2. AEMFI is a network of 31 MFIs established in June
1999
3. AEMFIs vision is to be a world class innovative
network providing value added services in building
an inclusive financial system in Ethiopia.
4. 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.
6. 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
7. Help appraise and improve the performance of MFIs by serving
as the industry’s self-monitoring and database forum
Facilitate 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
8. 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
9. General Assembly
Board of Directors
Executive Director
Training
Unit
SACCOs
Unit
Research
&
Publicatio
ns Unit
Perform
ance
Monitori
ng Unit
MIS
Unit
Admin Assistant
Accountant
Support Staff
Administration &
Finance Unit
Program Management
Unit
EIFTRI
Social
Performa
nce Unit
Research
&
Publicatio
ns Unit
10. THE DEVELOPMENT OF MICROFINANCETHE DEVELOPMENT OF MICROFINANCE
INSTITUTIONS (MFIS) IN ETHIOPIAINSTITUTIONS (MFIS) IN ETHIOPIA
11. 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
12. 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 INDEVELOPMENT OF DEPOSIT TAKING MFIS IN
ETHIOPIAETHIOPIA
13. Loan productsLoan products
Agricultural loansAgricultural loans
Micro and small enterprise loansMicro and small enterprise loans
Housing loansHousing loans
Equipment leasing loanEquipment leasing loan
Loan for trade and other servicesLoan for trade and other services
Consumption loanConsumption loan
Saving productsSaving products
Compulsory savingCompulsory saving
Voluntary saving from membersVoluntary saving from members
Voluntary saving from non-membersVoluntary saving from non-members
Insurance productsInsurance products
Money transferMoney transfer
Other products such as paying pensioners, collection of taxesOther products such as paying pensioners, collection of taxes
FINANCIAL PRODUCTS OF MFISFINANCIAL PRODUCTS OF MFIS
14. Outreach: over 2.6Outreach: over 2.6 millionmillion active borrowersactive borrowers
(49.8% Women)(49.8% Women)
Outstanding loan balance: BirrOutstanding loan balance: Birr 9.9 billion.9.9 billion.
(556 million USD)(556 million USD)
Balance of savings: Birr. 6.1 billion (336Balance of savings: Birr. 6.1 billion (336
million USD) (74% Voluntary Savings)million USD) (74% Voluntary Savings)
Outreach of MFIs as of March 2013Outreach of MFIs as of March 2013
15. GROWTH OF MFI OUTREACH IN ETHIOPIAGROWTH OF MFI OUTREACH IN ETHIOPIA
IndicatorIndicator Dec, 2003Dec, 2003 March, 2013March, 2013 % of Growth% of Growth
ActiveActive
borrowersborrowers
755,073755,073 2,609,0602,609,060 345%345%
LoanLoan
outstandingoutstanding
593,978,863593,978,863 9,998,273,2259,998,273,225 1683%1683%
SavingSaving
balancebalance
325,028,670325,028,670 6,053,312,9256,053,312,925 1862%1862%
16. OUTSTANDING LOANS & SAVINGSOUTSTANDING LOANS & SAVINGS
( December 2003 – December 2012)( December 2003 – December 2012)
18. FINANCIAL PERFORMANCEFINANCIAL PERFORMANCE
Financial StructureFinancial Structure
Financial PerformanceFinancial Performance
Efficiency and ProductivityEfficiency and Productivity
Risk and LiquidityRisk and Liquidity
19. Indicators 2003 2010
1 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%
20. Increase access to finance to 67%
Provide financial services to MSE operators
Avail 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 institutions
At least 80% of the loans should be financed from saving
mobilization
21. 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
22. Support the creation of an enabling policy and regulatory
environment through consultative process
Build the capacity of MFIs and other inclusive finance providers
Established 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
23. Strong focus on the excluded population (farmers and MSE operators) andStrong focus on the excluded population (farmers and MSE operators) and
on productive activitieson productive activities
Increase in outreachIncrease in outreach
MFIs have mobilized significant amount of savingsMFIs have mobilized significant amount of savings
Transforming from credit-led to saving-led institutionsTransforming from credit-led to saving-led institutions
Improvements in operational and financial sustainabilityImprovements in operational and financial sustainability
Transparency of MFIs, efforts to be ratedTransparency of MFIs, efforts to be rated
An enabling policy and regulatory environment and strong and positive
relationship between regulators and practitioners
Value adding support of the government
Strong network
24. High unmet demand and lack of loan capitalHigh unmet demand and lack of loan capital
Weak MISWeak MIS
Limited outreach, particularly womenLimited outreach, particularly women
Limited capacity in terms of skilled manpowerLimited capacity in terms of skilled manpower
Uneven coverage and penetration of the regions in the countryUneven coverage and penetration of the regions in the country
Limited financial products and innovationsLimited financial products and innovations
Limited opportunities to access foreign capital and inadequateLimited opportunities to access foreign capital and inadequate
donor fundingdonor funding
Limited interventions to provide financial services to pastoralistsLimited interventions to provide financial services to pastoralists
Lack of solid interventions to promote financial literacyLack of solid interventions to promote financial literacy
Governance problemsGovernance problems
Limited donor supportLimited donor support
25. Clear legal frameworkClear legal framework
Huge unmet demandHuge unmet demand
Existence of general government supportExistence of general government support
Development of telecommunication and power services in rural areasDevelopment of telecommunication and power services in rural areas
Transformation of MFIsTransformation of MFIs
CompetitionCompetition
Growing interest of banks, postal services, social investors, private sectorGrowing interest of banks, postal services, social investors, private sector
Joining WTO and other regional trade organizationsJoining WTO and other regional trade organizations
26. Production and marketing risksProduction and marketing risks
Distortions of financial markets by donors,Distortions of financial markets by donors,
government, etc programsgovernment, etc programs
InflationInflation
Politicizing microfinancePoliticizing microfinance
HIV/AIDsHIV/AIDs
Over-regulationOver-regulation
27. Increase outreach by addressing the issue of loan
capital
Tailored interventions to increase women clients and
other disadvantaged groups
Support of promote back-office and front office
technology
Technical support in product development
Provide capacity building in terms of training
Financial literacy
Promote SPM and client protection
Establishment of wholesale facilities, without
discouraging savings
Provide focused interventions to provide financial
services to access deficit areas, particularly pastoralists
27
