Ethiopia - Rural Financial Intermediation Project (RFIP)

The present project relates to the Rural Financial Intermediation Project (RFIP). It's designed because of the difficulties experienced by the populations in the rural financial intermediation sector. Indeed, in Ethiopia: (1) access to credit is one of the major constraints for agriculture and rural development, (2) there exist unmet demands for financial services particularly credit as evident from the findings of the study of the state of rural financial intermediaries in 2000, and (3) there exist financial intermediaries such as microfinance institutions (MFIS) and community-based organizations such as rotating savings and credit associations (ROSCAS) but lack adequate loan funds and capacities to deliver demand-driven services to rural households. The RUFIP is therefore initiated to strengthen existing financial intermediaries for effective and sustainable provision of demand-driven financial services to rural households. The project comprises four components namely: (i) institutional development of MFIs and Rural Savings and Credit Cooperative (RUSACCOs); (ii) regulatory framework and supervisory oversight; (iii) Line of credit through Development Bank of Ethiopia (DBE) to eligible MFIs and RUSACCOs, and commercial banks that buy equity in willing MFIs; and (iv) programme coordination and management.