The journey to mobilizing small savings in Ethiopia

Four years ago, UNCDF via its programme MicroLead embarked with three Ethiopian partners and two external TSP (one from India and one from France) on a journey to mobilize savings with technology in rural Ethiopia. As the project reached its closure, MicroLead organized an event on 3 June 2015 in Addis Ababa to share the achievements and the lessons learnt. The event was facilitated by the project’s stakeholders, namely the two technical service providers BASICS Ltd (India) and PAMIGA (France), the Association of Ethiopian Microfinance Institution (AEMFI), and the two Ethiopian microfinance institutions Buusaa Gonofaa (BG) and Wasasa.

Hermann Messan, UNCDF MicroLead programme specialist, introduced the event by stating that the option to access a safe savings account is one of the key pillars of financial inclusion. This is why at MicroLead, we support the development of new banking models that allow poor people to save their daily earnings right from their neighborhoods and villages.

In his keynote address, Ato Frezer Ayalew, Director of the Microfinance Supervision Directorate from National Bank of Ethiopia, emphasized the importance of domestic resource mobilization, mainly savings, for the successful implementation of the Growth and Transformation Plan, which is the national development strategy.  This strategy has the goal of maintaining the current growth momentum while also promoting an inclusive growth that can be adequately supported by financial inclusion. To that end, Ato Ayalew stated that the MicroLead programme is very well positioned and its achievements in the country are remarkable.

During the three sessions held at the event, the two technical service providers, BASIX and PAMIGA, the two financial service providers and AEMFI shared presentations showcasing their achievements under the MicroLead project, both at the meso and the micro level. The project outcomes can be summarised as below:

18 training programmes were conducted for all interested MFIs in Ethiopia. More than 450 Microfinance Institution (MFI) staff were trained with a “training of trainers” approach on areas such as – Savings Promotion, Product Development, Micro-insurance, MIS, Risk Management, Human Resources Development, Financial Management, Financial Education to Clients & Social Performance Management, Financing Micro & Small Enterprises & Lease Financing, training to Branch Managers, Livelihood Promotion, Marketing & Customer Service, and Agricultural Value Chain Finance.
A training was held on governance in MFIs, in which 23 Board Members from 18 MFIs participated. The training covered topics such as improvement of governance, board role and responsibilities and financial management
At the beginning of the project, Buusaa Gonofaa only offered a mandatory savings product to its borrowers which served as a guarantee for any loans issued, while Wasasa was offering voluntary savings products but its focus was not on deposit mobilization. As of March 2015, the two MFIs had added 85,468 voluntary depositors over the course of the project.
Wasasa and Buusaa Gonofaa increased their voluntary deposit three fold from $883,468 to $3.3 Million over the course of the project.
Wasasa graduated from a completely manual MIS mode to a full-fledged Core Banking System.
BG upgraded its existing software to meet its emerging needs and to support piloting of a branchless banking solution.

The event saw the participation of over 61 representatives from government organizations and donors involved in the financial inclusion agenda, as well as MFIs and technical service providers active in Ethiopia.

During the knowledge sharing event, MicroLead launched a case study titled “Expanding access to savings-led financial services in Ethiopia - integrating people and technology” that summarizes the experience and progress gained during the automation at both MFIs.