Saccos: Loan and Cooperative Financial Institutions

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Presented to EACRAT Workshop held on 22 – 24 July 2008

Addis Ababa, Ethiopia

Presented by Berhane Kidanu

Federal Cooperative Agency


A comprehensive and structured assessment or study is not made to know the clear picture of RUSACCOs in the country. But as a practitioner and being engaged in the promotion of RUSACCOs, ideas, which help as a point of discussion can be forwarded based on the available data’s (not inclusive and complete).

In-spite of the importance of the sector (RUSACCOs) to create financial access to reach deep the rural poor and participate all sections of the society members, attention was denied during the previous times. It is recently that the promotion of RUSACCOs has been started on a pilot basis by VOCA-Ethiopia in collaboration with RCPBs. This program was confined to agricultural high potential areas covering a limited geographical area in four major regions. Accordingly they have successes to establish around 50 RUSACCOs in these regions with a limited (very few) membership size not exceeding 40-50 members in each RUSACCO.

It is with the launching of RUFIP that the promotion of RUSACCOs has been considered as the integral part of the cooperative promotion activity by RCPBs in developing cooperative financial institutions in the rural areas. Consequently RUSACCOs has flourished in all corners of the country with hopes to build member owned sustainable financial institutions and create financial access to rural poor by contributing towards poverty alleviation. Currently (based on the PY4 report) there are 1961 RUSACCOs and 20 RUSACCO Unions operating in the country. These RUSACCOs have a membership size of 142,697 out of which 73,581 are male and 69116 female. These RUSACCOs has managed to mobilize savings amounting ETB 21.3 million and with a total capital of ETB 18.5 million. The RUSACCOs has disbursed a loan to their members amounting ETB 20.9 million during PY4. As regards RUSACCO Unions 20 have been established up to the end of PY4 having 322 member cooperatives. These Unions have mobilized ETB 6.9 from their members, share capital of ETB 2.8 million and a grant/reserve ETB 1.7 million with a total asset of 11.4 million. They have a disbursed a loan to their members amounting ETB 10.12 million and borrowed ETB 4.3 million from government and non-government institutions. In total ETB 31.02 million loan has been disbursed to members both by RUSACCOs and their Unions. Pertaining to women based RUSACCOs; 464 have been established having a membership size of 16530, mobilized ETB 556,109 savings, ETB 571,561 capital (including shares) and ETB 827,808 grant/reserve. It is envisaged that at the end of the program period each RUSACCO will have 150 members at average. Up to know the average membership size is 75, which is half way compared with the proposed. Pertaining to saving mobilized it is approximately ETB 11,000.00 per RUSACCO and ETB 150 per person. This is attributed to the low saving culture and suspicious character of the farmers. Besides most farmers income is below 1 USD and the poverty is sever in the rural areas that is why the amount of saving being mobilized remains very low visa a via the expected ones. However, the tasks done in the establishment of these rural institutions is a tremendous achievement as a first step towards creating cooperative financial institutions to promote an inclusive finance. It is believed that the creation of RUSACCO Unions will resolve the problem of managerial inefficiency and technical deficiency of the RUSACCOs. Besides these Unions will access loan to their members and minimize shortage of capital of RUSACCOs. But the Unions were confronted with financial constraints and unable to operate as envisaged. First of all the Unions are established by poor RUSACCOs who are not able to generate enough capital as a surplus to be used by the Union. Besides the Unions are not in a position to...
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