By Aklile Tsige /ABN/
The World Bank estimates that more than 500 million people have directly or indirectly benefited from microfinance-related operations. The International Finance Corporation (IFC), part of the larger World Bank Group, estimates that, as of 2014, more than 130 million people have directly benefited from microfinance-related operations. However, these operations are only available to approximately 20% of the three billion people who qualify as among the world’s poor.
According to the National Bank of Ethiopia, there are currently 44 MFIs operating in Ethiopia, and they are believed to have impacted on people’s lives. Aklile Tsige speaks to Dawit Wakgari, Chief Executive Officer, and Henok Abera, Business Development and Marketing Manager withone of these MFIs in the country,Nisir MFI.
In Ethiopia, micro finance institutions (MFIs), which were mostly founded with the aim of fighting poverty, play a big role in addressing the needs of people who are considered ‘high-risk’ by commercial banks. In a country where over 77pct of the population is unbanked, MFIs provide loans to the large portion of the population with very few assets.
Microfinance, also called microcredit, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. This is because banks are mainly targeting the rich. While institutions participating in the area of microfinance most often provide lending—microloans can range from as small as 100,000—500,000 birr ; many banks offer additional services such as checking and savings accounts as well as micro-insurance products.
Established in 2014, Nisir microfinance institution S.Cinitially kicked off operation with a start-up capital of seven million birr, and seven staff members and the visionary founders of the institution have been drawn from the National Bank, the World Bank and notable businesses. Nisircurrently provides efficient loans of multiple options with integrated and coordinated function of its various departments and sections: Operation, Business Development, Finance, Information Technology, Legal and Internal Control and Risk.
Nisir Micro Finance Institution is a growing institution which is currently operating at the headquarters located at Dembel City Center, and 4 branches at Megenagna, Beklobet, Piassa, and Merkato. Nisir is currently serving more than 3,700 clients with an exceptionally praised customer service.
Henok Abera, Nisir MFI Business Development and Marketing Department Manager noted that the institution which is closelyregulated and supervised by the National Bank of Ethiopia mainly focuses on mobilizing financial resources through shareholders’ investment and saving.
The manager further indicated that the institution requests not only vehicles as collateral but also share capital certificate, deposit certificate and machineries, among others.
Waving its business motto “A Treasure for All”, Nisir is now a-300-million birr company thathas currently managed to secure 300 million birr deposit out of which 50,000,000 birr is collected from its shareholders’ while the 250, 000,000 birr is secured from customers’ saving.
With the view to building trust among the public, the institution is doing its level best by maintaining good partnership with Awash Bank where Nisir’s depositors receive their interest from the Bank as the Institution has its account there.
According to Nisir MFI CEO, Dawit Wakgari, like conventional lenders, micro financiers must charge interest on loans, and they institute specific repayment plans with payments due at regular intervals. Some lenders require loan recipients to set aside a part of their income in a savings account, which can be used as insurance if the customer defaults. If the borrower repays the loan successfully, then they have just accrued extra savings.
Although there are two types of savings: fixed term and cash-in out, the institution mainly embarked on operating a competitive fixed term loan scheme by which depositors obtain up to 12% plus annual interest. This’s a stress-free, short-term investment alternative as a customer who deposits 1,000,000 birr receives a monthly interest of 10,000 birr, and the like. This’s how Nisir managed to mobilize huge amount of saving from customers.
Continuing its journey with innovative approach, Nisir Microfinance supports a large number of activities that range from providing the basics—like bank checking and savings accounts—to startupcapital for small business entrepreneurs and business development plans.
“Our service is so efficient that borrowers can secure loans within a few days as long as they fulfill the requirements set by the Institution,” Henok went on saying, “ but our customers are required only to deposit a 5% pre-saving, which is believed to be a foundation for developing saving habit.”
Nisir has also come up with a new business model, targeting the “missing middle” section of the society wholack investable capital targeted at funding SMEs; When the institution started operation five years ago the regular interest used to be 5% while it was paying 8% interest that undoubtedly captivated deposers.
Business Development and Marketing Manager indicated that many retired persons have been confused as to what do with their money at hand; so the institution manage s to provide a monthly interest for those depositors who could lead a descent life with the benefit they get.
Nisir MFI is planning to erect its own headquarters building at the heart of the city locally known as ‘Sengatera”, or lately considered to be “Sheger Wallstreet”. In order to look into future construction, the institution has bought three condominium basement apartments at this condo site and rented it for the same cause.
Since the institution mainly wants to mobilize financial resources it embarks on launching an aggressive promotion campaign through media and communication outlets such as TV, radio and other commercials with the view to captivating and persuading depositors.
“As we provide need-based financial service, we planned a 200 million birr deposit last year, but this Ethiopian fiscal year we set to make it a half a billion birr company 500 million birr. That’s why we need to engage in an intensive promotion campaign.” Dawit Wakgari ,Nisir MFI CEO noted.
This time around the use of information communication technology in financial institution appears to be mandatory to sustain in this competitive financial business. In this regard, Nisir MFI has already signed an agreement with an internationaltech company to implement core banking system in the institution.
“This technology undoubtedly helps us establish and maintain trust among the depositors, and provide efficient and effective saving and credit service.” Said Dawit
While most of MFIs are struggling to sustain their business Nisir Microfinance has been discharging its social responsibility in support of various socio-economic challenges. The institution has recently extended significant amount of support to joy Autism Center established by Niya Foundation.
The benefits of microfinance extend beyond the direct effects of giving people a source for capital. Entrepreneurs who create successful businesses, in turn, create jobs, trade, and overall economic improvement within a community. Thus, Nisir Microfinance Institution keeps going, maintaining its core values, unique saving and credit services while serving the nation with credible and reliable strategies.