Blog » Centralization of the Ethiopian SACCO sector: kick off and the way forward
The vast, populous and diverse country of Ethiopia is one of the flagship projects in the World Bank – Rabo Partnerships and Foundation partnership on Strengthening Financial Cooperatives. Focusing on the private sector side activities, Rabo Partnerships (RP) works with the Agricultural Transformation Agency (ATA) as a local counterpart. On Friday 19 February, the two parties jointly organized a kick off workshop for various relevant stakeholders in the pilot phase to inform them about the program and envisioned scope of activities. General managers of five SACCO Unions in the Oromia region were present, as well as the Oromia Regional Cooperative Promotion Agency. While the Ethiopian stakeholders physically gathered at the ATA office in Addis Ababa, the attendees from RP connected virtually due to Covid-19 related travel restrictions.
After inspiring opening words from Mr. Awet Tekie (Director Rural Finance Service at ATA) and Mr. David Gerbrands (Global Head Advisory Services at RP), informative presentations were alternated with open discussions. All of this together brought about interesting insights and perspectives, which are summarized in this blog.
Ethiopian Unions and their SACCOs are facing a number of challenges
In the past 5 years, the number of SACCOs in Ethiopia increased to over 21.000, having more than 5 million members. Over the course of the project so far, we have concluded that the Ethiopian SACCO sector can be seen as a network with sufficient outreach and scale, with a unique proximity to rural communities and rural customers. However, these SACCOs and Unions still have a low level of cooperation and do not benefit from the scale of their network. This naturally leads to a number of other challenges. The most crucial ones, according to the workshop’s participants, are listed below.
How do we envision to solve these challenges?
Living up to the overall vision to “transform the Ethiopian SACCO system into a leading, sustainable system with a rural and financial focus”, we aim to tackle the problem at its roots. As the overarching challenge seems to be a lack of scale and cooperation, the solution might be found in centralization. The way in which this solution will be offered is twofold: on the one hand, RP prepares a centralization training based on experiences in other countries and tailored to the specific situation in Ethiopia. On the other hand, we start designing and implementing products and services that can enhance cooperation and ultimately centralization. An example of such a product would be a member registration tool, on which a team of young IT professionals from Rabobank is currently working.
The concrete way forward
Being more concrete, the pilot phase of these activities starts with five selected Unions in the Oromia region, aiming to:
As soon as the concept, products, and services are adjusted according to experience and feedback, the program’s activities will expand to other Unions and regions of Ethiopia. In this way we hope to increase the outreach and ultimately enhance financial inclusion, in an effective and valuable manner.