AEMFI is a network of 31 MFIs established in June 1999

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.

Transparency Non-political Equity Accountability Member driven Social responsiveness

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 Assembly

Board of Directors

Executive Director

Training Unit

SACCOs Unit

Research &

Publications Unit

Performance

Monitoring Unit

MIS Unit

Admin Assistant

Accountant

Support Staff

Administration & Finance Unit

Program Management 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, collection of taxesOther products such as paying pensioners, collection of taxes

FINANCIAL PRODUCTS OF MFISFINANCIAL PRODUCTS OF MFIS

Outreach: over 2.6Outreach: over 2.6 million million active borrowers active borrowers

(49.8% Women)(49.8% Women)

Outstanding loan balance: Birr Outstanding loan balance: Birr 9.9 billion. 9.9 billion.

(556 million USD) (556 million USD)

Balance of savings: Birr. 6.1 billion (336 Balance 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

GROWTH OF MFI OUTREACH IN ETHIOPIAGROWTH OF MFI OUTREACH IN ETHIOPIA

IndicatorIndicator Dec, 2003 Dec, 2003 March, 2013March, 2013 % of Growth% of Growth

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 2012)( December 2003 – December 2012)

ACTIVE CLIENTS ACTIVE CLIENTS

(December 2003 – December 2010)(December 2003 – December 2010)

FINANCIAL PERFORMANCEFINANCIAL PERFORMANCE

Financial Structure Financial Structure

Financial Performance Financial Performance

Efficiency and Productivity Efficiency and Productivity

Risk and Liquidity Risk and Liquidity

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%

5Operating 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 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 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 operators) and Strong focus on the excluded population (farmers and MSE operators) and

on productive activitieson productive activities

Increase in outreach Increase 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 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 practitioners

Value adding support of the government

Strong 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 country Uneven coverage and penetration of the regions in the country Limited financial products and innovations Limited financial products and innovations Limited opportunities to access foreign capital and inadequate Limited opportunities to access foreign capital and inadequate donor funding donor funding Limited interventions to provide financial services to pastoralistsLimited interventions to provide financial services to pastoralistsLack of solid interventions to promote financial literacyLack of solid interventions to promote financial literacyGovernance problemsGovernance problemsLimited donor supportLimited donor support

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

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-regulation Over-regulation

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 pastoralists27