Sidama Micro Financing Institution s.c

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Sidama Micro Financing Institution s.c
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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

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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.

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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.

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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.

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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

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Financial Products, Services and Methodology

• Lending Methodology
• two types of lending methods
• Group lending
• individual lending

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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.

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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

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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

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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

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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.

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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.

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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

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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.

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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/

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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

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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
  

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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

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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

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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,

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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

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The end

• Thank you