Rural Electrification Projects where DBE is acting as a Trust Agent 1. Background The Ethiopian government is implementing a rural based development strategy with the expectation of rapid and equitable development of all its peoples. This strategy is multidimensional and integrated where inputs; processes and outputs in the rural socio-economic are treated in totality. The strategy recognizes that energy is one of the critical inputs for enhancing economic productivity and also building the human capital through the provision of critical social services including potable water, health and education. Expanding modern energy services, particularly electricity, in rural areas will accelerate the economic and social development process. The government has formulated a national rural electrification strategy where both the public electricity service company (EEPCO) and the private and non-government sector will be involved in extending services to the rural population. Implementation of the public sector rural electrification program
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Rural Electrification Projects where DBE is acting as a Trust Agent
1. Background
The Ethiopian government is implementing a rural based development strategy with the expectation of rapid and equitable development of all its peoples. This strategy is multidimensional and integrated where inputs; processes and outputs in the rural socio-economic are treated in totality.
The strategy recognizes that energy is one of the critical inputs for enhancing economic productivity and also building the human capital through the provision of critical social services including potable water, health and education. Expanding modern energy services, particularly electricity, in rural areas will accelerate the economic and social development process.
The government has formulated a national rural electrification strategy where both the public electricity service company (EEPCO) and the private and non-government sector will be involved in extending services to the rural population. Implementation of the public sector rural electrification program is already in progress and hundreds of rural towns will be the beneficiaries of this program in the coming five years.
The second private-led rural electrification strategy focuses on electrification of rural areas not to be covered by EEPCO's system expansion plan for the next ten years. This strategy will be implemented through a newly
established Rural Electrification Fund (REF), the resources of which will be made available to viable projects and eligible private and non-government project promoters on a loan basis.
The Rural Electrification Fund is administered under the ministry of water and energy by Alternative Energy Technoogy Dissimination Director (AETD), which serves as the Rural Electrification Fund Administrator. A Rural Electrification Board (REB) directs the activities of the Directorate.
The Directorate will provide loan and technical assistance to eligible rural electrification Project Promoters. The Directorate will disburse, track and collect the loan finance to the Project Promoters through an intermediary finance institution or Trust Agent.
The Development Bank of Ethiopia (Trust Agent) is the financial intermediary between the Rural Electrification Fund and Project Promoters. The Development Bank of Ethiopia disburses funds during project implementation and later recovers loans in line with the loan agreement agreed upon by the Directorate and the Project Promoters.
Scope of Service for the Development Bank of Ethiopia (Trust Agent)
The Development Bank of Ethiopia, as the financial intermediary between the Directorate and the Project Promoters, has been providing the following services.
• Evaluate the creditworthiness of Promoters Project
•Prepare a disbursement and repayment schedule for each project
•Release funds to Project Promoters according to disbursement schedule
•Conduct independent supervision to ascertain that projects are implemented as per agreed upon schedule and cost
• Recover loans according to the loan agreement• Conduct periodic loan repayment follow-up
•Conduct periodic reviews of the financial performance of projects
•Communicate regularly with Project Promoters regarding their financial status
The technologies that are expected to be covered under the program include:
Bio Gas Plants
o
Small Scale Wind Energy
o
Solar Home System
o
Solar Lanterns
o
West to energy
o
Improved cook stoves
o
Banking Service
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Ser. No.
Type of Document and Other Conditions required (Loan Processing Stage)
1 Opening Current Account (C/A)
1.1 Individual
A memo from Loaning Department requesting Finance and Banking Department to open Current Account for a Customer;
Ser. No.
Type of Document and Other Conditions required (Loan Processing Stage)
The Memo should further clearly indicate the name of person operating the Current Account;
If the Current Account is operated by a representative, the legitimate representative should forward a photocopy of power of attorney, supported by Legal Services;
The person who operates the Current Account should show a valid card for verification;
Name of person who operates the Current Account, including the representatives, should not appear on delinquent list (for improper use of Current Account with other Banks, if any) as regularly circulated by the Supervision Department of NBE;
The customer should fill out a Current Account opening form and gives specimen signature on two cards;
A minimum initial balance of Birr 250= (two hundred fifty) for opening Current Account;
1.2 Organizations (Private of Public Associations)
A memo from Loaning Department requesting Finance and Banking Department to open Current Account for a customer;
The memo should further clearly indicate the name of person(s) operating the Current Account for and behalf of the legal entity;
The legal entity should submit photocopy of memorandum of association and article of association each;
If definite specifications are not stipulated for the power of the person(s) operating the Current Account in the memorandum of association and/or article of association, a copy of letter/minute of authorization for the said person (s) allowing him/her (them) to operate Current Account, supported by the resolution of the General Assembly;
If the General Manager delegates the power of operating Current Account to somebody else (according to his/her power and responsibilities set forth in the memorandum of association), the
Ser. No.
Type of Document and Other Conditions required (Loan Processing Stage)
authorized representative should submit a photocopy of power of attorney supported by Legal Services;
The person (s) who operates the Current Account should show a valid ID Card for verification;
The name of the shareholders as well as the person (s) who operate (s) the Current Account, including the representative should not appear on delinquent list (for improper use of Current Account with other Banks, if any) as regularly circulated by the Supervision Department of NBE,
The person (s) operating Current Account should fill out a Current Account opening form and give specimen signatures on two cards each;
A minimum initial balance of Birr 250= for opening Current Account
1.3 Issuance of Check Book Requisition
The customer should fill out a check requisitions from and submit to the counter clerk, while at the same time either making cash payment or instructing the Bank to debit his/her account for the cost of check book, depending on the number of check leaves, as follows:-
Birr 10 for a 25 leaf check book;
Birr 20 for a 50 leaf check book;
2 Disbursement by CPO
The customer should show a valid identification card
If the customer desires to take the CPO to the supplier, the customer will provide their identification card and obtain the CPO. The identification card will be returned when the customer provides the receipt from the supplier.
If the supplier is receiving the CPO directly, the supplier will be provided with the CPO when they provide a receipt
3 Checklist for Import by Letter of Credit and CAD
Ser. No.
Type of Document and Other Conditions required (Loan Processing Stage)
A.Import -Letters of Credit (L/C)
I.Required Documents
The following documents are required for opening L/C:
a) Two copies of correct, legible and valid pro forma invoices showing clearly full description of goods, including :
Supplier’s name and address,
Quantity ,
grade,
quality,
volume,
measurement,
weight,
brand name, etc;
Mode of shipment, i.e., sea, air, etc;
FOB and freight costs separately;
Unit and total price (including currency of transaction) of the
goods at a named place of delivery;
Terms of payment, i.e., L/C, CAD, T.T., etc;
Price validity date;
Port of loading and destination;
Origin of goods;
Manufacturer’s name, if the supplier is different;
Delivery terms, i.e., FOB, C& F, etc;
Delivery time;
If the payment term is L/C, the pro forma invoice should
clearly indicate whether it is an irrevocable confirmed one or
Ser. No.
Type of Document and Other Conditions required (Loan Processing Stage)
irrevocable unconfirmed one;
a) Two photocopies of valid (and renewed) investment permit or foreign trade license or industry license, whichever is applicable;
b) Two photocopies of insurance certificate plus debit note from licensed local insurance company, evidencing adequate insurance cover (usually CIF plus 10%), with DBE co-beneficiary;
c) If the goods are not shipped by the Ethiopian carrier (in particular the Ethiopian Shipping
Lines) due to the fact that it has no scheduled voyage/flight on the date of loading , the
importer should produce a waiver of written proof evidence for shipment by a foreign vessel;
d) Duly completed (typed), signed and sealed application form for letter of credit in two copies (available from Finance & Banking Department at Banking Division free of charge);
e) Foreign exchange application for import duly completed (typed), signed and sealed in five copies (which can be obtained at cash counter upon payment of 2 Birr per set);
f) Certificate, supporting documents, approval letter or stamp on pro forma invoice (whichever is applicable) from:
Ministry of Health if the import of goods are medicine and other
related medical equipment;
Ministry of Agriculture for import of insecticides , pesticides, and
veterinary medicines;
Quality and Standard Authority for import of goods such as food items,
a) Request for release of disbursement lodged with the Loaning Department and/or customer’s own deposit for 100% value of the pro forma value
Ser. No.
Type of Document and Other Conditions required (Loan Processing Stage)
calculated in Birr.
b) The client has to cover the following commissions and charges for L/C up-front from his own source:
Exchange commission to NBE 1.5% of value of L/C
Opening commission 0.6% of value of L/C
Service charge 0.65% of value of L/C
Confirmation commission 0.5% of value of L/C
(If the L/C is an irrevocable confirmed one)
SWIFT charge Birr 300
B Import by Cash against Documents (CAD) at Sight Basis
I. Required Documents
I.I First Step: At the Time of Approval of Purchase Order
a) The customer should lodge an application for importing goods by
C.A.D. or a memo request from the Loaning Department;
b) In addition, a customer has to present a purchase order, prepared in
a manner acceptable to DBE, in three copies to be approved by DBE
for 90 days maximum
I.I Second Step: At the Time of Processing Import Applications Upon Arrival
of Shipping Documents
Foreign exchange application for import duly completed (typed),
signed and sealed in five copies (which can be obtained at cash
counter upon payment of 2 Birr per set);
Ser. No.
Type of Document and Other Conditions required (Loan Processing Stage)
II. Other Requirements (At the Time of Processing Import Applications)
a) Request for release of disbursement lodged with Loaning Department or customer’s own deposit for 100% value of the goods shipped, based on the final commercial invoice, calculated in Birr;
b) The client has to cover the following charges for CAD up-front from his own source:
Exchange commission to NBE 1.5% of value of goods
Service charge 1.25% of value of goods
SWIFT charge Birr 40
The Grand Ethiopian Renaissance
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1. Bond
What is Bond?
Bond is a debt instrument issued for a period of more than one year with
the purpose of raising capital by borrowing. . It is a debt security, under
which the issuer owes the holders a debt and, depending on the terms of
the bond, is obliged to pay them interest (the coupon) and/or to repay the
principal at a later date, termed the maturity. Interest is usually payable at
fixed intervals (semiannual, annual, sometimes monthly).
Savings Bond
Savings bond is an alternative type of saving or a debt instrument issued
by the government. A savings bond is basically a more restrictive (longer
maturity period) type of savings account. Savings bonds are considered
one of the safest types of savings schemes because they are backed by
the full faith the government. The big advantage of a savings bond is that
the rates of interest you can expect to earn are generally higher, as you
need to be able to commit your savings for a set period.
2. Characteristics of the Grand Ethiopian Renaissance Dam Bond
It is a bond which enjoys full government Guarantee.
It is a bond marketed to finance the Grand Ethiopian Renaissance
Dam which the government intends to build on Abay River.
3. Bond Types
Interest bearing Bond
Non- interest bearing Bond
3.1 The bond can only be sold to Ethiopian Nationals and foreign nationals
of Ethiopian Origin.
3.2 Interest accrued will be paid every six months.
4. Benefits of the Bond
4.1 Revenue accrued will be free from any tax.
4.2 It can be used as collateral to get loans from banks.
4.3 For the client it will earn revenue
4.4 Since it has full government Guarantee it is risk free.
4.5 It earns better interest than the normal savings rate.
4.6 It can be transferred as an inheritance or to a third party.
5. Bond Value
5.1 The minimum Bond value is 50 in Birr. Bond values of 25 (for
2000, 3000, 4000, 5000, 10,000 and 50,000, 100,000, 200,000,
500,000 and 1,000,000 could be purchased. There is no limit on the
maximum amount one wants to buy.
6. To purchase a bond the following needs to be fulfilled
6.1 For those 18 and older: - Kebele or Work ID
6.2 For children: Birth Certificate
6.3 For Student: School or Keble ID
7. Bond -Maturity Date and Interest Rate
7.1 Interest Rate
The interest rate is paid based on the following maturity dates:-
· Bonds with Maturity date up to 5 years – 5.5%
· Bonds with maturity date above 5 years--6%
8. How to buy bonds
8.1 Through Development Bank of Ethiopia (DBE) and commissioned
agents including Commercial Bank of Ethiopia (CBE) and Regions
Micro-Finance institutions.
These banks have branches in many parts of the country which makes it
easier to buy bonds.
9. About transferring the bond to a third party
9.1 The Bond can be transferred as a gift or as an inheritance by signing
on the back of the coupon, the bond can also be used as a collateral
to take loans from banks as well as it can be sold to a third party via
secondary market.
10. About buying the bond on behalf of a third party
10.1 It is allowed to by a bond in the name of a third party. However, the
name that will appear on the bond will be that of the bearer of the
bond. The person that will be buying the bond on behalf of the third
party can sign at the back of the coupon, care-of the coupon owner.
The principal and interest paid at the time of maturity will only be
returned to the owner of the coupon or to the person that is legally
representing the bond owner.
10.2 Parents or guardians can buy bonds on behalf of their minor children.
This can be done by writing the name of the Child/Children on the
coupon and by signing care-of on it. If parents want to keep the
interest and principal until the child/ children get the age of 18 this
can be considered accordingly.
Export Credit Guarantee(ECG)
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Background
Export credit guarantee is a scheme provided to safeguard export financing
banks against losses resulting from the export transaction they finance. The
scheme is a vehicle to facilitate exporters’ access to bank credit and enables
local exporters not to lose an export market due to inability to get bank
credit. It enables national exporters to compete on equal footing with other
exporters in increasingly competitive foreign markets.
Previously, the National Bank of Ethiopia had been handling the scheme
until it is transferred to Development Bank of Ethiopia from February 1, 2007
onwards. During the start of operation at DBE, the Branch operation and
project management department was responsible for handling the
operations of the scheme. Later on, as of August 2008, Export Credit
Guarantee and Special Fund Administration Bureau (ECGSF) start to
undertake the responsibility.
Process and eligibility requirements
Local exporters, those engaged in non-coffee export, lodge their pre- or post-
shipment loan application to any licensed commercial banks operating in
Ethiopia. These commercial banks appraise the export business with their
applicable credit policy and procedures. Upon the written request of a
financing bank, the guarantor, DBE, issues letter of guarantee to cover 80%
of the outstanding loan balance and interest thereof when the project is
found within acceptable risk level of DBE.
The guarantee period is up to 365 days to cover pre-shipment export loan
extended to exporters and post-shipment guarantee period may extend up
to 180 days.
Exporters shall satisfy all of the following in order to be considered eligible
for export credit guarantee
The export project to be financed under ECG scheme shall be bankable;
• Exporters shall not carry ‘loss’ category loans;
• Exporters Shall present bona-fide purchase order from foreign buyer;
•Exporters Shall produce evidence of a valid investment certificate and/or trade license
New exporters, those engaged in export business for less than 12 months at
time of applying, shall produce property or other collateral
1.New producer-exporters shall produce a collateral equivalent to at least 40% of the amount of the loan requested.
2.Other new exporters shall produce property or other collateral equivalent to at least 50% of the amount of the loan requested.
3.Both (Producer/other new exporters) shall produce evidence that all proceeds from non-perishable goods to be exported shall be paid through irrevocable letter of credit.
Existing exporters, those who have been engaged in export business for at
least 12 months prior to the date of application, shall produce from local
banks documentary evidence about receipt of export proceeds in the 12
months preceding the date of application for export credit guarantee.
Necessary documents/attachments
The following are the necessary Documents/attachments to be fulfilled for
export credit guarantee
• Fully completed ECG application format by the financing bank
•Copy (ies) of complete loan approval form (LAF) prepared by the financing bank (including related annexes)
•Export credit guarantee request application cover letter written by financing bank addressed to the DBE.
•Copy of exporter’s (borrower’s) application letter for export credit filed with financing bank.
• Copy of business license
• Copy (ies) of valid purchase order from foreign buyer(s)
•Copies of export proceeds tickets evidencing export receipts over the recent 12 months prior to the application date
• Copies of recent financial statements of the borrowing company
•Exporter’s letter of declaration stating that all information provided and documents submitted to the financing bank are correct and true to the best knowledge of the borrower.
•Credit information of the client (CIC) obtained from NBE data base within less than 1 month period of application for DBE’s Export Credit Guarantee.
• Written documents that shows the applicants credit disciplineDBE’s distinguishing feature is its “project” based lending tradition.
Projects financed by the Bank are carefully selected and prepared,
thoroughly appraised, closely supervised and systematically
evaluated.
The Bank extends credit to credit worthy borrowers and projects that
have received a thorough appraisal and found to be financially and
economically viable and socially desirable in terms of environment
protection, employment generating capacity and other social benefit
that may be included in the framework of development regulation act
of the Government.
Process Description/Purpose Statement
The Core Credit Process of the Bank is designed to serve the customer
with a shortest possible time, minimum cost and high quality. This
process starts its function by attracting and persuading customers to
apply for manufacturing, agro processing, and agriculture loans, which
is the domain of the priority area and ends at loan collection.
This process is responsible for the overall loan administration of the
Bank for those projects with a loan of fifteen million birr and above. It
is equally accountable to any failure to meet the set standards of
outputs. Moreover, this process is the one that has access for
customers and represent the Bank’s corporate credit operation system.
The process works with the Loan Appraisal and Project Rehabilitation
and Loan Recovery Sub-processes and Loan Approval Team to deliver
credits to its customers and collect loans.
The core credit process accepts all kind of manufacturing, agro processing
and commercial agricultural projects loan applications from both walk-in and
sourced customer and undertakes the necessary investigation on the
required documents and borrowers within shortest possible time and cost to
extend loans. The process shows all activities of the job in an organized way
accordingly defined the duties and responsibilities of individual performers
and creates transparency and accountability.
The Core Credit Process is important to have a clear picture of the whole
credit process and creates a transparent way of doing things by properly
defining tasks and assign responsibilities to all professionals so that there
will be proper loan delivery and portfolio management in the Bank. The
detail workflow of the Corporate Credit Process is stipulated hereunder;
· Customer Sourcing: This is the first step of the Loan process that focuses on the recruitment of potential customer through promotion and persuading investment loan applicants.
· Document Screening: This is the second step of the credit process. It focuses on screening loan documents forwarded by customer.
· Loan Application Receiving: This third step of the credit process focuses on: Verifying completeness of loan documents, Singing disclaimer agreement and Receiving Loan application.
· Due Diligence Assessment: These steps of the Loan Process focus on undertaking due diligence assessment on a loan applicant. At this step all applicant related information are assessed and analyzed to know credit worthiness of the applicant.
· Follow up Loan Appraisal Process: These steps of the Loan Process ASP for appraisal and follow-up of the appraisal activity.
· Discussion on Draft Appraisal Report with Customer: At this step of the loan process, the contact person communicates the customer & discusses on the appraisal report and aware the customer about conditions set for loan provision.
· Loan Granting: This step of the loan process prepares loan and mortgage contract and make ready for signature and documentation.
· Equity Contribution and Compliance Check: This step of the Credit process requires blocking and utilization of equity contribution as a pre-disbursement condition.
· Effecting Disbursements: This step of the credit process undertakes disbursements by checking the implementation progress of a project.
· Inspecting Project Implementation Progress: This step of the Credit process sees about proper utilization of the disbursements and implementation progress in terms of schedule set.
· Project Implementation Completion Follow up: This step of the credit process helps to know completeness of project implementation.
· Loan Repayment Follow up: This step of the process helps to assure timely loan repayment after project follow up is carried out.
· Project Follow up: This step of the credit process helps to undertake continuing project follow-up to ensure timely loan collection and sustainability of project.
· Project insurance Follow up: This step of the credit process helps to undertake continuing project follow-up to ensure timely and appropriate insurance purchase and renewal to minimize the likely risk of the project.
· Loan Settlement: These steps of the credit process help for settlement of the loan and release of collateral after the loan is repaid.
DBE’s distinguishing feature is its “project” based lending tradition.
Projects financed by the Bank are carefully selected and prepared,
thoroughly appraised, closely supervised and systematically
evaluated.
The Bank extends credit to credit worthy borrowers and projects that
have received a thorough appraisal and found to be financially and
economically viable and socially desirable in terms of environment
protection, employment generating capacity and other social benefit
that may be included in the framework of development regulation act
of the Government.
Process Description/Purpose Statement
The Core Credit Process of the Bank is designed to serve the customer
with a shortest possible time, minimum cost and high quality. This
process starts its function by attracting and persuading customers to
apply for manufacturing, agro processing, and agriculture loans, which
is the domain of the priority area and ends at loan collection.
This process is responsible for the overall loan administration of the
Bank for those projects with a loan of fifteen million birr and above. It
is equally accountable to any failure to meet the set standards of
outputs. Moreover, this process is the one that has access for
customers and represent the Bank’s corporate credit operation system.
The process works with the Loan Appraisal and Project Rehabilitation
and Loan Recovery Sub-processes and Loan Approval Team to deliver
credits to its customers and collect loans.
The core credit process accepts all kind of manufacturing, agro processing
and commercial agricultural projects loan applications from both walk-in and
sourced customer and undertakes the necessary investigation on the
required documents and borrowers within shortest possible time and cost to
extend loans. The process shows all activities of the job in an organized way
accordingly defined the duties and responsibilities of individual performers
and creates transparency and accountability.
The Core Credit Process is important to have a clear picture of the whole
credit process and creates a transparent way of doing things by properly
defining tasks and assign responsibilities to all professionals so that there
will be proper loan delivery and portfolio management in the Bank. The
detail workflow of the Corporate Credit Process is stipulated hereunder;
· Customer Sourcing: This is the first step of the Loan process that focuses on the recruitment of potential customer through promotion and persuading investment loan applicants.
· Document Screening: This is the second step of the credit process. It focuses on screening loan documents forwarded by customer.
· Loan Application Receiving: This third step of the credit process focuses on: Verifying completeness of loan documents, Singing disclaimer agreement and Receiving Loan application.
· Due Diligence Assessment: These steps of the Loan Process focus on undertaking due diligence assessment on a loan applicant. At this step all applicant related information are assessed and analyzed to know credit worthiness of the applicant.
· Follow up Loan Appraisal Process: These steps of the Loan Process ASP for appraisal and follow-up of the appraisal activity.
· Discussion on Draft Appraisal Report with Customer: At this step of the loan process, the contact person communicates the customer & discusses on the appraisal report and aware the customer about conditions set for loan provision.
· Loan Granting: This step of the loan process prepares loan and mortgage contract and make ready for signature and documentation.
· Equity Contribution and Compliance Check: This step of the Credit process requires blocking and utilization of equity contribution as a pre-disbursement condition.
· Effecting Disbursements: This step of the credit process undertakes disbursements by checking the implementation progress of a project.
· Inspecting Project Implementation Progress: This step of the Credit process sees about proper utilization of the disbursements and implementation progress in terms of schedule set.
· Project Implementation Completion Follow up: This step of the credit process helps to know completeness of project implementation.
· Loan Repayment Follow up: This step of the process helps to assure timely loan repayment after project follow up is carried out.
· Project Follow up: This step of the credit process helps to undertake continuing project follow-up to ensure timely loan collection and sustainability of project.
· Project insurance Follow up: This step of the credit process helps to undertake continuing project follow-up to ensure timely and appropriate insurance purchase and renewal to minimize the likely risk of the project.
· Loan Settlement: These steps of the credit process help for settlement of the loan and release of collateral after the loan is repaid.
International Banking Service Process (IBSP) has been
providing efficiently and effectively the following
International Banking Services for its customer who has a
credit relation with the Bank.
1. Import Transactions
Advance Payment
Under this method, the seller receives payment from the buyer prior to
shipment or rendering the service. This mode of payment is appropriate
for imports of small items for values not exceeding USD 5,000.00 or its
equivalent in other foreign currencies. If the advance payment is more
than USD 5,000 an advance payment bank guarantee for the equivalent
Institutional development within the microfinance and cooperative
sub-sectors.
Improved Regulation and supervision of Micro Finance Institutions
(MFIs) by strengthening the institutional capacity of National Bank of
Ethiopia (NBE), Association of Ethiopian Micro Finance Institutions
(AEMFIs)
Equity and Credit Funds for MFIs and RUSACCOs.
Programme coordination and management.
Programmme Organizing and Executing Agency
The key agencies responsible for implementation of the programme are:
Development Bank of Ethiopia (lead implementing Agency)
National Bank of Ethiopia (NBE)
Association of Ethiopian Microfinance Institutions (AEMFIs)
The Domestic Commercial Banks
The Federal and Regional Cooperative Promotion Bureaus (FCA)
Programme Coordination and Management Unit
A programme coordination and management Unit (PCMU) has established in
DBE which is primarily responsible for management of equity and credit
funds, institutional development of MFIs in association with AEMFIs
and the overall coordination of programme activities. There are also
two committees that would involve in policy and decision- making in the
programme implementation process. These committees include:
1. Progrmme Management Committee (PMC): the main function of
this committee shall involve in decision making and guiding of
the overall programme implementation process.
2. National Rural and Microfinance Policy steering committee
(NRMFPC): this committee shall mainly involve in policy issues at
national level.
Programme operation current status
RUFIP I have been under implementation for 7 years since 2003/4 to
2009/2010 a total programme cost was USD 88.73 million. As per the
interim evaluation of Rural Financial Intermediation Programme I (RUFIP)
conducted by IFAD in 2009, RUFIP I was successful in achieving its objectives
in the microfinance sub-sector and had a real and sustainable impact on
rural poverty. The programme was found to be relevant and timely, and its
overall performance was satisfactory.
In view of the overall results obtained from RUFIP I, the interim evaluation
made a strong case for the development of a second-phase of RUFIP. As a
result the government of Federal Democratic Republic of Ethiopian and IFAD
agreed to have the second phase of the programme i.e. RUFIP II.
RUFIP II builds on the success of the Rural Financial Intermediation
Programme one to scale up the delivery of financial services from a baseline
of about 3.3 million to 6.9 million poor rural households by 30 June 2019, the
total estimated RUFIP II cost is USD 248 million (ETB 4.23 billion). The
government and financers reached to consensuses for the launching of
RUFIP II for the next seven years (2011/12- 2018/19).
The overall development objective of the programme is to provide
sustainable access to rural households to a range of financial services
through a nationwide network of some 30 MFIs and about 5 500 RUSACCOs
(and 100 unions of RUSACCOs) as well as capacitating the programme
beneficiaries in the form of capacity building. RUFIP II was launched on July
2012 and started operation for the past one year.
List of Priority Sectors
The Bank provides loans for Commercial Agriculture, Agro-Processing, Manufacturing and Extractive Industries, preferably export focused. The economic sub-sectors for which the loanable financial resource will be availed are:
Commercial Agriculture•Commercial scale Horticulture products, vegetables, fruits, mushrooms and the like;