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

By Lennon, S. & Kebede, A.
Published