Meseret Tesfaye is a vendor in a traditional open-air market called Gullit, around Cherkos area at Addis Ababa. She started her small business by borrowing 15,000 birr from Addis Credit and Saving Institution with her two other friends. Currently she has returned the loan and started saving in the institution. She appreciates the emerging of the micro finance institutions even in each woredas.
As to her, she could not have her own business market if she did not get a chance to get credit from the brunch. She also added that there are many women and youth who change their life by saving and getting credit from such financial institutions. She further explains that this institution has enabled her to become economically self-reliant as she leads a decent life with her three children and grandson. “I advise other women and youth to change their lives by joining those micro finance institution which are found in their surroundings” Meseret said.
Microfinance Institutions are mainly established to provide financing for the underprivileged section of the society both in rural and urban settings, with aim to help them in developing self-employment opportunities and engaging in various income generating activities who can never meet the tiresome conditions and requirements of traditional banks.
In Ethiopia in the last two decades, microfinance institutions have emerged as an instrument to expand financial services to low economic dwellers rural and urban entrepreneurs, as providing access to financial services, principally small loans through microfinance institutions to the underprivileged society has been considered as a tool for poverty reduction, and in overall for economic development of the nation.
According to Mawerdi Abdurhaman program management specialist at Association of Ethiopian Microfinance Institution (AEMFI), currently there are 36 microfinance institutions providing financial services to the underprivileged members of the society across the country particularly in rural areas.
As per Proclamation 40/96 the Ethiopian microfinance starts serving the rural low economic dwellers with the supervision and monitoring of National Bank of Ethiopia (NBE). Mawerdi also stated that the association is responsible to provide capacity building campaigns, conducting research and preparing workshop about the financing risk management and marketing for the institutions. They have a biennial international microfinance conference in collaboration with African and international networking members she added. She also explained that the number of the clients is increasing every year.
For instance there were 4.5 million clients until last year and currently their number has reached to 4.8 million. As to her this number shows that the people are being beneficiary through these institutions. Ayalneh Mihretu, Information and Communication Director at Amhara Credit and Saving Association also says the institution is giving financial supply for all underprivileged societies in all woredas of Amhara State regardless of their remoteness. The institution registered by NBE in 1996 and is a founding member of AEMFI.
There are about 6.5 million saving and about 1.3 million credit customers of which 66 percent credit customers are women in the institution with its 460 branches. The director also added that there are some challenges in modernizing and increasing the service and the system. As to him, infrastructure is the worst challenge in modernizing the system and its’ process.
For instance networking and electric power interruption are the major hindrances not to use modern technologies and networking all branches through internet. Serkeberihan Zeray , vice Managing Director of Addis Credit and Saving Institution S.C on his part said that the institution has a benefit for the parts of the society who have no access to banking services and have poor habit of saving.
Accordingly Serekeberihan noted that there are about half a million credit and saving clients in all 142 branches including their districts and sub branches of the institution. He also added that they are working in amalgamation with other organizations in order to make follow up and support for our clients.
For the question approached by The Ethiopian Herald whether the institution has achieved its goal, the vice marketing manager replied that it is possible to say the institution has achieved its goal. He said that different privileged societies are being benefited from this institution. There are different parts of the privileged society who have changed their lives after starting saving in this financial institution and acquiring credit.
The micro finance institutions are playing a great role in addressing the underprivileged part of the society nevertheless works must be done to provide the service for all low economic dwellers found at rural and urban areas across the country. Because the information from the above two micro finance institutions and the association indicates that they are not providing sufficient service for the parts of the society.
Therefore the government, the stake holders, the Medias and all the concerned body must strive in contributing their part for giving the service for all the underprivileged people across the country. By this reason one of the societies’ economic problems will be solved Mawerdi Abdurhaman noted.
Herald FEBRUARY 2/2019
BY HIZKEL HAILU
