Loan Conditions of Commercial Banks and Micro Finance Institutions

This note presents information on loan conditions of commercial banks and microfinance institutions (MFIs) in Ethiopia. The study, conducted by GTZ-Micro and Small Enterprises Development Program, aims to help micro and small enterprises (MSEs) overcome lack of information on financing possibilities.

One of the most significant problems MSEs in Ethiopia face is lack of access to finance. This hinders them from investing in improved production facilities, infrastructure and supplies as well as marketing and promotional activities. The Government of Ethiopia established a legal framework for MFIs to provide financial services to poor households when it became clear that commercial banks and NGOs were unable to service this segment in a profitable or sustainable manner.

The study gathered information through questionnaires sent to 20 MFIs and 9 commercial banks. The information provided by banks and MFIs were clarified through personal visits and telephone calls.