
improve the socio-economic condition of the low-income people through providing working
finance at affordable interest rate and encouraging saving habit of the people. Like other MFI,
one of challenge issue of interest as the Deputy General Manager informed the assessment
teams. In this regard, the OCSSCO has Yabelo zone branch and under this branch there are nine
sub branches. These branches provide service the Borena and Guji zone of Oromia Regional
State. The services provide by these branches to communities are: Credit Service, Saving service,
Money Transfer and Micro insurance
In Moyale Wareda Somali Region, there is no existing MFI and no formal financial service providers
except small number of RUSSACOs in Moyale. At this end, the assessment found that in Yabelo OCSSCO
branch the interest on loan is not an issue but the limited capacity of these branches cannot cover and
fulfil the huge demand of loan in the in Yabelo wareda and some part of Moyale Wareda, but large parts
of Moyal community complaining the interest. In the other hand, the Moyal Somali parts has no any
access of finance except the limited number of RUSSACO that exist in small part of the Wareda. The
Challenges the yabelo zonal zone branches and at OCSSCO level at all: Shortage of Loanable fund,
Interest Issue in some parts of borena and all eastern parts of the region particularly in East Haraghe,
Shortage of logistics to increase coverage, Drought, Conflict, Market distortion of Government and
NGOs, Wrong perception of credit about community and Poor credit and saving culture.
Association of Ethiopian Microfinance Institutions: The Association of Ethiopian Microfinance
Institution (AEMFI) was registered under the Ministry of Justice of the Federal Democratic
Republic if Ethiopia on June 28, 1999. The strategic goal of AEMFI includes, among others,
creating institutional structure to serve as a national/industry forum and network for
microfinance institutions (MFIs).
AEMFI in conjunction with its members sets out to identify and promote “good practices” through a
number of key programs and activities, these include:
A. Training: to coordinate and ensure that appropriate technical and skill training is
delivered to the board, management and all other personnel of the MFIs and also the
clients of the MFIs.
B. Performance Monitoring: In consultation with the National bank of Ethiopia (NBE),
AEMFI seeks to monitor the financial performance of the MFIs and Produce periodic
performance indicator.
C. Advocacy: to liaise with federal and local governments, NGOs and other relevant
organizations in the financial sector to promote the services of the microfinance
industry in all appropriate media.
D. Technical Assistance: to assist members with the provision of MFIs, marketing, financial
management and preparation of business plans
E. Research: To carry out, coordinate, publish and disseminate the results of the research
projects that are relevant and related to the future success of the microfinance industry.
F. Financial cooperatives (SACCOS/RUSSACOs: Support is provided by AEMFI through
training, technical support, research, and performance monitoring of
(SACCOs/RUSSACOS.
G. Networking: AEMFI, together with its members, seek to liaise with all organizations,
networks (SEEP, AFMIN, INFAFI, MAIN and AFRACA) and individuals who share a
common interest, in promoting and delivering financial services to the economically
active poor.
H. Exposure visit: To build and maintain a resources center providing a collection of books
and reports, relevant to the microfinance industry, available to all interested individuals
and groups.
I. Fund raising: To seek out and identify potential donors and lenders who are interested
in developing, building and enhancing the services of the microfinance industry and
providing loan and equity funds.
Thus, the assessment team identified that in spite of the visible success of the network within a short
period of time, it is facing a lot of challenges to meet the needs of its members and stakeholders. These
include:
Huge expectations from the industry in terms of the capacity building, research,
advocacy, fund raising, etc.. However, the limited fund and capacity of AEMFI does not
allow it to meet all the expectations.
RUSSACO/SACCOS key finding
SACCOs seems to be the most successful types of cooperatives among the different types of
cooperatives established in both urban and rural areas of Ethiopia for a number of reasons. SACCOs
have many desirable properties than other types of cooperatives. Members participate continuously in
the business activities of the cooperative and the amount of members’ money continuously grow over
time, hence, members develop strong ownership feelings on their cooperatives and they actively
participate in any matters of the cooperative. The cooperatives provide credit services at zero default
risk. The types of business activities are few, simple, predetermined and periodic. Hence, it puts small
burden on management committee. In sum, RuSACCOs primarily improve the saving behaviour of
members and also encourage them to enter into profitable business activities. Thus, it increases savings
and enables them to increase their income which in turn increases the saving capacity and enable them
to diversify and expand their business activities which further increase income and saving capacity and
so on. It thus leads to an upward spiral saving-income growth.
As the assessment of EMMA team reveals except the cooperatives of Dire Dawa Administrative Council,
most of the RuSACCOs are slightly different from the conventional RuSACCOs in that some modifications
have been made to conform the bylaws and working procedures of the cooperatives with the Islamic
principles and the culture and tradition of the pastoralist communities. It was learnt that all the visited
RuSACCO do not pay any interest to savings (compulsory and voluntary savings) and loans. However,
most the visited cooperatives charge a certain percentage of the loan in the form of service charge and
explicitly mentioned it in the bylaws of the cooperatives. Still some other RuSACCO/PaSACCOs of the
region have agreed to provide members loans in kind (in the form of livestock, water pump, etc.) by
adding the costs some plus mark up of procuring the materials to be supplied to the borrower in-kind
and to administer the loan by including some profits onto the market prices of the material supplied to
the borrower. In addition to the modifications made on saving and loan to conform to Islamic principles
and as element of the principles of cooperatives, the strict procedures common in commercial loans and
conventional cooperatives have been made very loose to reflect the cultural and social settings of the
pastoralists. Hence, unlike the conventional RuSACCOs which uses other members’ saving as collateral,
the RuSACCO established in the Somali regions takes social relationships and sanctions as principal
instrument for enforcing loan repayment and other contract agreements. Except these changes on the
saving and loan procedures, the organizational structures and other aspects of bylaws are the same as
the conventional RuSACCOs.
The situation is a bit different in the Borena Zone of Oromia region in that the RuSACCOs are just similar
with the conventional RuSACCOs. The field survey indicated that the issue of Islamic principle seems to
be not an issue in most of the parts. Hence they have not made major modifications in the bylaws.
Given these organizational forms, except the RuSACCOs of Borena Zone of Oromia region where most of
them established at the end of 1990s, most of the RuSACCO in Somali region were established only in
the past two to three years. Thus, most of the cooperatives are just at their infant stages. Yet, the
performance of the cooperatives seems promising. The assesment team members of the visited
cooperatives reported that members have been saving the agreed minimum amounts of compulsory
savings without interruption. It is also reported that each cooperative has currently accumulated a total
savings of 50000 to 80000 Birr.
It is the Pastoralist Community Development Project (PCDP) and Mercy Corps, CARE Ethiopia that
facilitated and supported the organizations and promotion of RuSACCOs in Borena, Afar and Somali
regions. In addition to these, the Cooperative Promotion Bureau has also promoted and organized
similar RuSACCOs in many districts of the region. Most of the cooperatives have reported that they have
provided loan services to about 30% of the members of the cooperatives. It was also reported that the
borrower have been able to enter into new micro-business activities such as fruit, small ruminant
fattening, vegetable, khat, butter and other merchandise goods trading. But cooperative in Afar region
faced challenge and resulted to frustration among members due the service charge for the credit service
in considering that it contradict with Muslim Shari.
Multipurpose cooperative union Dire Multipurpose Cooperative was established in 2009 with 38 peasant association kebele members
and 38000 Birr initial capital. Since its establishment, the Dire Dawa Administration has provided the
Union seed money, offices and agreed to pay the salary of three experts working in the Union. Although
the Union is its infant stage as most RuSACCOs of Dire Dawa, Somali, and Afar regions, it leapt into
diverse complementary business activities. It also introduced many innovative approaches and
procedures to develop the Union.
Currently, the Union has formed three business wings, namely; merchandise trade, agro-processing and
credit and saving wings. The merchandise trade wing supplies various inputs (fertilizer, pesticides, water
pump, etc) and other consumption goods. The agro-manufacturing wing has already started to process
and pack honey production and have made the necessary preparations to establish wheat processing
plant. The credit and saving wing mobilizes savings from both members and non-members and provide
credit services to members. The credit and saving wing has introduced mobile banking services within a
radius of 80 km to mobilize rural savings. The saving and credit procedures the Union introduced partly
agree with the interest of the Islamic community in that no interest is paid for saving and the credits are
provided in kind with cost plus mark-up charges to the costs of supplying the required material to the
borrower. As a result, the cooperative has shown a dramatic capital growth. In addition to the business
activities, the Union is also providing various technical supports to the member primary cooperative.
The assessment team revealed that to introduce and duplicate the experience of Dire Daw Union
RUSSACOs to other regions like Borena zone in Oromai region, Somali regions and Afar regions is will be
an asset and leverage point for PRIME because there many SACCOs/RUSSACOs that need to organize in
one union.
Index Based Livestock Insurance Index Based Livestock Insurance (IBLI) was introduced by reducing the operation costs and by
eliminating the risk costs associated with both moral hazard and adverse selection problems of
providing small insurance services to remote and scattered pastoralists. Such index-based insurance
could not only provide an effective safety net to the vulnerable pastoralist community it can also
contribute to the deepening of other financial systems.
The index based livestock insurance (IBLI) which was, for the first time, designed to manage the risks of
livestock mortality among pastoralist in Marsabit district of northern Kenya. The preference is that
index-based insurance contracts avoid the twin asymmetric information problems of adverse selection
(hidden information) and moral hazard (hidden behavior) because the indices are not individual-specific;
they explicitly target – and transfer to insurers – covariate risk within the contract place and period. Due
to these essential characteristics and its potential for adaptation, the IBLI was planned to be adopted for
pastoralists in Borana zone in southern Ethiopia. Based on the experience of Northern Kenya,
International Livestock Research Institution (ILRI) started a pilot IBLI system in pastoralist areas of
Borena zone in collaboration with Oromia insurance company and Cornell University.
ILRI was a lead for the implementation and initiatives of the IBLI in Borena zones and coordinating with
oromiya insurance. The community mobilization and premium collection is channeled by the Oromiya
saving and credit association at Yabelo branch and having the share of 10% from the collected premium
from the community. Though the intensive effort done so far the result was not as such expected by the
insurance as only 631 pastoralists only purchased the premium in two rounds. The overall coverage in
the borena zone was in 8 woredas.
The IBLI seems promising intervention and to be replicated in other region as the oromiya insurance has
also an extending strategy to other pastoralist areas. The PRIME will potentially facilitate with having
evidence based experience from the Northern Kenya and promoting the insurance approach across the
Borena zones and geographically inseparable Somali regions (Liben zones). The impact and sustainability
of IBLI require further research and assessment as the EMMA assessment only identified that this
innovation of micro-insurance of livestock could be duplicate to other pastoralist regions like Somali MFI
and Afar but it should be modify to align with the shari principles.
Micro and Small Enterprise Agencies In countries where unemployment is extremely high and its one of major social problems solution is
MSE because of its nature of employing huge labor force especially semi-skilled and unskilled labor. As a
result, developing and expanding MSEs become development strategy for Regional states in Ethiopia.
Hence, as a development strategy, it is important to focus on development and expansion of the MSEs
in Ethiopia
Thus, the study identified that the MSE agency in the regions have very limited capacity and experiences
to manage and organize MSE both urban and rural, In this regard strengthening the capacity of MSE
agency in the regions will be leveraging point for PRIME to enhance the expansion of MSE to pastoralists
and as well as to work to link parallel to MFI. Some of common gaps that identified by the team in all
region visited are:
Lack of strengthening/capacitating/delegating of one stop service centres to provide complete
services to the community such as providing trade license, investment license,, Cooperative
Certificates, Title deeds, bylaws in one stop centre;
Lack of awareness by the regional stakeholders on the regional MSE Development strategy and
Poor support by the regional bureaus in giving due consideration/ priority to the established
small enterprises of the region during BID/contract competition; (Most market supply
provisions are government dependent that does not able MSEs to be competent
independently), the relationship with cooperative agency is poor particularly in Afar and Somali
Region.
Lack of strengthening/capacitating/delegating of one stop service centers to provide
complete services to the community such as providing trade license, investment
license,, Cooperative Certificates, Title deeds, bylaws in one stop center;
Lack of Database and Logistic problem because Somali MSE doesn’t have a single vehicle
Capacity building of different levels of the staff on the new rules and regulations that
are going to be implemented the strategy and limited information to locate/analyze
markets therefore exhibition/bazaar is needed
Lack of linkage of Modern Agricultural inputs i.e. modern beehives, farm tools,
fertilizers etc and lack of Assessments on different sectors of MSEs that are going to be
identified on the opportunities existing in the region
Main recommendations and conclusions
The EMMA assessment team recommended hereby based on the finding of constraints and
opportunities in visited areas that PRIME will make an intervention to leverage the financial service that
exists in the operational regions.
I. Building the institutional capacity of MFIs and Commercial banks
The issue of interest is most common challenging issues in all financial service providers.
For, this reason, Provide and facilitate training and exposure visit on Islamic modalities
both banks and MFIs
Develop new products and improve the existing financial services such as introducing
free interest modalities both the MFIs and interested Commercial banks.
Lack of loan fund to on-lend to clients, as the number reason which directly influences
the growth of MFIs in the regions the team assessment team that, this is aggravated by
the inadequate capacity of MFIs to mobilize savings, limited access to bank loans,
absence of donors and NGOs support to provide grant and inadequate support to
implement credit guarantee schemes. In this regards, PRIME must focus on supporting
the MFI to make loan guarantee fund or revolving fund because all MFIs visited first
raised that their major constraints is lack of loan fund.
Limited use of back-office and front-office technologies was mentioned as the second
serious problems in expanding the activities of MFI in the regions. The EMMA
assessment team recommend that PRIME will support for MFIs for appropriate MIS to
improve their efficiency.
The limited Capacity of staff to effectively deliver quality financial services to clients, the
third major problem of MFIs constraining the growth of outreach and expansion. The
team emphasize to provide training and arrange exposure for MFI staff and banks are
very crucial to develop access and appropriate financial service providers.
Lack of concerted and coordinated efforts to expand education, also constrained saving
mobilization, managing the financial resources of clients and limited the awareness of
the pastoralist on Micro-insurance of livestock and other financial products. In this
regard, PRIME should address to support the MFIs to improve saving mobilization and
awareness of the pastoralist on insurance
Inadequate capacity of in developing client-centred financial product, poor governance,
weak management and leadership, lack of donor support and social investors, who can
buy shares, has limited the expansion and outreach of the institutions.
Strengthen the establishment process of afar MFI and provide all necessary steps and
conduct awareness creation workshops and training for the board of members and
senior government officials.
Support Somali MFI for Mobile and agent banking service to reach the remote areas
where there are no financial service providers.
II. Provide Capacity Building to the clients ( Demand side)
Providing business development services, technical training, Marketing linkages, market
places and other technical services to clients.
Provide financial literacy which has the primary objectives of imparting knowledge and
skills to manage financial resources effectively. There is dire need to educate clients on
how to develop saving and insurance culture, manage loans and other financial
resources, carry out cash flow, and manage relations with lenders.
III. Provide Capacity building, Strengthening, Expanding & Linking of SACOS/RUSACOS
The establishment of RUSACOS in the visited regions lacks good foundation in that
members were encouraged to come to the cooperatives by putting membership
requirement as a precondition for obtaining loan. Not only, many of the important
working documents and forms are missing, the existing documents are not being used
properly. The existing rules and regulations that are essential for guiding the decision of
management committee are shallow and less articulated. In this regard, strengthening
the capacity of RUSSACO through training on recording keeping, organizational
management , leadership styles and mentoring, Coaching and developing appropriate
documents and products and arranging exposure visit
Among the various cooperatives visited in the survey, we found Dire Multipurpose
Cooperative Union. The assessment team recommend that to introduce and replicate
the experience of Dire Daw Union RUSSACOs to other regions like Borena zone in
Oromai region, Somali regions and Afar regions is will be an asset and leverage point for
PRIME because there many SACCOs/RUSSACOs that need to organize in one union.
Facilitation of organizing and awareness creation should RUSSACO union should be
conducted in Afar, Somali and Borena zone.
The issue of interest is very distressful to many of SACCOS/RUSSACOs in Afar, Somali
and some parts of Borena zone. To overcome and get solution for it, it is crucial to
introduce to develop appropriate product that can meet the interest of
SACCOs/RUSSACOs members particularly in Afar region
One of the main constraints of RUSSACOs and SACCOs are limited capital of loan. In this
regard, there should be mechanism to link MFI to get access of credit or PRIME facilitate
loan guarantee fund to get loan from MFI.
IV. Provide capacity building on Micro and Small enterprises agency
The team found that there is Lack of strengthening/capacitating/delegating of one stop
service centres to provide complete services to the community such as providing trade
license, investment license,, Cooperative Certificates, Title deeds, bylaws in one stop
centre; So, the project support to provide training and arrange exposure visit to teach
to MSE agency staff and other concerned body of government about how the one stop
services works in other regions.
The assessment team found that there is Lack of awareness and Poor support by the
regional stakeholders on the regional MSE Development. In this regard, we, should
support to MSE agency to conduct awareness creation and to facilitate market linkage
for their product and skills.
We identified that the MSE required Capacity building of different levels of the staff on
the new rules and regulations that are going to be implemented the strategy. So the
team recommend supporting to provide training on staff to become familiar with
federal strategy.
Also we found that there is limited information to locate/analyse markets ,therefore,
the project prepare arrange trade fair, exhibition/bazaar in the Modern Agricultural
inputs i.e. modern beehives, farm tools, fertilizers etc
V. Introduce innovative micro insurance product and services to pastoralist
The IBLI seems promising intervention and to be replicated in other region as the oromiya insurance has
also an extending strategy to other pastoralist areas. The PRIME will potentially facilitate with having
evidence based experience from the Northern Kenya and promoting the insurance approach across the
Borena zones and geographically inseparable Somali regions (Liben zones). The impact and sustainability
of IBLI require further research and assessment as the EMMA assessment only identified that this
innovation of micro-insurance of livestock could be duplicate to other pastoralist regions like Somali MFI
and Afar but it should be modify to align with the shari principles.
Response Options
Option Implementation Methods
Advantages Disadvantages Feasibility & Timing
Indicators
1. Building the institutional capacity of MFIs and Commercial banks Provide and facilitate training and
exposure visit on Islamic modalities both banks and MFIs
Conducting training on free interest banking to MFI
Conducting training on free interest banking to interested Banks and NBE
Prepare and arrange exposure visit in neighbouring countries
Huge untapped demand
Existing & supportive of NBE directives
Existence of free interest banking in neighbouring countries like Kenya, Djibouti and Sudan
Lack of skilled persons in in free interest banking in the regions as well as in the country
Lack of experience in this areas
Within six months and above
Number of participants trained in free interest banking system both of MFI and banks
Number of person participated the exposure visits
Develop appropriate new products and improve the existing financial services
Hire Constancy to develop appropriate new product for excluded community and improve the existing ones
High demand of appropriate product for pastoralist
Limited of experiences of pastoralist product in the country
Within 12 months
Number of people benefited the new products
Provide loan guarantee fund for MFIs or revolving fund for MSE, RUSSACO/SACCOS and
Availing fund for MFIs to serve the TOPs and pastoralist.
Facilitate loan guarantee fund for TOPs to access loan from MFIs
Arrange agreement for MFI to provide credit to RUSSACOs and MSE operators
High demand of loan for TOPs
Limited capacity of MSE operators to avail guarantee
Limited skills of TOPs and MSE operators to manage loans
Create Dependency or negative attitudes about the credits
Within 12 months
Number of beneficiaries got access loan from MFIs for the revolving fund
Number of RUSSACOs got access of loan for the guarantee fund
Provide Support on appropriate MIS for MFIs
Hire MIS technology providers to install the system to MFIs
Create strong internal control system
MFI required highly
Limited or lack of MIS for MFIs
Limited experience of MFI Staff for MIS
Within 12 months
Number of MFI provided MIS technology
Workshops and trainings for the board of members and senior government officials in Afar Regions
Conduct awareness creation Workshops lead by PRIME with collaboration with AEMFI, NBE delegates while the event facilitated by
AEMFI willingness to support the establishment of MFI
Supportive legal environment from
Lack of skilled man power and experience
Interference of the govet structures
Poor infrastructure
Immediately Number of participants created awareness of MFIs’ importance for the communities.
PRIME NBE
Willingness of the BOFED and respective burues
Existence of local NGOS and private sectors
Poor culture of credit and saving
Participation of private sectors and local NGO in the share of the Afar MFI
Promoting and organize private sectors actors to participate the share of Afar MFI particularly Livestock traders.
Government interference decreased and decision of share holder harmonize
LS traders benefited from MFIs
MFI financial capacity strengthened
Limited awareness of private sector about MFI
Unwilling of private sectors to share with government
Private sector need profit from MFI
12 months Number of private shareholders participate the Afar MFI
Support MFI expansion of new branches for logistics such as Motorcycle etc
Procure motorbikes for MFIs to reach the remote areas particularly pastoralist
Reach the remote areas or villages to serve credit and saving facility
Lack of infrastructure like rural roads
12 months Number of clients reached by MFIs
Replicate the experience of Somali MFI to other MFIs
Arrange exposure visit other MFIs to see the Somali loan modalities
Easily adopt the existing Somali experience MFI to other MFIs
Limited experience of MFI staff in Islamic loan Modalities
Within six months
Number of staff visited to Somali MFI
Number of MFI adopt the Islamic loan modalities
Support Somali MFI for Mobile and agent banking service to reach remote areas
Provide training and capacity building to Somali MFI staff
Install Mobile and agent banking system to Somali MFI
Awareness of community about mobile banking service
Limited infrastructure such network coverage
2. Provide Capacity Building to the clients ( Demand side)
•Providing business development services, technical training, Marketing linkages, market places and other technical services to clients.
Conducting business training and create market linkage for clients both MSE and clients
Huge untapped demand for loans and other financial services
limited entrepreneurial capacity
Within six month
Number of clients trained BDS
•Provide financial literacy to educate Conduct training Huge potential Limited capacity Within 12 Number of clients
clients on how to develop saving and insurance culture, manage loans and other financial resources, carry out cash flow, and manage relations with lenders.
on financial literacy for MSE, clients etc
for saving
mobilization; Huge untapped
demand for loans
and other financial
services
of clients (lack of technical skill training and BDS services, working places, etc) to use the opportunities and take risks;
months participated the financial literacy
3. .Provide Capacity building, Strengthening, Expanding & Linking of SACOS/RUSACOS Improve access to credit for RUSACOS,
with appropriate product for pastoral
community (rural and urban)
Capacity building on
office equipment,
printing documentation
awareness creation on
the modalities on
Islamic financial ,
exposure visit
Untapped Huge Demand
Existence of prior experience in SRS & DD
Limited experience of RUSSACO on appropriate product for clients
Within six months
Number of RUSSACOs got access of appropriate product
Strengthening the capacity of RUSSACO through training on recording keeping, organizational management , leadership styles and mentoring, Coaching
Conducting on training for RUSSACO, such as book keeping, organizational management, leadership
Mentoring and coaching
High demand of RUSSACOs for capacity building
Limited capacity of RUSSACOs for organizational management
Within six months
Number of RUSSACOs trained
Organize the existing RUSSACO to form Multi-purpose Cooperatives and Arrange exposure visit
Conduct awareness creation about the Multi-purpose Union
Arrange exposure visit
High Untapped demand of multi-purpose Cooperatives union
Limited capacity of RUSSACOs for organizing multi-purpose union
Within 12 months
Number of RUSSACOs organized in Cooperative union
Link RUSSACO to MFI to get access of loan or facilitate loan guarantee fund to get access of credit
Prepare agreement with MFIs to facilitates credit services
High Untapped demand of credit
Limited financial capacity of RUSSACOs
Within 12 months
Number of RUSSACOs participated loan guarantee fund
4. Provide capacity building on Micro and Small enterprises agency Provide MSE agency staff TOT on BDS
and arrange experience sharing in other regions
Conduct TOT for MSE agency training on BDS
Existing MSE agency across the region
High demand of MSE operators.
Limited capacity of MSE operators Within 12 months
Number of MSE operators trained in TOT on BDS
Capacity building in office infrastructure and staffing
Working along the MSE agency based on the
Limited resources to address the requirement by each MSE across the
12 Months
Number of MSE agency supported by PRIME
requirement across the region to improve the capacity to reach the unreached
regions Number of MSE operators assisted
Support MSE agency to organize awareness creation work shop for government for the Development Strategy of MSE
Conduct awareness creation workshop
High demand of MSE operators
Limited knowledge of MSE in regions 12 months
Number persons participated the workshop
Facilitate and create market linkage for MSE operators’ product and support to create one stop services in the regions
Conduct trade fair Bazar I modern input suppliers
Facilitate one stop service centres
High demand of MSE product increase
Limited experience on Bazar and trade fairs
12 months
Number of MSE operators participated the trade fair or Bazar
5. Introduce innovative micro insurance product and services to pastoralist
Asses the feasibility in the Northern Kenya and benefit so far in the selected Borena areas
Working closely with the ILRI on how the community advantageous.
Due the recurrent drought in the pastoral areas would benefit pastoralist due tremendous asset loss
Insurance reluctance to cover all regions
Low level of awareness to insurance service by the community
12 months Number of pastoralist entered to the insurance
Annex 1. Financial Services Seasonal calendar
Seasons Drought season Rainy season Drought season Rainy season
Drought season
Calendar Sep Oct Nov Dec Jaun Febr Mar Apr May Jun Jul Aug
1 Credit
2 Saving
3 Remittance
4 Insurance
Keys for the table
High
Low
Annex 2. Financial service Contact list Region/woreda Institution Contacted person Address Remark
Afar
Afar BOFED Ahmed 093000 0046
Afar Cooperative Agency Omer Nur 0910741649
Afar Cooperative Agency Ahmed Mohamed 0923206320
Afar Cooperative Agency Gashaw Shifaraw 0911022192
Afar Micro and Small E. agency Said
Afar PCDP Azhar Yilmaw 0913173063
Afar PCDP Efrem Tadess 0911062217
AFAR MFI under formation
Mohamed Afkea
Aar MFI Under formation Mohamed Abdulkadir
Eastern cluster
DD Cooperative Bank of Oromia
Dire MFI Ato Neguse 0912101833
Dire MFI Ato Getachew 0911353890
Commercial bank of Ethiopia
Negatu 0913853237
Micro and Small enterprise Agency
Ato Wagayo
Cooperative Agency Ato Shamsadin
DD Cooperative Union
Shinile
Somali MFI, Shinile branch Sa’ada Omer Nur 0915742766
Bile RUSSACO( Erer Wareda
Harar
Harari MFI Arif Adulhafiz 0912623783
Jig- Jiga Cooperative Oromia Bank Abarew Asfaw 0911710130
Awash Bank in JJ
Commercial Bank of Ethiopia in JJ
Somali MFI
Cooperative Oromia Bank in Togwajale
Mesfin Alemeyu 0933270488
Somali MFI Togwajale branch
Mawlid Abdi 0911033376
Dalsan RUSSACO in Hartisheck
Muna Abdullahi 0915075858
SRS Cooperative Agency Guled 0915330199
SRS MSE agency Abdulfatah Mahamud 0915754404
Southern cluster
OCSSCO Borena Zone office
Birru Darad 0912202279
Commercial Bank Yabelo branch
Cooperative Agency in Moyale branch in Moyale Oromia
Mesfin Alameyu 0911851837
MSE agency in Moyale Oromia
Dhabo Abdulkadir 0911916275
IRLI in Yabelo Wako
Guji Zone Oromia MFI branch
Mokenen
Alfatah RUSSACO in Filktu
Addis Ababa
Oromia Insurance Company
AEMFI Yared & Dr. Wolday
OCSSCO Teshome and Rashid 0911511407 &0911637504 respectively
Cooperative Oromia Bank