Ethiopia: Launch of the first commercial microfinance institution
The first commercial micro finance institution in Ethiopia will be operational this year, it has been announced.The first commercial micro finance institution in Ethiopia will be operational this year, it has been announced.
Nisir Micro Finance Institution (NMI) will open its doors in December with a paid-up capital of Br15 million (around €600,000).
"Collateral will not be our pre-requisite for giving credit, rather our main concern will be a viable feasibility study," Michael Addisu, project manager and lead promoter for NMI, told Addis Fortune.
Organisers of NMI have a strategy to deliver tailored services to the urban population, and are planning to offer interest rates for depositors ranging from eight to 12 percent.
Ethiopia's formal financial sector currently meets only a fraction of the demand for financial services, according to Michael Addisu.
He added that the huge gap between the supply and demand led to the formation of NMI, whose focus is to provide a need-based and swift credit facility.
There are more than 30 microfinance institutions funded by the State, development partners or NGOs in Ethiopia, twelve years after the first one was licensed.
According to experts, the potential is much greater, but such institutions have limited capacities and fear the risk of lending to poor households, especially in rural areas.