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Sidama Micro Financing Institution s.c

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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 ... – PowerPoint PPT presentation

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Title: Sidama Micro Financing Institution s.c


1
Sidama Micro Financing Institution s.c
2
Historical Background
  • SMFI has evolved from Sidama Rural Womens 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

3
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.

4
Vision, Mission
  • SMFIs Vision
  • Is Seeing the Changed Live of the Poor
  • SMFIs 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.

5
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.

6
Ownership
  • SMFI is established as Share Company
  • public owned/community ownership and
  • Represented by nominal shareholders
  • has represented with few/7/ nominal shareholders
  • who dont have legal right to claim dividend at
    any time
  • And simply they assigned to fulfill the legal
    requirement

7
Financial Products, Services and Methodology
  • Lending Methodology
  • two types of lending methods
  • Group lending
  • individual lending

8
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.

9
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

10
Types of Loan Products
  • Types of Loan Products
  • Agricultural Loans
  • Micro and Small enterprises loan
  • Petty trades
  • Handicrafts and services loan
  • Consumption loan
  • Housing loan

11
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

12
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 farmers income is seasonal in nature
  • Repay their loan during post harvesting their
    farm products.

13
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.

14
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
  • Compulsory saving
  • 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

15
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 clients
    familys or group members.

16
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/

17
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

18
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

19
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

20
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

21
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,

22
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

23
The end
  • Thank you
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