Economic Management and Social Policy 133 oNAL ev April 1999 Findings occasionally reports on development initiatives not assisted by the World Bank. This article is one such effort. The views expressed here do not necessarily reflect the views of the World Bank WORLD BA N K Group, the Government of Ethiopia, Redd Bama or Irish AID. Ethiopia: N ?O,A14 Two Microfinance Delivery Programs Financial Institutions in Ethiopia mode of operation, organization, legal framework, as well as the fi- U ) _ JFormal flnancial institutions in nancial and non-financial ser- Ethiopia have traditionally fo- vices they offer. The focus is on cused on the accessible urban towns leaving rural areas, where one urban and two rural and say- the majority of the population re- sides, without access to financial services. Recognizing this prob- Redd Barna lem, a number of development Objectives and Evolution agencies such as Redd Bamna and World Vision started to provide ac- Redd Barna, also known as Save cess to financial services to the the Children-Norway, is an inter- poor in rural areas in the 1980s. national NGO, which has been op- They undertook income genera- erating in Ethiopia since 1969. Its tion programs (IGPs) by forming program areas focus primarily on _saving and credit schemes (SCS). child welfare and health, educa- Credit to the rural poor was pro- tion, agriculture, and income gen- vided in the form of grants, and eration. The objective of these agricultural inputs. Women were programs is poverty alleviation. w W the primary targets of these pro- Income generation activities grams (IGAs) were introduced to Redd Barna Programs in 1988 and are Leading Practitioners now a component, through Sav- ings and Credit Cooperatives This study summarizes the find- (SACC), in most Redd Barna ings of action research conducted Ethiopia's projects on microflnance institutions in Ethiopia, with focus on the per- Structure of the Micro-finance formance of Redd Barna and on Program Irish Aid-supported program. Ac- U tion research facilitates the ex- In urban areas, associations have change of information on innova- been formed, and in rural areas, tions and experiences so that informal self-help women's U 3 other micro-finance institutions groups were organized to develop may learn from each other's mis- the SACCs. In all these associa- takes and replicate best practices. tions, saving is an integral and The extended study on which this complementary obligation to en- article is based addresses their sure sustainability and was con- sidered key to increasing the com- area in response to the govern- THE IRISH AID-SUPPORTED mitment of the participating mem- ment's appeal for intervention PROGRAM bers during the formation of the during the 1984/85 drought peri- schemes. A group or an associa- od. After having participated ex- Objectives and Evolution tion willing to form an SACC must tensively in relief efforts to help Irish Aid is the development coop- flrst come up with some minimal alleviate the needs of communi- eration organization of the Irish starting capital collected from ties in drought conditions, RB-E government. It started supporting members in the form of member- was concerned with helping to community development pro- ship and registration fees, and realize the long-term development grams in Ethiopia in 1994 after the through periodic savings. needs of such a society. The signing of a technical co-operation Both in the rural and urban pro- Wolayita Women's Self-Help agreement. Currently, it is sup- jects, Redd Barna provides these Scheme has been engaged in agri- porting development programs in schemes with some basic starting cultural production and market- Eastern Tigray-Adigrat, Gurage capital or a grant in order to ing and has an impressive finan- and Sidama zones of the Southern strengthen their loan disburse- cial performance. Member savings Ethiopia Peoples' Region (SEPR) ment capacities and support their stand at 66,390 Birr, retail earn- and the Jimma Health Institute. sustainability. Along with the ings are 86,408 Birr, and Redd The major areas of intervention grants, they are also given techni- Barna has provided 66,000 Birr in are health, education, agriculture, cal support such in areas such as grants resulting in total capital of infrastructure and capacity and in- group formation and management. 215,438 Bin. Total loans issued in stitutional development. The Formal training is given in basic ac- 1996 were 243,010 Birr, and total agency also provides credit facili- counting skills, savings and credit loans repaid are 239,322 Birr The ties to rural poor women. procedures and records keeping. mutual trust among members has been critical to assuring the regu- Operations Targeting, Outreach and lar repayment of loans. Financial Performance The Sidama Integrated Rural De- Impact velopment program is the biggest The programs that the study in terms of coverage and funding. looked at included an urban one Many respondents to the survey The program is managed through in Addis Ababa and a rural SACC carried out by the study team were a co-ordination office known as in the Wolayita zone in the South. very positive about the program s the Sidama Development Program The urban credit program was se- impacts, especially women who (SDP) based in Awasa town, the lected by Redd Barna to assist the have been able to transform/ex- capital of the SEPR. Projects are patients of a leprosy research and pand their businesses. All those implemented directly by the rele- treatment center. The SACC was interviewed and a great number of vant government sector ministries established in 1990 started with a the women who deal in petty trade and where the relevant govern- membership of 82 people. By (selling injera, gesho, tella, ment sector ministry is not in 1990, this had grown to 6,000, of onions, shiro, tomatoes, spices, place, the Sidama Development whom 368 were women. As of Feb- beans, peas, butter, etc.) are satis- Corporation (SDC) implements the ruary 1997, it enjoyed a grant of fled with RB-E's intervention. Con- projects. The Sidama Administra- 81,000 Birr (1 US$ = approximate- sultations with a number of tive Council for the zone is the ly 6.7 Birr ) from Redd Barna, clients of the SCS contacted indi- highest decision-making body. 83,206 Birn in savings, 9,240 Birr cate that the saving and credit in fees contributed, and 12,424 schemes have helped them im- Birr in retained earnings. Out- prove their livelihoods, and has Structure of the Micro-finance standing loans stood at 192,240 had a positive impact on the lives Program Birr. Total capital was approxi- of their children. Their nutritional The SIDAMA Savings and Credit mately 395,829 Birr. However, the status has also improved consid- Scheme started in May 1995. Now, ratio of loans to savings 1.8 to 2.3 erably. Those engaged in selling it operates in eight of the nine suggests possible liquidity prob- injera indicated that they were Weredas (districts) in the zone. It lems if the ratio is not adjusted. both feeding their family and mak- follows the existing government Redd Barna-Ethiopia (RB-E) ing a limited amount of income structure of Kebele (village) and started to operate in the Wolayita from their business. Wereda, and works closely with the Bureau of Agriculture (BoA). It (ii) combined groups savings of and the husbands were initially tries to emulate, more or less, the 34,500 Birr, and very reluctant to allow the women Grameen Bank of Bangladesh to do this through their participa- micro-flnancing model. The forma- (iii) combined center savings of tion in the SACs. According to the tion of a center is designed in 36, 000 Birr. women clients, a really significant such a way that flve women volun- change that has taken place since tarily form a group and four This amounts to a total of 208,500 the credit and saving scheme was groups form a center. In mid-1997, Birr in savings from the 169 cen- introduced into these communi- there were 3,380 women members ters. Though the amount may not ties has been the attitudinal in the 169 centers over the eight be very signiflcant given the num- change, as for example, with re- Weredas. By the end of the year, ber of beneficiaries, 3,380 in the gard to women participating in there 7,500 women members. 169 centers, the centers were suf- trade. In fact, some husbands now flciently equipped to handle the keep their wives informed on prof- Outreach and Targeting loan requirements of their most itable trading activities. needy members at any given mo- The three sites in Sidama zone se- ment. Among the most admirable lected for this study are all rural. performances of this scheme is its For more information on this case The clients of the SACC schemes repayment rate on the principal- study, please contact Shimwaayi Muntemba, Rm. J3-1 01, Africa Region, in all these sites are women. In an impressive 97%. World Bank, 1818 H Street NW Wash- fact, of the total population of 3.7 The program has been able to ington, D.C. 20433. Tel. No.: (202) 458- million in Sidama, 48% are instill a sense of obligation in the 7370; e-mail address: women. The average number of participants regarding the need to children per woman in Sidama is repay their loans. Borrowers have very high (about 6.25 children per also been helped to understand client). In a society where having a the need for saving. large family is considered a bless- ing, the economic pressure on the Impact breadwinner to maintain the fami- ly is intense. Most of the clients The targeted support provided by interviewed indicated that they Irish Aid has improved the socio- were unable to send their children economic status of many vulnera- to school simply because of their ble women facing difficult condi- inability to pay. tions. It has enabled them to send In Sidama, as in Ethiopia gener- their children to school and pay ally, women have limited or no ac- for their clothing and stationery. It cess to and control over resources has also relieved domestic tension such as farm produce, property, resulting from the inability of the cash, land, cattle or any form of as- husband to pay for household ex- sets. The husband decides on the penses. use of the family resources as he According to clients interviewed sees fit. Sidama is a polygamous in the three centers, a major im- society where the mother is re- pact of Irish Aid's intervention has sponsible for the food needs and been the liberation from money- the general welfare of the husband. lenders, who used to be the sole providers of credit. In that situa- Financial Performance tion, poor producers and traders had to agree to 100 percent inter- The Sidama SACC was established est on the principal during the fol- in May 1995. By the end of 1996, it lowing harvest season, before any had: credit could be provided. Like many other societies in (i) combined individual sav- Ethiopia, Sidama has never al- ings of 138, 000 Birr, lowed women to engage in trade Findings Findings would also be of interest to: Name Institution Address Emi: pmhnwrlbn.r