Presentation on theme: "Sidama Micro Financing Institution s.c. Historical Background SMFI has evolved from Sidama Rural Women’s Credit and savings schemes from 1994 to 1998;"— Presentation transcript:
Historical Background SMFI has evolved from Sidama Rural Women’s Credit and savings schemes from 1994 to 1998; Objective, to create access to credit and savings services to empowering women. Previously, this RWCAS Scheme supported by the Bureau of Agriculture; The schemes had operated two years before licensed ; SD Program had coordinated the Irish Aid Grant
Legal Status Cont. Has got operational license from NBE in 1998 SMFI is a registered, licensed, regulated and public owned/Community owned micro financing institution. The Head quarter is in Hawassa, capital of SNNPRS in Sidama Zone.
Vision, Mission SMFI’s Vision Is “Seeing the Changed Live of the Poor” SMFI’s Mission To improve the well being of the economically active poor both in the rural and urban areas through providing sustainable and appropriate financial services to the productive poor.
Specific objectives: Provide financial services to productive poor To expand outreaches in clients, portfolios and branch network; Give priority to women to get access to F. services; Promote rural and urban MSE operators ; Promote culture of savings in operating area; Creation of self-employment and IGA; Develop appropriate financial products and BDS to meet the needs of the clients; Deter exploitation of moneylenders; who push poor in vicious cycle of poverty.
Ownership SMFI is established as Share Company public owned/community ownership and Represented by nominal shareholders ; has represented with few/7/ nominal shareholders; who don’t have legal right to claim dividend at any time; And simply they assigned to fulfill the legal requirement;
Financial Products, Services and Methodology Lending Methodology two types of lending methods 1.Group lending 2.individual lending
Group lending The lending modality is only group lending /Grameen model until recently ; Members of the group are jointly liable for unpaid loan. Repayment enforcement through Peer pressure The group member will be trained for seven days The individual group member will co-guarantee each other Loan will be given to individual within the group Solidarity group lending is continuing for rural, agricultural loan – specially farmers.
Individual lending – individual lending is Introduced recently – Objective to maintain creditworthy individual borrowers during their group lending; – To meet higher loan size need of clients – Individual lending is to address the financial needs of the missing middle – Individual loan are required to pledge tangible collateral or personal guarantee
Types of Loan Products – Agricultural Loans – Micro and Small enterprises loan – Petty trades – Handicrafts and services loan – Consumption loan – Housing loan
Activities Financed Some of the economic activities financed so far Cereal Crop farming and Vegetables products Trade (selling of coffee, chat, grain and other staple crops); Fishing activities ; Cattle fattening and selling; Selling of dairy products such as butter and milk; Small restaurants, tea rooms; Preparation and selling of bamboo wood product ; Selling of 'enset' products;
Some Features of Agricultural Loans Average loan is XXX Birr The loans are provided for farmers in the rural ; Application is easy & filling loan request format Terms are six months’ loans Repaid in Lump sum payment The interest rate is 18% flat per Annum. Farmers invest this loan for periodic farm input demand As farmer’s income is seasonal in nature Repay their loan during post harvesting their farm products.
Loan Eligibility Criteria Client's experience in performing his/her business activity Availability of market for the product/services Willingness to form groups and center; Access loans on a group guarantee basis; Credit History, Character assessment and motivation Type of Collateral Needed; Group and Center Guarantee are required Group guarantee or peer pressure is used as collateral & repayment enforcement.
Savings services Smfi is a deposit taking MFI Saving service is provided for both loan & non clients Saving is a cheap source of sustainable fund SMFI mobilizes two types of saving 1.Compulsory saving ; 2.Voluntary saving -like, time deposit, institution saving, saving Box instrument etc; Individuals and institutions are encouraged to save Mobilize more savings and diversify its product to encourage a saving habit in the society; pays interest rate of 5% per annum on both saving
Cont. Compulsory-saving Group and individual loan borrowers forced to save 10% up front deduction; Compulsory saving used as security for the loan; Withdrawal is possible when loan fully repaid; Pays 5% interest rate for this saving ; Insurance services Credit life insurance services would be given for clients; 1% premium collected from Group borrowers and 2% on individual depend up on loan size; Remaining unpaid loan will be offset if the client die; Help to reduce a Vulnerability of client’s family’s or group members.
Overall performance Status Current Operational Area (s), the MFI is operating in Sidama Zone alone, Covered 19 woredas-SNNPRG Total No. of Kebeles Covered so far 230 out of 526 ; Total No. of Branches Opened so far 21 full-fledged Branches; Gender Sensitivity; M, clients = 52%, F, Clients = 48% Total No. of Clients served so far 70,000 with 60% R Total loan disbursement made so far 270 million birr Total Amount of loan recovered so far birr 259million /about 96% RR/
Target Clients for the services The primary clients of SIDAMA are: Rural poor peasants; Off-farm activity operators; individual clients ; Micro and Small Enterprise Operators; Special emphasis is given to women clients; Target Clients for Savings Urban and Rural poor households Thus, the SMFI has reach 60% of its clients, are rural one; Currently about 20,400 active borrows are agricultural loan, nearly 80% of the total clients; Disburse annual loan of 40 million birr Agri. Loan per yr Currently agricultural loan has account for 50% (31.3 million) outstanding portfolios; Currently creates employment for over 230 employees
Current performance As of June 30,2012, disbursed loans of birr 63,000,000 for 12 thousand loan clients; has an outstanding loan balance of around 52million ETB with 30,000 Clients ; Mobilize net saving of 29million birr both in compulsory and voluntary saving during the same period; OSS =120%, FSS= 82% - this will be improved in the yrs come. The objective of SMFI is to create access to financial services for the rural & urban clients;
Key Partners’ organization Donors, Irish Aid /mother NGO/ now it is inactive/quite DBE via RUFIP Program –IFAD mission; Care Ethiopia –Active Sidama Development corporation – Active one;
Current Challenges Shortage of loan able funds; A very low ratio of own capital /outstanding loan MIS Problem/system constraint Inflation effect- create expensive operational activities; High transaction costs, Staff turn over Limited BDS services to build the capacity of clients;
Cont. Weak entrepreneurship skill of clients and high risk nature of the services ; Limited ability to repay from cash flows No systems for collateral valuation No access to the Credit Bureau/information A lack of knowledge and skills on product development like agri-business loan, Value-chain finance system,
Future Expansion Plan SIDAMA has no intention of expanding to other regions. It rather wants to increase the outreach in Clients 30,000 to 110,000 To increase portfolios size from 51million to 235 million to be served in the same region/zone the next three to five years. Adopt MIS Technology Build branches office facilities at all Woredas to enhance capacity Establish Micro bank department to address the missing meddle rural and urban areas Enhance financial and operational self sufficiency to build sustainability;