Paper
Developing Agriculture Loan Products for Poor Rural Communities - Metemamen Microfinance Institution: Ethiopia
Pilot testing a new loan product for rural poor farmers
Download
7 pages
This paper describes the pilot testing of an agricultural loan product, Eshet, by Metemamen Microfinance Institution, an Ethiopian MFI.The Eshet product was designed to serve as a catalyst for Metemamens entry into rural areas. The primary objectives of Eshet were to:
- Provide loans to resource-poor farmers;
- Expand Metemamen's rural market penetration into new areas;
- Link with Catholic Relief services (CRS), Ethiopia's agro-enterprise development intervention;
- Generate income to enhance operational and financial self-sufficiency.
The Eshet loan product was successful and created demand for agriculture loans in a number of communities. Its success hinged on key factors such as:
- Excluding the interest rate, no other fees were charged on the loan product;
- CRS support in organizing farmer groups, providing materials and training farmers was beneficial;
- Good weather conditions helped farmers plant and harvest their crops on time;
- Clients were honest and had strong solidarity relationships;
- Close monitoring of activities by Metemamen staff encouraged timely repayment;
- Hiring loan officers from the project area established trust;
- Partnering organizations ensured that recruitment, group formation and follow-up were conducted easily.
About this Publication
Published