Financial Inclusion Program is Planning to Establish a Savings and Credit Cooperative in Ethiopia

In August 2014, the Nuru Ethiopia Financial Inclusion (FI) Program, formerly known as Community Economic Development, concluded a six-month program planning process (PPP). After successfully completing the PPP, the FI Program is now moving forward with the launching of the program in three kebeles of Boreda Woreda: Dubana Bulo, Meteka Mele and Hambisa. These three kebeles are the first areas where the Nuru Ethiopia Agriculture Program launched a year ago.

The PPP is one of the most remarkable events in designing a program model in Nuru Ethiopia. The FI PPP is the second of similar programs designed with this co-creation process. At the end of 2013, Nuru Ethiopia co-created its Agriculture program with participation of local leaders and Nuru staff.

Eight important milestones were set during the FI PPP. The first and most important one was hiring local leaders who could help in co-creating the program. The number of qualified applications received for the positions was overwhelming. Out of more than 50 applicants, we selected 4 highly competent leaders. Through the support and active participation of these local leaders, the team addressed all eight milestones and completed the planning process in August 2014.

NE FI Team from left to right: Kassim, Guche, Tsegereda and Girum

The key component of the FI PPP was the cruicial information the Strengths and Needs Assessment (SNA) provided about the communities in the intervention areas. The SNA indicated that there are no reliable financial management services offering flexibility or ease of withdrawals to communities in the three kebeles. Moreover, it found that farmers need easily accessible savings and credits services to develop savings habits and cope with economic shocks.

To address these fundamental needs, our team explored various community based financial services and researched organizations with similar missions. The purpose of our research packets was to learn from others and avoid mistakes that are commonly made in the sector. The team analyzed different community-based financial inclusion models supported by the microfinance industry and research organizations promoting financial inclusion agendas.

After concluding our research, the team agreed on the contents of the program model. At its core, we will support the capacity of local leaders to establish a locally-based financial services organization in the form of Savings and Credit Cooperative. The second important decision was to work exclusively with Nuru Agriculture Program household members. These decisions were made for both practical and strategic reasons. Working with Nuru household members is important to ensure integration of the Agriculture and Financial Inclusion Programs. We expect that Nuru farmers’ income will increase by participating in the Agricultural Program due to improved farming practices and application of agricultural inputs. The financial gains made through farming with the Nuru Agriculture Program could easily be lost when farmers face economic shocks such as minor illnesses of a family member or death of livestock. To retain the benefits brought by the Agriculture Program, farmers need to learn better financial management practices and secure financial resources to draw from during emergencies. The FI Program strengthens the gains made by the Agriculture Program by helping farmers understand financial management practices and giving access to group savings and credits services in crucial times of financial need.

Community members are excited by the outcome of the planning process and expressed their appreciation of the model through regular consultation and active participation. Members are now organizing in groups and enrolling in the FI Program. In the next few weeks, group leaders will be elected and start drafting their bylaws and constitution. Once groups fulfill government requirements and register, their members will start learning basic financial management skills and practice saving habits through regular cash contributions.