Enat Bank S.C. is planning to provide loans without collateral, in two months time, to women wishing to become entrepreneurs
The project, which the Bank will start in collaboration with other stakeholders, like the Ethiopian Entrepreneurship Development Centre (EDC), the Centre for African Women Economic Empowerment (CAWEE) and the Prime Minister's Office, involves financing and training.
The women will receive the loans after training for six days on document preparation, business recording and basic accounting, for literate women, and saving money, business planning and balancing incomes and expenses, for those who are not able to read and write. The training for the latter group will take around two to three days. The training will be conducted by the EDC.
The women are expected to decide what businesses they want to engage in. The Bank will then provide them with loans depending on their proposal. The minimum amount of money to be given out as loan will be 20,000 Br, Fortune learnt.
The program aims to provide loans to women with little or no income, aged between 18 and 65, by way of assisting them to become entrepreneurs, said Birtukan G.Ezgi, vice president of the Bank.
Discussions to launch the program started between the EDC - a quasi-government entity, established in February 2013 with the aim of training entrepreneurs - and the Bank about a month ago. The discussions were initiated by the CAWEE and the Prime Minister's Office. The Bank expects to sign a Memorandum of Understanding (MOU) with the EDC before the end of February.
Around 1,050 people have acquired entrepreneurial skills and knowledge through training organised by the EDC. The Centre also says it has helped approximately 412 micro & small enterprises, as well as medium-level businesses to improve their business operations.
The financing program is phase-based, as it aims to embrace women throughout the country. The Bank plans to finance 50 women during the first phase. The number of beneficiaries will increase as the program progresses to the next level, says Birtukan.
Crowd funding - a financing system whereby blocked accounts will be prepared and customers who support the idea will make payments, has been selected by the Bank for the program. The beneficiaries will sign an undertaking with the Bank to share the risk.
"The interest rate of the loan is still undecided," Birtukan told Fortune. "But it will certainly be much less than the normal market interest rate."
The rate will be announced upon the commencement of the program, according to the vice president.
"The programme helps to promote social responsibility among financial institutions and the people", said Etalem Engida, CEO of the EDC. "We decided to prioritise women because their loan repayment rate is higher than men."
The Centre will assign one advisor for ten women in the program. The advisors, according to Etalem, will be conducting overall supervision on the progress and health of the businesses.
The Bank, which is working on awareness creation about the program, has already found two customers willing to be included in the program.
The United Nations Development Programme (UNDP), and other international organisations known for providing grants for similar initiatives, are being contacted by the Bank, Fortune learnt. The Bank has also sent a document to the Department for International Development (DFID) to support the program. The Bank also sent a letter to Madam Graca Machel, Nelson Mandela's wife, to solicit her support in persuading international organisations to provide grants to the program.