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Journal of Economics and Sustainable Development www.iiste.orgISSN 2222-1700 (Paper) ISSN 2222-

Savings and Credit Cooperatives in

2855 (Online) Vol.6, No.5, 2015 140

Ethiopia: Development and Challenges Kifle Tesfamariam

Assistant Professor, Department of Cooperative Studies, Mekell University E-mail:
kifletesfamariam@gmail.com Abstract Savings and Credit Cooperatives (SACCOs)
in Ethiopia are playing an active role both in rural and urban areas. Their number
has increased from 5,437 in 2006 to 14,453 in May 2014 showing a compound
growth rate of 28% per year. The aggregate number of membership during the same
period increased from 0.38 million to 1.7million and their capital increased from
one billion birr to 5.2 billion birr. These figures indicate that financial
cooperatives have had the support of the people in undertaking activities
contributing to their economic development. SACCOs are considered to have
immense potential in financing short term loans for agricultural production
technologies and undertake off-farm income generating activities in areas where
both the state and the private sector have failed. Serious efforts are being made to
strengthen capital resource of SACCO’s base through increasing members’
subscription and mobilization of savings in rural and urban areas. Therefore, the
objective of this paper is to examine the current status and challenges of SACCOs in
Ethiopia. The study is based on review of pertinent literature on SACCO operations,
policy and regulatory framework documents as well as secondary data obtained
from various sources. The paper identifies challenges such as, absence of
financial cooperatives policy and regulatory environment, weak institutional capacity,
narrow product range and inappropriate loan security requirements. Finally, it
suggests that the establishment of cooperative bank is required to combat the
problems. Keywords: Financial cooperative, savings, regulatory environment,
cooperative bank 1.Background and justification of the study Cooperatives have
played a significant role towards achieving the growth and poverty reduction
strategy by promoting income generating activities and improving access to
near banking services to rural and urban households. In response to the
changing needs of farmers-members, the government instituted an overarching
strategy of Agricultural Cooperative Sector Development Strategy 2012-2016
(ACSDS). One of ACSDS’s derivative features is to improve smallholder
farmers` productivity and income by leveraging a cooperative sector; hence
the promotion of cooperative movement is in line with the national strategy.
Moreover, in the Growth and Transformation Plan (GTP) due emphasis was given
for the cooperatives as the driving force for agricultural productivity and savings
mobilization. Based on the savings mobilized domestically a resource will be
generated to finance the various investment opportunities from time to come. Most
cooperatives have access to some financial products, but more sophisticated
services like warehouse receipts and insurance are rare. Although significant
progress has been made in recent years, many rural financial institutions generally
have insufficient capital, reach, and capacity to provide agricultural
cooperatives with services at the scale they need. The main rural financial
institutions currently functioning in Ethiopia are currently savings and credit
cooperatives (hereafter “SACCOs”) and microfinance institutions (MFIs), but
their ability to serve their target clients is limited. At present, there are
14,453 SACCOs in the country, yet they provide less than one percent of the
country’s total financing, and many struggle with low-capacity management and
governance (Kifle, 2011). The extent to which their contributions could be realized
partly depends on the expansion and growth which in turn depends on the
environment they operate and delineated by the legal and policy framework.
However, there is little understanding of what the contemporary development
challenges of SACCOs in Ethiopia. Whatever the SACCOs do should be analyzed in
terms of its contribution on the socio-economic development. Therefore, the driving
force for initiating this study is that very little is known about the current status and
challenges of SACCOs for its growth and sustainability in Ethiopia. 2.Study approach
The study is based on review of pertinent literature on Savings and Credit
Cooperatives (SACCOs) in Ethiopia, policy and regulatory framework documents,
past study reports; cooperatives annual reports as well as secondary data obtained
from various sources. Descriptive statistics is used to answer the research objective.
3.Historical development of Savings and Credit Cooperatives (SACCOs) in Ethiopia The
development and promotion of modern savings and credit cooperatives
(SACCOs) in Ethiopia is not different from that of general cooperative promotion
and development in the country. It was in 1960 for the first time in Ethiopia, during
the imperial regime, the government issued a “Farm workers Cooperative Decree”
that
Journal of Economics and Sustainable Development www.iiste.orgISSN 2222-1700 (Paper) ISSN 2222-
2855 (Online) Vol.6, No.5, 2015 141 aimed at organizing the landless people in to
agricultural cooperatives and the ministry of national community development was
charged with the responsibility of ensuring systematic cooperative promotion and
development. Furthermore, in 1966, cooperative promotion No. 241/1966 was
proclaimed to give basis for the promotion cooperatives and it was only after this
proclamation that cooperatives began to emerge in the county. Establishment of
SACCOs in Ethiopia started in the mid-1960 and the first one was pioneered by the
employees of Ethiopian Airlines in 1964. From 1964-1973, there were 28 SACCOs
and these societies formed their own national apex body known as Ethiopia Thrift
and Cooperative Societies Ltd (ENTACCS). At that time the apex had 28 SACCO
with 6,247 members and savings amounting to USD 627,752 and was also a
member ofthe Africa confederation of Cooperative Savings and Credit Association
(ACCOSCA). During the Dergue regime (1974 -1991), the different types of
cooperative societies (agricultural cooperatives, handicrafts and small scale
industry cooperatives, housing cooperatives, saving and credit cooperative and
mining cooperatives) were organized, promoted, regulated and inspected by
different Ministries and Institutions like Ministry of Agriculture, Ministry of Industry,
Ministry of Housing and Urban Development, National Bank of Ethiopia and Ministry
of Mines respectively. The SACCO which was under the National Bank of Ethiopia
during the Dergue regime unlike the other type of cooperative were not very
much affected but continued to mushroom except the national apex ENTACCS
which was abolished. By 1990/91 when the Dergueregime was abolished there were
495 SACCO in the country with the total membership of 119,799 and total savings
amounting to 79 million birr, assets totaling of 102 million birr, and outstanding loans
of 80 million birr. Following the overthrow of the military government (1991) with
the adoption of economic reform program helped the organization, promotion and
development of cooperative societies within the framework of the free market
economy. The government provided a legal framework which is both comprehensive
in manyrespects (including its ability to accommodate coops in various sectors/sub-
sectors) and incorporates universally accepted principles of cooperatives
including voluntary membership (Proclamation No. 147/1998 and amendment
402/2004). As a result some improvements have been seen in that cooperatives
started to distribute inputs, provide loan to their members, marketing their
products in the domestic and foreign market, unions (secondary cooperatives)
were formed, dividend payments were made by the unions as well as
primary cooperatives. Both ADLI (the government's development program) and the
Marketing Strategy explicitly envisage cooperatives to play a critical role in the
development and poverty reduction efforts of the country (see Ministry of Finance
and Economic Development 2003, 2003; Ministry of Agriculture and Rural
Development 2005). In line with this a general legislation setting out the formal rules
and procedures by which the development and activities of all types1 of co-
operatives in the country are to be guided (Proclamation. No. 147/1998 and
402/2004) was issued. As such, it constitutes the incentive structure that shapes the
behavior of cooperatives and their members. According to the proclamation, the
objectives of cooperatives societies are to create savings and mutual assistance
among its members by pooling their resources, knowledge and property, to enable
them to actively participate in the free market economic system (Proclamation.
No. 147/1998). In response to the prevailing supportive government policy and
commitment for the development of genuine cooperatives their number and
diversity increased rapidly. Nowadays, cooperatives is functioning through important
sectors like saving and credit, coffee, beekeeping, seed multiplication,
sugarcane, livestock, dairy, mining, marketing, consumer, fisheries and
construction etc. Thus, cooperatives in Ethiopia are playing multi-functional roles in
rural and urban areas. As of May 2014, according to Federal Cooperative Agency
(FCA), there were 32 different kind of cooperatives with 56,044 primary
cooperatives operating in all regional states of Ethiopia with aggregate
membership size of 9,165,267 (6,949,589 male and 2,215,678 female) and capital
amounting to 8.8 billion birr. The regional distribution of primary cooperatives shows
that Oromia 29.3 %, SNNP 20.9%, Addis Ababa 21.6%, Amhara 13% and Tigrai
8%. The remaining five regions (Somalia, Afar, Gambella, Beneshangul and
Harare)and Dire Dawa city collectively accounted for 6.8% of the number of
cooperatives in the country. Out of these various types of primary cooperatives
14,453(25.8%) are primary SACCOs with membership of 1.7 million and
capital of 5.2 billion birr. Within these rural SACCOs and urban SACCOs
accounts 8,383 (52%) and 6,070(42%) respectively. Currently, SACCOs constituting
the second most common type of coops (next to multipurpose cooperatives) in
the country in terms of both number, membership and capital. 4.Trends in
number of SACCOs, membership and capital Despite the ups and downs experienced,
SACCO’s movement in Ethiopia has registered numerical growth over the past
decades both in terms of number, membership and capital. However, membership is
still much smaller 1The cooperative sectors covered include Agricultural, Housing,
Industrial & Artisans Producers, consumer, savings & credit, fishery, and mining cooperative
societies.
Journal of Economics and Sustainable Development www.iiste.orgISSN 2222-1700 (Paper) ISSN 2222-
2855 (Online) Vol.6, No.5, 2015 142 against the huge potential. The table below indicates
that SACCOs have been constantly growing in terms of number, membership and
capital mobilized over the period. Table1. Trends in growth of SACCOs and capital Year
No. of SACCOs Membership Capital ( Birr) Capital per member (Birr) 1991 495
119,799 78,772,710 658 1995 522 116,619 111,173,060 953 1999 716
156,938 174,577,503 1,110 2004 2,146 155,120 504,334,084 3,251 2006
5,437 381,212 994,960,169 2610 2008 7,834 383,311 1,426,550,110 3722
2012 10,270 910,275 1,206,319,160 1325 2013 11,850 1,037,788 485,064,779
467 2014 14,453 1,736,122 5,126,912,681 2953 Source: Wolday Amha (2003)
and Federal Cooperative Agency (May 2014). As can be noted from the above table
1, the number of SACCOs has increased by 84% between 2008 and 2014 from
7,834 to 14,453. Similarly, the aggregate membership has increased from 383
thousands to 1.7 million over the same period representing over and above four
times increase. The capital of the society has also shown an increase of 259% over
the same period. 4.1.Geographical distribution of Savings and Credit Cooperatives
(SACCOs) Due to non-availability of sufficient data about the SACCOs, it is difficult to
analyze the financial performance of SACCOs. In general, table2 presented the
distribution of SACCOs by region, their membership size and capital. The
distribution of SACCOs among the regional states also presents sharp difference
with Oromia and SNNP representing the highest numbers of SACCOs. Oromia
represents the largest number of SACCOs with 5,334(36.9%), followed by
SNNP with 3,473(24%), Amhara with 2,520(17%), Addis Ababa 1,705(11.8%), and
Tigrai with 834(5.8%) SACCOs. The aggregate numbers of SACCOs in the rest of
regional states constitutes the difference. In terms of number of membership,
Oromia constitutes the largest number of members, followed by Addis Ababa, SNNP
and Amharain the order given. Table2. Distribution of SACCOs by region Region No.
of SACCOs Membership Capital (Birr) Male Female Total Oromia 5334 432,709
250,576 683,285 132,986,708 SNNP 3473 188,059 110,945 299,004 112,780,258
Amhara 2520 139,218 71,699 210,017 96,176,921 Afar 120 1,033 4,249 5,282
965,702 Tigrai 834 112,318 76,086 188,404 216,000,312 Somali 166 1,796 5,953
7,749 8,929,063 Gambella 40 567 2,186 2,753 379,239 BGS 44 432 1,126 1,558
288,098 Harare 66 1,116 1,746 2,862 2,342,398 Dire Dawa 151 55 3,365 3,420
961,679 Addis Ababa 1,705 182,582 148,306 330,888 4,555,102,303 Total 14,453
1,059,885 676,237 1,736,122 5,126,912,681 Source: Federal Cooperative
Agency, May 2014. 4.2. Savings and Credit Cooperatives (SACCOs) Unions The
existence of clear and accommodating governmental policy and all-inclusive
structures and the government’s commitment to transform the subsistence
economy have created conducive environment for the development of voluntary
based SACCO unions in the country. Accordingly, there are 89 SACCO unions with
2,753 primary SACCO members and a capital amounting to 618,654,727 birr. As to
their distribution by regions, there are 26 SACCO unions in Oromia(29%) and
SNNP(29%), 23 in Amhara(26%), 9 in Tigrai(10%), 2 in Addis Ababa(2%),
1(3%) each in Benishangul/Gumuz, Harare and Dire Dawa. Detail SACCO unions
found in
Journal of Economics and Sustainable Development www.iiste.orgISSN 2222-1700 (Paper) ISSN 2222-
2855 (Online) Vol.6, No.5, 2015 143 each region, primary societies affiliated to the unions
and capital is indicated below on Table 3. Table3. Distribution of SACCO Unions
and primaries by Region Region No. of SACCO Unions No. of member SACCOs
Capital(Birr) Oromia 26 696 483,018,203 SNNP 26 668 67,022,161 Amhara23 778
36,509,792 Tigrai 9 276 22,804,866 BSG 1 5 240,000 Harare 1 7 382,000 Diredawa
1 43 516,000 Addis Ababa 2 280 8,161,705 Total 89 2753 618,654,727 Source:
Federal Cooperative Agency, May 2014. 5.Challenges of Savings and Credit
Cooperatives (SACCOs) in Ethiopia The business mission of SACCOs is to provide
financial service to members and become viable community based financial
institutions by providing value-added services such as education, training and
financial services on a sustainable basis. In connection with this, their progress
made by both primary and union SACCOs in terms of providing demand driven
financial services to members and ensuring the sustainability during the last
50 years of its existence is not very impressive. According to different document
analysis and field experience results indicate that SACCOs in Ethiopia are
entangled by the number of challenges that need to be addressed in order to enable
them improve on soundness and stability, effectiveness and efficiency, governance,
product diversity and integration to the formal financial system. The major
challenges of primary and union SACCOs include the following. Lack of awareness
Members are not well informed about the basic cooperative principles and
values and create the inspiration among members to rally around their grass root
financial service institutions. Regrettably, no special efforts have been made in this
direction. People look upon these institutions as means for obtaining loans from the
government and / NGOs. Likewise, the SACCO unions established are based on the
weak primary SACCOsthat were established mainly to access loan fund from rural
financial intermediation program (RUFIP). So long as people expect to get
something from the government, they see to it that societies somehow
continue to function.Weak governance Management committee members have no
knowledge about financial management. In most cases SACCOs are unable to
employ high caliber management staff and the burden of due diligence is left to
members who may have limited education on management. The committee
members elected by the general assembly to lead the affairs of the societies for
fixed period do not have the necessary capacity to bring good governance,
not undergone in skill upgrading. Thus, good governance is the main and crucial
weakness of SACCOs. Weak financial management system The financial system in
place including accounting and audit works are very weak. Most of the
primary SACCOs are not maintain proper financial records and produce reports
timely. Similarly, the accounts of the societies are not timely audited with three to
four years lag in the case of certain primary societies. This is mainly due to limited
capacity and inadequate personnel base of the regional cooperative agency
and Woreda cooperative desk to provide such type of services timely as required by
the cooperative proclamation 147/1998 and bylaws. Following, SACCO are not in a
position to pay dividends to members yearly unless the accounts are audited and
the societies confirm profitable. Limited outreach The SACCO movement has only
registered about 17 million members until May 2014 despite the huge potential to
enlarge membership. They continue to play significant economic and social roles in
their communities. Here is a brief overview showing just how important SACCOs are
to the economies of most countries. -In Colombia, co-operatives provide 87.5% of
short term loan provision in 2007. -In Kenya, co-operatives are responsible for 31%
of national savings and deposits. -In France, co-operatives are responsible for 60%
of bank deposits. Limited outreach is thus, a challenge to the SACCO movement in
Ethiopia. Therefore, a lot has to be done in expanding the outreach of members in
the SACCO movement; as this will enable the societies mobilized more
Journal of Economics and Sustainable Development www.iiste.orgISSN 2222-1700 (Paper) ISSN 2222-
2855 (Online) Vol.6, No.5, 2015 144 savings to finance loan portfolios and ensure
sustained growth of the societies. Lack of differentiated products Apart from the above
stated problems, cooperatives have not yet provided demand driven products that
could address the needs of their members in spite of their older age and better
outreach to the grass roots level and unbanked community. In general, there are
no planned and structured ways of developing new products orrevising the
existing. Policy and regulatory environment Lack of appropriate supervisory and
regulatory environment for financial cooperatives including SACCOs could hamper
the development of sustainable, financially prudent, and economically viable
institutions. There is a need for special financial cooperative law due to the unique
feature of financial cooperatives. On the one hand a good legal framework
governing financial cooperatives should empower them, enabling their
development and encouraging outreach towards their target population while on
the other hand, it should ensure that financial sector rules are appropriately applied
to protect members against poor financial management. So, the state should have a
regulatory role emanating from its responsibility of establishing procedures to
protect both the cooperatives and their representatives. In line with this, in
Ethiopian regulation governing financial cooperatives is required to maintain
prudential financial norms and reduce governance risks. Currently, SACCOs are
organized, promoted, regulated and supervised under the general cooperative
law/proclamation No.147/98. The regulation requires that all cooperative types
should be promoted, regulated and supervised under the umbrella of one
authority. Consequently, SACCOs have been taken away from the NBE and placed
under the supervision of this unified authority. The law also defines, among other
things, the relationship between government and cooperatives, permits vertical
structure, introduces holding of share capital and dividend payment based on the
decision of the General Assembly. The lack of a separate financial cooperatives law
to promote cooperative banking is a major constraintto the development of
SACCOs. Some of the big SACCOs in Addis Ababa (in terms of savings mobilized
andassets owned) have surpassed the minimum requirement to establish even a
commercial bank according to the banking law of the country. Due to lack of an
appropriate financial cooperative law, their resources have been tied up and
deposited in commercial banks. Efforts so far to establish cooperative banks have
been frustrated; what were initiated as cooperative banks had to eventually register
under the commercial banks act due to the lack of a cooperative law. Another major
constraint is the lack of adequate trained manpower in the finance area to regulate
and supervise SACCOs according to standard financial principles. Many
SACCOs complain about the restrictive legal requirement that their accounts be
audited by an appropriate authority. Without audit it is difficult to assess whether
cooperatives are operating efficiently and are providing the necessary service to
their members or not. Audit is also important to build public confidence in the
SACCOs thereby enabling them to mobilize more voluntary savings. Yet, the
authority has not been able to regularly audit the accounts of SACCOs due to
shortage of auditors. Recently some have opted to hire external audit firms, but is
too expensive for most. Even though the establishment of an appropriate
supervisory and regulatory environment is undisputable, it lacks clearly
articulated and organized product development and revision policies in the
SACCOs. The policy does not encourage the development of new products and
product development/revisiontakes place arbitrarily, mostly initiated by mangers and
experts. A product revision or the development of new products only arises based
on problems prevailing in the SACCO and not made following the product cycle and
assessments made earlier. Testing of the product is not practiced in all SACCOs, if it
has been believed that it is beneficial to members or workable it will be directly
promoted without passing the testing stage. The absence of SACCOs Federation
which will conduct research and assume supervisory roles has constrained SACCOs
and their unions from being engaged in the development and revision of financial
products. Such Federation will have the advantages economies of scale and ensure
sustainability. It will ease and support the promotion of financial literacy, create
financial prudence, help in the development of new products and put in place
appropriate supervision activities to create financially viable and sustainable
institutions. Many SACCOs now feel that they have reached to the level of forming
secondary level associations and, hence the number of SACCO unions is increasing
both in rural and urban areas. The regulation is very restrictive in that it does not
allow SACCOS to engage in income generating activities (other than lending to
members) or to lend to non-members thereby greatly constraining their capital base
and ability to diversify their portfolio. Lending to members constitutes the main
source of income with saving as the only source of loanable funds. Unfortunately,
savings in most SACCOs is not attractive partly due to the low interest rate on
savings. Hence, SACCOs are often faced with serious shortage of finance for loans.
The dependence of SACCO loans on member-personal guarantor(s) also
restricts access as finding such
Journal of Economics and Sustainable Development www.iiste.orgISSN 2222-1700 (Paper) ISSN 2222-
2855 (Online) Vol.6, No.5, 2015 145 guarantor has remained problematic. Both spouses
have to agree to become personal guarantors for a loan. The loan may not be
approved if one of the parties refuses the request to become a guarantor. Even
members of other SACCOs cannot become guarantors for loans. Thus, the personal
guarantor-based loan system has been reported to be a major challenge for the
development and sustainability of SACCOs. The policy is very static and is not
changing to changing environment. Inappropriate loan security requirements SACCOs
insist on personal member-guarantors while soundness of the purpose of the loan is
irrelevant. The personal guarantor requirement inhibits some from borrowing
because, given that the guarantor has to be a non-borrower and cannot borrow until
his obligation as guarantor is settled (or transferred), getting a guarantor is difficult.
It is sometimes argued that the low level of operation of SACCOs as well as
the 100% security (through borrower’s own savings and guarantee) rendered risk
assessment unnecessary. However, this might not be a prudent approach in view
of the importance of sustainability in the context of a dynamic environment.
SACCOs requirement of 100% security through own saving and member-guarantor
is too rigid and restrictive, hence is not a viable option; more so in view of the fact
that most members tend to demand loans. Financial cooperatives should thus
design an advanced strategy to expand outreach and become a sustainable
service provider for the grass root level community. 6.Proposed Intervention Based on
the results and experiences of the cooperatives movement, and not to repeat the
problems encountered, the major solutions that should be undertaken are stated
below: Conduct cooperatives education and training in organized manner As we
have seen the past experience there was no continuous organized
cooperative education and training programs condu4cted, thus in a country like
Ethiopia the consciousness of the people is very low it isindispensable in
designing and providing savings and credit with education would bring the
members andpotential members the knowledge to teach about the SACCO’s,
personal budgeting, importance of savings, loan utilization, and other life changing
curriculums. Strategies should be designed to minimize capital and infrastructural
problems of SACCOs It is vivid that the main capital source of cooperatives is
member`s share capital. However the current situation clearly shows that SACCOs
is not in a position to collect sufficient capital from their members. This is mainly due
to capital base and low income of members. Moreover, they are not in a
position to get a credit from financial institutions due to collateral problems.
Hence a financial capacity building system should be designed in a short period of
time. Some of the majors to be undertaken are state below:- -Establishment of a
cooperative bank is the best and sustainable means to combat the problem. Saving
and credit cooperatives (SACCO) and different types of cooperatives are the main
potential resources for the establishment. Cooperative banks are common in
many countries in the hierarchies of the cooperative movement. In this regard
we can think of cooperatives banking like the Credit Agricole in France, Migros and
Coop Bank in Switzerland and the Raiffeisen system in Austria, Germany, the
Netherlands, and Belgium in Ethiopia. This can be achieved using the four tiers
cooperative structure to create one strong cooperative bank that branch out to
different regions of Ethiopia and secure a very strong competitive advantageous
than small cooperative banks per regional state. Banks established at, regional
level may not withstand the tough competitions from other financial service delivery
institutions. -To improve cooperatives involvement in the rural development
programs cooperatives storage and infrastructure (road, telecommunication etc.)
should be included in the rural development policy.Enabling legislation and regulation A
sound cooperative sector needs an enabling legislation and regulation. Thus,
laws governing cooperatives should be continuously revised to keep up with the
country’s dynamic economic system. In this regard, a special legislation that
specifically focuses on SACCOs based on recognition that SACCOs are financial
institutions and hence treats and nurtures them as such is required. However, in
view of the large number and dispersed location of the financial coops, formally
regulating them may be demanding in terms of capacity. The National Bank of
Ethiopia (NBE) cannot be expected to handle this on top of its current
responsibility of regulating and supervising banks and Microfinance Institutions
(MFIs). Specific recommendation regarding the regulatory
Journal of Economics and Sustainable Development www.iiste.orgISSN 2222-1700 (Paper) ISSN 2222-
2855 (Online) Vol.6, No.5, 2015 146 arrangement should be based on a careful
consideration of a number of issues including capacity issues as well as the effects
of different arrangements on the growth and sustainability of financial cooperatives.
Moreover, the cooperative agency can work out specific cooperative policy, strategy,
and financial cooperative laws that will address issues like future cooperative
promotion directions, supervision, vertical and horizontal integration of cooperatives,
relationship between state and cooperatives, cooperative banks, insurance etc
among other issues.Consolidation of the SACCO’s and Union’s The SACCOs and
Union’s that are not viable need to be merged to create large more
professionally run institutions and to have the economies of scale; should only be
one Union in each region. Reference Agricultural Cooperative Sector Development
Strategy 2012-2016. Federal cooperative agency . 2014. Annual Publication,
Vol1,No11 ETHIOPIA, I. G. O. 1960. Commercial Code of the Empire of Ethiopia of
1960, NegaritGazeta - Extraordinary Issue No. 3 of 1960, Addis Ababa. KIFLE
TESFAMARIAM .2011. Management of Savings and Credit Cooperatives from
the Perspective of Outreach and Sustainability: Evidence from Southern Tigrai of
Ethiopia. Research Journal of Finance and Accounting, 2(7/8), 16-20; available to
download at www.iiste.org. . NEGARITGAZETA, F. 1998a. Cooperative Societies
(Amendment) Proclamation No. 402/2004, Addis Ababa, Ethiopia.
NEGARITGAZETA, F. 1998b. Cooperative Societies Proclamation No. 147/1998,
Addis Ababa, Ethiopia. SERVICES, P. C. A. I. 2006. Developments in Saving
and Credit Cooperatives in Ethiopia: Evolution, Performances, Challenges and
Interventions with Particular Emphasis on RUSACCOs (September): Addis
Ababa, Ethiopia. WOLDAY AMHA .2003. Microfinance in Ethiopia: Performance,
challenges and the role in poverty reduction. AEMFI, Occasional Paper No. 7.
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Savings and Credit Cooperatives in Ethiopia:

Development and Challenges Kifle Tesfamariam Assistant Professor,
Department of Cooperative Studies, Mekell University E-mail:
kifletesfamariam@gmail.com Abstract Savings and Credit Cooperatives (SACCOs)
in Ethiopia are playing an active role both in rural and urban areas. Their number
has increased from 5,437 in 2006 to 14,453 in May 2014 showing a compound
growth rate of 28% per year. The aggregate number of membership during the same
period increased from 0.38 million to 1.7million and their capital increased from
one billion birr to 5.2 billion birr. These figures indicate that financial
cooperatives have had the support of the people in undertaking activities
contributing to their economic development. SACCOs are considered to have
immense potential in financing short term loans for agricultural production
technologies and undertake off-farm income generating activities in areas where
both the state and the private sector have failed. Serious efforts are being made to
strengthen capital resource of SACCO’s base through increasing members’
subscription and mobilization of savings in rural and urban areas. Therefore, the
objective of this paper is to examine the current status and challenges of SACCOs in
Ethiopia. The study is based on review of pertinent literature on SACCO operations,
policy and regulatory framework documents as well as secondary data obtained
from various sources. The paper identifies challenges such as, absence of
financial cooperatives policy and regulatory environment, weak institutional capacity,
narrow product range and inappropriate loan security requirements. Finally, it
suggests that the establishment of cooperative bank is required to combat the
problems. Keywords: Financial cooperative, savings, regulatory environment,
cooperative bank 1.Background and justification of the study Cooperatives have
played a significant role towards achieving the growth and poverty reduction
strategy by promoting income generating activities and improving access to
near banking services to rural and urban households. In response to the
changing needs of farmers-members, the government instituted an overarching
strategy of Agricultural Cooperative Sector Development Strategy 2012-2016
(ACSDS). One of ACSDS’s derivative features is to improve smallholder
farmers` productivity and income by leveraging a cooperative sector; hence
the promotion of cooperative movement is in line with the national strategy.
Moreover, in the Growth and Transformation Plan (GTP) due emphasis was given
for the cooperatives as the driving force for agricultural productivity and savings
mobilization. Based on the savings mobilized domestically a resource will be
generated to finance the various investment opportunities from time to come. Most
cooperatives have access to some financial products, but more sophisticated
services like warehouse receipts and insurance are rare. Although significant
progress has been made in recent years, many rural financial institutions generally
have insufficient capital, reach, and capacity to provide agricultural
cooperatives with services at the scale they need. The main rural financial
institutions currently functioning in Ethiopia are currently savings and credit
cooperatives (hereafter “SACCOs”) and microfinance institutions (MFIs), but
their ability to serve their target clients is limited. At present, there are
14,453 SACCOs in the country, yet they provide less than one percent of the
country’s total financing, and many struggle with low-capacity management and
governance (Kifle, 2011). The extent to which their contributions could be realized
partly depends on the expansion and growth which in turn depends on the
environment they operate and delineated by the legal and policy framework.
However, there is little understanding of what the contemporary development
challenges of SACCOs in Ethiopia. Whatever the SACCOs do should be analyzed in
terms of its contribution on the socio-economic development. Therefore, the driving
force for initiating this study is that very little is known about the current status and
challenges of SACCOs for its growth and sustainability in Ethiopia. 2.Study approach
The study is based on review of pertinent literature on Savings and Credit
Cooperatives (SACCOs) in Ethiopia, policy and regulatory framework documents,
past study reports; cooperatives annual reports as well as secondary data obtained
from various sources. Descriptive statistics is used to answer the research objective.
3.Historical development of Savings and Credit Cooperatives (SACCOs) in Ethiopia The
development and promotion of modern savings and credit cooperatives
(SACCOs) in Ethiopia is not different from that of general cooperative promotion
and development in the country. It was in 1960 for the first time in Ethiopia, during
the imperial regime, the government issued a “Farm workers Cooperative Decree”
that
aimed at organizing the landless people in to agricultural cooperatives and the ministry of national
community development was charged with the responsibility of ensuring systematic cooperative
promotion and development. Furthermore, in 1966, cooperative promotion No. 241/1966 was
proclaimed to give basis for the promotion cooperatives and it was only after this proclamation that
cooperatives began to emerge in the county. Establishment of SACCOs in Ethiopia started in the mid-
1960 and the first one was pioneered by the employees of Ethiopian Airlines in 1964. From 1964-1973,
there were 28 SACCOs and these societies formed their own national apex body known as Ethiopia Thrift
and Cooperative Societies Ltd (ENTACCS). At that time the apex had 28 SACCO with 6,247 members and
savings amounting to USD 627,752 and was also a member ofthe Africa confederation of Cooperative
Savings and Credit Association (ACCOSCA). During the Dergue regime (1974 -1991), the different
types of cooperative societies (agricultural cooperatives, handicrafts and small scale industry
cooperatives, housing cooperatives, saving and credit cooperative and mining cooperatives) were
organized, promoted, regulated and inspected by different Ministries and Institutions like Ministry of
Agriculture, Ministry of Industry, Ministry of Housing and Urban Development, National Bank of Ethiopia
and Ministry of Mines respectively. The SACCO which was under the National Bank of Ethiopia during
the Dergue regime unlike the other type of cooperative were not very much affected but
continued to mushroom except the national apex ENTACCS which was abolished. By 1990/91 when the
Dergueregime was abolished there were 495 SACCO in the country with the total membership of
119,799 and total savings amounting to 79 million birr, assets totaling of 102 million birr, and
outstanding loans of 80 million birr. Following the overthrow of the military government (1991) with
the adoption of economic reform program helped the organization, promotion and development of
cooperative societies within the framework of the free market economy. The government provided a
legal framework which is both comprehensive in manyrespects (including its ability to accommodate
coops in various sectors/sub-sectors) and incorporates universally accepted principles of cooperatives
including voluntary membership (Proclamation No. 147/1998 and amendment 402/2004). As a result
some improvements have been seen in that cooperatives started to distribute inputs, provide loan to
their members, marketing their products in the domestic and foreign market, unions (secondary
cooperatives) were formed, dividend payments were made by the unions as well as primary
cooperatives. Both ADLI (the government's development program) and the Marketing Strategy explicitly
envisage cooperatives to play a critical role in the development and poverty reduction efforts of the
country (see Ministry of Finance and Economic Development 2003, 2003; Ministry of Agriculture and
Rural Development 2005). In line with this a general legislation setting out the formal rules and
procedures by which the development and activities of all types1 of co-operatives in the country are
to be guided (Proclamation. No. 147/1998 and 402/2004) was issued. As such, it constitutes the
incentive structure that shapes the behavior of cooperatives and their members. According to the
proclamation, the objectives of cooperatives societies are to create savings and mutual assistance
among its members by pooling their resources, knowledge and property, to enable them to actively
participate in the free market economic system (Proclamation. No. 147/1998). In response to the
prevailing supportive government policy and commitment for the development of genuine
cooperatives their number and diversity increased rapidly. Nowadays, cooperatives is functioning
through important sectors like saving and credit, coffee, beekeeping, seed multiplication, sugarcane,
livestock, dairy, mining, marketing, consumer, fisheries and construction etc. Thus, cooperatives in
Ethiopia are playing multi-functional roles in rural and urban areas. As of May 2014, according to
Federal Cooperative Agency (FCA), there were 32 different kind of cooperatives with 56,044 primary
cooperatives operating in all regional states of Ethiopia with aggregate membership size of
9,165,267 (6,949,589 male and 2,215,678 female) and capital amounting to 8.8 billion birr. The regional
distribution of primary cooperatives shows that Oromia 29.3 %, SNNP 20.9%, Addis Ababa 21.6%,
Amhara 13% and Tigrai 8%. The remaining five regions (Somalia, Afar, Gambella, Beneshangul and
Harare)and Dire Dawa city collectively accounted for 6.8% of the number of cooperatives in the country.
Out of these various types of primary cooperatives 14,453(25.8%) are primary SACCOs with
membership of 1.7 million and capital of 5.2 billion birr. Within these rural SACCOs and urban
SACCOs accounts 8,383 (52%) and 6,070(42%) respectively. Currently, SACCOs constituting the second
most common type of coops (next to multipurpose cooperatives) in the country in terms of both
number, membership and capital. 4.Trends in number of SACCOs, membership and capital Despite the
ups and downs experienced, SACCO’s movement in Ethiopia has registered numerical growth over the
past decades both in terms of number, membership and capital. However, membership is still much
smaller 1The cooperative sectors covered include Agricultural, Housing, Industrial & Artisans Producers,
consumer, savings & credit, fishery, and mining cooperative societies.

against the huge potential. The table below indicates that SACCOs have been constantly growing in
terms of number, membership and capital mobilized over the period. Table1. Trends in growth of
SACCOs and capital Year No. of SACCOs Membership Capital ( Birr) Capital per member (Birr) 1991
495 119,799 78,772,710 658 1995 522 116,619 111,173,060 953 1999 716 156,938 174,577,503
1,110 2004 2,146 155,120 504,334,084 3,251 2006 5,437 381,212 994,960,169 2610 2008
7,834 383,311 1,426,550,110 3722 2012 10,270 910,275 1,206,319,160 1325 2013 11,850
1,037,788 485,064,779 467 2014 14,453 1,736,122 5,126,912,681 2953 Source: Wolday Amha
(2003) and Federal Cooperative Agency (May 2014). As can be noted from the above table 1, the
number of SACCOs has increased by 84% between 2008 and 2014 from 7,834 to 14,453. Similarly, the
aggregate membership has increased from 383 thousands to 1.7 million over the same period
representing over and above four times increase. The capital of the society has also shown an increase
of 259% over the same period. 4.1.Geographical distribution of Savings and Credit Cooperatives
(SACCOs) Due to non-availability of sufficient data about the SACCOs, it is difficult to analyze the
financial performance of SACCOs. In general, table2 presented the distribution of SACCOs by region,
their membership size and capital. The distribution of SACCOs among the regional states also presents
sharp difference with Oromia and SNNP representing the highest numbers of SACCOs. Oromia
represents the largest number of SACCOs with 5,334(36.9%), followed by SNNP with 3,473(24%),
Amhara with 2,520(17%), Addis Ababa 1,705(11.8%), and Tigrai with 834(5.8%) SACCOs. The aggregate
numbers of SACCOs in the rest of regional states constitutes the difference. In terms of number of
membership, Oromia constitutes the largest number of members, followed by Addis Ababa, SNNP and
Amharain the order given. Table2. Distribution of SACCOs by region Region No. of SACCOs Membership
Capital (Birr) Male Female Total Oromia 5334 432,709 250,576 683,285 132,986,708 SNNP 3473 188,059
110,945 299,004 112,780,258 Amhara 2520 139,218 71,699 210,017 96,176,921 Afar 120 1,033 4,249
5,282 965,702 Tigrai 834 112,318 76,086 188,404 216,000,312 Somali 166 1,796 5,953 7,749 8,929,063
Gambella 40 567 2,186 2,753 379,239 BGS 44 432 1,126 1,558 288,098 Harare 66 1,116 1,746 2,862
2,342,398 Dire Dawa 151 55 3,365 3,420 961,679 Addis Ababa 1,705 182,582 148,306 330,888
4,555,102,303 Total 14,453 1,059,885 676,237 1,736,122 5,126,912,681 Source: Federal Cooperative
Agency, May 2014. 4.2. Savings and Credit Cooperatives (SACCOs) Unions The existence of clear and
accommodating governmental policy and all-inclusive structures and the government’s commitment
to transform the subsistence economy have created conducive environment for the development of
voluntary based SACCO unions in the country. Accordingly, there are 89 SACCO unions with 2,753
primary SACCO members and a capital amounting to 618,654,727 birr. As to their distribution by
regions, there are 26 SACCO unions in Oromia(29%) and SNNP(29%), 23 in Amhara(26%), 9 in
Tigrai(10%), 2 in Addis Ababa(2%), 1(3%) each in Benishangul/Gumuz, Harare and Dire Dawa. Detail
SACCO unions found ineach region, primary societies affiliated to the unions and capital is indicated
below on Table 3. Table3. Distribution of SACCO Unions and primaries by Region Region No. of SACCO
Unions No. of member SACCOs Capital(Birr) Oromia 26 696 483,018,203 SNNP 26 668 67,022,161
Amhara23 778 36,509,792 Tigrai 9 276 22,804,866 BSG 1 5 240,000 Harare 1 7 382,000 Diredawa 1 43
516,000 Addis Ababa 2 280 8,161,705 Total 89 2753 618,654,727 Source: Federal Cooperative Agency,
May 2014. 5.Challenges of Savings and Credit Cooperatives (SACCOs) in Ethiopia The business mission
of SACCOs is to provide financial service to members and become viable community based financial
institutions by providing value-added services such as education, training and financial services on a
sustainable basis. In connection with this, their progress made by both primary and union SACCOs in
terms of providing demand driven financial services to members and ensuring the sustainability
during the last 50 years of its existence is not very impressive. According to different document
analysis and field experience results indicate that SACCOs in Ethiopia are entangled by the number
of challenges that need to be addressed in order to enable them improve on soundness and stability,
effectiveness and efficiency, governance, product diversity and integration to the formal financial
system. The major challenges of primary and union SACCOs include the following. Lack of awareness
Members are not well informed about the basic cooperative principles and values and create the
inspiration among members to rally around their grass root financial service institutions. Regrettably, no
special efforts have been made in this direction. People look upon these institutions as means for
obtaining loans from the government and / NGOs. Likewise, the SACCO unions established are based on
the weak primary SACCOsthat were established mainly to access loan fund from rural financial
intermediation program (RUFIP). So long as people expect to get something from the government,
they see to it that societies somehow continue to function.Weak governance Management
committee members have no knowledge about financial management. In most cases SACCOs are unable
to employ high caliber management staff and the burden of due diligence is left to members who may
have limited education on management. The committee members elected by the general assembly to
lead the affairs of the societies for fixed period do not have the necessary capacity to bring good
governance, not undergone in skill upgrading. Thus, good governance is the main and crucial weakness
of SACCOs. Weak financial management system The financial system in place including accounting
and audit works are very weak. Most of the primary SACCOs are not maintain proper financial
records and produce reports timely. Similarly, the accounts of the societies are not timely audited with
three to four years lag in the case of certain primary societies. This is mainly due to limited capacity
and inadequate personnel base of the regional cooperative agency and Woreda cooperative desk
to provide such type of services timely as required by the cooperative proclamation 147/1998 and
bylaws. Following, SACCO are not in a position to pay dividends to members yearly unless the accounts
are audited and the societies confirm profitable. Limited outreach The SACCO movement has only
registered about 17 million members until May 2014 despite the huge potential to enlarge membership.
They continue to play significant economic and social roles in their communities. Here is a brief overview
showing just how important SACCOs are to the economies of most countries. -In Colombia, co-
operatives provide 87.5% of short term loan provision in 2007. -In Kenya, co-operatives are responsible
for 31% of national savings and deposits. -In France, co-operatives are responsible for 60% of bank
deposits. Limited outreach is thus, a challenge to the SACCO movement in Ethiopia. Therefore, a lot has
to be done in expanding the outreach of members in the SACCO movement; as this will enable the
societies mobilized moresavings to finance loan portfolios and ensure sustained growth of the societies.
Lack of differentiated products Apart from the above stated problems, cooperatives have not yet
provided demand driven products that could address the needs of their members in spite of their older
age and better outreach to the grass roots level and unbanked community. In general, there are no
planned and structured ways of developing new products orrevising the existing. Policy and
regulatory environment Lack of appropriate supervisory and regulatory environment for financial
cooperatives including SACCOs could hamper the development of sustainable, financially prudent, and
economically viable institutions. There is a need for special financial cooperative law due to the unique
feature of financial cooperatives. On the one hand a good legal framework governing financial
cooperatives should empower them, enabling their development and encouraging outreach towards
their target population while on the other hand, it should ensure that financial sector rules are
appropriately applied to protect members against poor financial management. So, the state should have
a regulatory role emanating from its responsibility of establishing procedures to protect both the
cooperatives and their representatives. In line with this, in Ethiopian regulation governing financial
cooperatives is required to maintain prudential financial norms and reduce governance risks.
Currently, SACCOs are organized, promoted, regulated and supervised under the general cooperative
law/proclamation No.147/98. The regulation requires that all cooperative types should be
promoted, regulated and supervised under the umbrella of one authority. Consequently, SACCOs
have been taken away from the NBE and placed under the supervision of this unified authority. The law
also defines, among other things, the relationship between government and cooperatives, permits
vertical structure, introduces holding of share capital and dividend payment based on the decision of the
General Assembly. The lack of a separate financial cooperatives law to promote cooperative banking is a
major constraintto the development of SACCOs. Some of the big SACCOs in Addis Ababa (in terms of
savings mobilized andassets owned) have surpassed the minimum requirement to establish even a
commercial bank according to the banking law of the country. Due to lack of an appropriate financial
cooperative law, their resources have been tied up and deposited in commercial banks. Efforts so far to
establish cooperative banks have been frustrated; what were initiated as cooperative banks had to
eventually register under the commercial banks act due to the lack of a cooperative law. Another major
constraint is the lack of adequate trained manpower in the finance area to regulate and supervise
SACCOs according to standard financial principles. Many SACCOs complain about the restrictive
legal requirement that their accounts be audited by an appropriate authority. Without audit it is difficult
to assess whether cooperatives are operating efficiently and are providing the necessary service to their
members or not. Audit is also important to build public confidence in the SACCOs thereby
enabling them to mobilize more voluntary savings. Yet, the authority has not been able to
regularly audit the accounts of SACCOs due to shortage of auditors. Recently some have opted to
hire external audit firms, but is too expensive for most. Even though the establishment of an
appropriate supervisory and regulatory environment is undisputable, it lacks clearly articulated
and organized product development and revision policies in the SACCOs. The policy does not
encourage the development of new products and product development/revisiontakes place arbitrarily,
mostly initiated by mangers and experts. A product revision or the development of new products only
arises based on problems prevailing in the SACCO and not made following the product cycle and
assessments made earlier. Testing of the product is not practiced in all SACCOs, if it has been believed
that it is beneficial to members or workable it will be directly promoted without passing the testing
stage. The absence of SACCOs Federation which will conduct research and assume supervisory roles has
constrained SACCOs and their unions from being engaged in the development and revision of financial
products. Such Federation will have the advantages economies of scale and ensure sustainability. It will
ease and support the promotion of financial literacy, create financial prudence, help in the development
of new products and put in place appropriate supervision activities to create financially viable and
sustainable institutions. Many SACCOs now feel that they have reached to the level of forming
secondary level associations and, hence the number of SACCO unions is increasing both in rural and
urban areas. The regulation is very restrictive in that it does not allow SACCOS to engage in income
generating activities (other than lending to members) or to lend to non-members thereby greatly
constraining their capital base and ability to diversify their portfolio. Lending to members constitutes
the main source of income with saving as the only source of loanable funds. Unfortunately, savings in
most SACCOs is not attractive partly due to the low interest rate on savings. Hence, SACCOs are often
faced with serious shortage of finance for loans. The dependence of SACCO loans on member-
personal guarantor(s) also restricts access as finding suchguarantor has remained problematic. Both
spouses have to agree to become personal guarantors for a loan. The loan may not be approved if one
of the parties refuses the request to become a guarantor. Even members of other SACCOs cannot
become guarantors for loans. Thus, the personal guarantor-based loan system has been reported to be a
major challenge for the development and sustainability of SACCOs. The policy is very static and is not
changing to changing environment. Inappropriate loan security requirements SACCOs insist on personal
member-guarantors while soundness of the purpose of the loan is irrelevant. The personal guarantor
requirement inhibits some from borrowing because, given that the guarantor has to be a non-borrower
and cannot borrow until his obligation as guarantor is settled (or transferred), getting a guarantor is
difficult. It is sometimes argued that the low level of operation of SACCOs as well as the 100%
security (through borrower’s own savings and guarantee) rendered risk assessment unnecessary.
However, this might not be a prudent approach in view of the importance of sustainability in the
context of a dynamic environment. SACCOs requirement of 100% security through own saving and
member-guarantor is too rigid and restrictive, hence is not a viable option; more so in view of the fact
that most members tend to demand loans. Financial cooperatives should thus design an advanced
strategy to expand outreach and become a sustainable service provider for the grass root level
community. 6.Proposed Intervention Based on the results and experiences of the cooperatives
movement, and not to repeat the problems encountered, the major solutions that should be
undertaken are stated below: Conduct cooperatives education and training in organized manner As we
have seen the past experience there was no continuous organized cooperative education and
training programs condu4cted, thus in a country like Ethiopia the consciousness of the people is
very low it isindispensable in designing and providing savings and credit with education would
bring the members andpotential members the knowledge to teach about the SACCO’s, personal
budgeting, importance of savings, loan utilization, and other life changing curriculums. Strategies should
be designed to minimize capital and infrastructural problems of SACCOs It is vivid that the main capital
source of cooperatives is member`s share capital. However the current situation clearly shows that
SACCOs is not in a position to collect sufficient capital from their members. This is mainly due to capital
base and low income of members. Moreover, they are not in a position to get a credit from
financial institutions due to collateral problems. Hence a financial capacity building system should be
designed in a short period of time. Some of the majors to be undertaken are state below:- -
Establishment of a cooperative bank is the best and sustainable means to combat the problem. Saving
and credit cooperatives (SACCO) and different types of cooperatives are the main potential resources for
the establishment. Cooperative banks are common in many countries in the hierarchies of the
cooperative movement. In this regard we can think of cooperatives banking like the Credit Agricole in
France, Migros and Coop Bank in Switzerland and the Raiffeisen system in Austria, Germany, the
Netherlands, and Belgium in Ethiopia. This can be achieved using the four tiers cooperative structure to
create one strong cooperative bank that branch out to different regions of Ethiopia and secure a very
strong competitive advantageous than small cooperative banks per regional state. Banks established
at, regional level may not withstand the tough competitions from other financial service delivery
institutions. -To improve cooperatives involvement in the rural development programs
cooperatives storage and infrastructure (road, telecommunication etc.) should be included in the rural
development policy.Enabling legislation and regulation A sound cooperative sector needs an
enabling legislation and regulation. Thus, laws governing cooperatives should be continuously
revised to keep up with the country’s dynamic economic system. In this regard, a special legislation that
specifically focuses on SACCOs based on recognition that SACCOs are financial institutions and hence
treats and nurtures them as such is required. However, in view of the large number and dispersed
location of the financial coops, formally regulating them may be demanding in terms of capacity. The
National Bank of Ethiopia (NBE) cannot be expected to handle this on top of its current
responsibility of regulating and supervising banks and Microfinance Institutions (MFIs). Specific
recommendation regarding the regulatoryarrangement should be based on a careful consideration of
a number of issues including capacity issues as well as the effects of different arrangements on the
growth and sustainability of financial cooperatives. Moreover, the cooperative agency can work out
specific cooperative policy, strategy, and financial cooperative laws that will address issues like future
cooperative promotion directions, supervision, vertical and horizontal integration of cooperatives,
relationship between state and cooperatives, cooperative banks, insurance etc among other
issues.Consolidation of the SACCO’s and Union’s The SACCOs and Union’s that are not viable need
to be merged to create large more professionally run institutions and to have the economies of
scale; should only be one Union in each region. Reference Agricultural Cooperative Sector Development
Strategy 2012-2016. Federal cooperative agency . 2014. Annual Publication, Vol1,No11 ETHIOPIA, I. G.
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of 1960, Addis Ababa. KIFLE TESFAMARIAM .2011. Management of Savings and Credit Cooperatives
from the Perspective of Outreach and Sustainability: Evidence from Southern Tigrai of Ethiopia.
Research Journal of Finance and Accounting, 2(7/8), 16-20; available to download at www.iiste.org. .
NEGARITGAZETA, F. 1998a. Cooperative Societies (Amendment) Proclamation No. 402/2004, Addis
Ababa, Ethiopia. NEGARITGAZETA, F. 1998b. Cooperative Societies Proclamation No. 147/1998, Addis
Ababa, Ethiopia. SERVICES, P. C. A. I. 2006. Developments in Saving and Credit Cooperatives in
Ethiopia: Evolution, Performances, Challenges and Interventions with Particular Emphasis on
RUSACCOs (September): Addis Ababa, Ethiopia. WOLDAY AMHA .2003. Microfinance in Ethiopia:
Performance, challenges and the role in poverty reduction. AEMFI, Occasional Paper No. 7.