Addis Abeba — The Commercial Bank of Ethiopia (CBE) is set to finance four new Microfinance institutions (MFI) in addition to the five similar institutions it is supporting, the ministry of finance and economic development said on Tuesday.
It was not known about the new microfinance institutions the bank has decided to support.
The bank currently supports five microfinance institutions namely, the Addis Credit Association and three others based in regional states of Amhara, Oromia, Tigray and the SNNP regional states.
Speaking at a regional workshop at the Hilton Hotel, State Minister of Finance and Economic Development Mekonnen Manyazewal said his government attaches great importance to the micro financial institutions for their crucial role as part of poverty reduction and sustainable development strategy.
He said the MFIs were particularly instrumental in implementing development strategy to address the issues pertaining to access to financial provision to rural and urban poor and small scale enterprises.
"Currently we have 29 MFI's playing significant role in expanding financial services to those who are not reached by the conventional banks," the state minister noted.
The three-day East African Sub regional workshop was conducted by African Rural and Agricultural Credit Association (AFRACA) Secretariat in conjunction with the East African Sub-Regional Chairperson, Association of Microfinance Institutions in Uganda (AMFIU), and CBE.
On the first day of the workshop, experts in microfinance presented study papers on which participants discussed and debated.
During the discussion session, some participants from private micro financial institutions voiced discontentment over CBE's "discriminatory" policy for supporting only those are under the federal or regional governments.
One such complaint came from Tezera Kebede of the Poverty Eradication and Community Empowerment.
He said he was disappointed about the inclination of CBE towards financing MFI's which are either governmental or some how related to the government.
Responding to that, Abie Sano, President of CBE, denied the criticism saying the bank was only supporting those microfinance institutions which happened to fulfill the requirements.
"We finance MFI's which only fulfilled CBE's own requirements, rules, and procedures - but not to intentionally discriminate one from another." The president added that the CBE realizes the unsatisfied demands of clients and said the bank was currently working on that.
Researches conducted on impact of MFIs on poverty and food security have shown that microfinance is not the only instrument for improving the poverty situation of the poor in areas like that of the Amhara region.
"For it to be effective, the marketing situation, the infrastructure, particularly the road net-work, the skill and risk aversion behavior, particularly that of women, and integration of the whole service with other sectors requires immediate attention," one research noted while also highlighting the significant achievements of the MFIs.
The Amhara Credit and Savings Institution (ACSI) in the Amhara and Dedebit Credit and Savings Institution in the Tigray Regional States have been rated among the top 50 microfinance institutions in the world by Forbes magazine.
The Institutions were chosen from a field of 641 micro-credit providers around the world.
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Dear colleagues,
Thank you for highlighting on this issue, particularly the fact that 'microfinance' is NOT the only solution for poverty. This calls for integrating other important sectors with MF. But you didn't indicate the source. Also what were the papers presented at the workshop.
We hope you would cover more of microfinance issues. While it is indeed playing a key role in terms of 'stimulating' households and individual efforts to get out of poverty, primarily through self employment, there are also key and real challenges, and controversies, regarding 'sustainability' issues.