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Meklit 
Micro-Finance Institution

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(a)  General Information

Year of Establishment

16^th February 2000

Legal Status

Meklit Micro Finance Institution S.C. (MMFI) was legally registered by the National Bank of Ethiopia, according to Proclamation No.40/1996.

Current Operational Area (s)

• Addis Ababa City Administration – (Various Woredas and Kebeles)

• Oromiyaa Regional State – Adama (Nazareth)

• Southern Nations and Nationalities Peoples’ Regional State (SNNPRS) – Butajira

Future Expansion Plan

Meklit Micro Finance Institution has indicated in its five-year to commence operation in the Amhara Regional State. It also has a plan to further increase its outreach in Addis Ababa City Administration, Oromiyaa and Southern Regions of Ethiopia. Meklit is licensed to operate all over Ethiopia. It is expected that the total number of active clients would reach about 8,000 by the end of year 2005.

Total Number of Woredas Covered so far

Six Woredas in the Addis Ababa City Administration, four in Oromiyaa Regional

State and one in SNNRS.

Total Number of Branches Opened so far

Two

Total Number of Clients served so far

3,600

Gender Sensitivity

Male clients = 40%, Female Clients = 60%

 (b)  Loan Services/Products

• Small merchandizing business loan

• Petty trade loan

• Household manufacturing and processing loan

• Service delivery business loan

• Agricultural loan (farming, cattle fattening, vegetable gardening, etc)

• Emergency loan (with in-built insurance scheme)

Annual Lending Rate

Meklit Micro Finance Institution has two lending rates depending on the poverty level of its clients. Borrowers with the lowest living standard of life (the very poor) and who are engaged in petty trade activities are charged an annual lending rate of 14% and 2% service charge. This provision is given to urban and rural women micro entrepreneurs. Meklit classifies micro businesses such as selling of local foods and drinks, vegetable vending and minute petty trade undertakings as ‘A’ level businesses.

Meklit applies 22% lending rate and 2% service charge to clients who are considered economically active, compared to the above category of clients. Micro entrepreneurs engaged in production activities, handicraft and service sectors and with relative increased level of income as well as with good potential to grow to the small and medium scale enterprise sector are the ultimate targets.  Such businesses are classified as either ‘B’ or ‘C’ level businesses.

Loan Size and Loan Term Per Loan Cycle and Business Level

Loan Eligibility Criteria

• A person who is engaged in on-farm and off-farm activities as well as micro and small business activities;

• A person who is willing to take loans through a solidarity group collateral or legally registered cooperative;

• A person who accepts the financial rules and regulations of the Institution;

• An individual entrepreneur with innovative, unique and viable business idea;

• A person with acceptable social behavior and impetus for entrepreneurial growth;

• A person whose age is equal to or above 18 years and is capable of undertaking  his/her business actively.

Type of Collateral Needed

Group Guarantee/Collateral for regular borrowers and direct salary deductions for staff loans.

Some of the economic activities financed so far

• Petty trade (selling of vegetables, cereals, charcoal, spices and similar items that are not produced by the seller);

• Processing and manufacturing (---of local items such as food and drinks, spices, wood and metal products, shoe brush production, recycled products such as plastics, tannery wastes, etc.;

• Agriculture (cattle and sheep fattening, vegetable gardening);

• Services (maintenance of electric and electronic equipment, small beauty saloons, small hotels, kindergarten);

Grace Period

Grace period is given to borrowers according to their business levels and nature of business. Thus,

• Seven  days is given to ‘A’ level business clients (mainly women) who sell fast moving items;

• Fifteen days is given to “B’ and ‘C’ business level clients. The nature of the business of such clients is production-oriented.

Time needed to process and get loan

• A minimum of 15 days for new clients

[During this period, potential clients are expected to consolidate their solidarity groups, familiarize themselves with the policies of the Institution, start saving and with the assistance of the credit officers evaluate each others’ business. It is during this time that they also complete business plans and conclude agreements with the Institution].  

• Three days for existing clients (repeat borrowers)

Business Plan Presentation

At Meklit, both new and existing clients should present business plans. For the sake of convenience, Meklit provides the clients with pre-made and simplified business plan   of its own. For clients that could not read and write, the credit officers assist them in filling out the business plan.

The business plan (with code MK.003) contains the following major items:

• Monthly family income and expenditure (for house rent, utilities, etc);

• Monthly income and expenditure specific to the business for which the loan is requested for;

• Past credit history of the borrower (if any);

• Nature of business (temporary or permanent);

• Asset, liability and capital structure;

• Budget for which the loan is requested for;

• Available market opportunities for products/services of the borrower;

• Amount of loan approved per borrower by his/her respective group, the credit officer and the operations head.

Target Clients for Loans

• Individual borrowers;

• Groups;

• Cooperatives;

• Urban and rural households.

Target Clients for Savings

• Urban and rural households;

• Own employees, shareholders, board of directors;

• Employees of other organizations (government and NGOs);

• Cooperatives and associations;

• Other Community-based organizations.

Willingness to lend to new business start-ups such as high school drop-outs, college graduates and similar groups

New business start-ups can access financial services of the Institution as follows:

• One or two new business start-ups can join a group with three clients that have pre-established businesses;

All group/cooperative/association members can all be new business start-ups. In this case, in addition to the concerned credit officer, the credit approval committee of the Institution (management team) makes proper evaluation of the new business proposed by the potential clients. The head of operation shall make give technical assistance to the borrowers in making feasibility studies. Meklit has a good track record in this regard.

Frequency of Revising Institutional Policies

The board of directors and the staff of the Institution make joint-evaluation and amendments to the financial, operational and administrative policies on yearly basis.

(b)   Savings Products

( c )     Other non-financial Services

Field experience showed that Micro and Small Entrepreneurs are constrained by managerial and technical skills deficiencies, limited market information, poor financial and inventory control, inadequate processes, systems, equipment, inefficient resource use and many other problems. In collaboration with embassies and NGOs, Meklit provides standardized training services to its clients that would help them:

(a)  calculate product or service costs;

(b)  determine product or service price;

(c)  record daily business transactions;

(d)  improve quality of product or service;

(e)  promote product or service and improve customer relations;

(f)  develop new product or service through idea generation (innovation);

In addition, Meklit provides:

(g)  relevant information to clients that help them cope up with changing market

      situation;

(h)  orientation on the dynamics of the Micro and Small Enterprise Sector and the

      economic linkages that should exist with the formal sector;

(i)   training in effective management of human, material and financial resources.

Service Out-let

Meklit’s services are accessible to clients through its strategically located sub-branch and branch offices as well as the doorsteps of the client.

New products to be introduced during the coming 3-5 years

Type of Product
Loan	Savings	Other Related Services
Emergency loan (with in-built insurance scheme)		Institutionalized Business Development Services
Individual (personal) loan General purpose loan  (health, education,  construction,  etc.

  Guiding Principles

1.      Team Spirit is highly valued – building effective team is the core agenda;

2.      The staff is at the center of all activities;

3.       Respect  to work colleagues and clients

4.       Confidentiality to Clients’ Accounts

5.       Transparency and accountability to all its Constituency

6.       Does not compromise on quality and efficiency of services to clients

7.      Institutional Self-sufficiency through own performance – Our Dream – shall 

        come true!!!!.

• The Staff

MEKLIT has experienced and multi-disciplinary staff with high Comittement towards working with micro and small entrepreneurs as well as rural poor households.

Address

P.O.Box:  27634, Addis Ababa, Ethiopia

Telephone:  +251-1-507964/533509

Fax:+251-1-504941

E-mail:mmfi@telecom.net.etetsanet@telecom.net.et

Branch Offices

Telephone:  +251-2-125864 (Nazareth) and  +251-6-150788 (Butajira)

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