Banking the unbanked rural population of Amhara region (Ethiopia)

Banking the unbanked rural population of Amhara region (Ethiopia)

Bahir Dar, EthiopiaBahir Dar, Ethiopia
Organization type: 
nonprofit/ngo/citizen sector
Project Stage:
$250,000 - $500,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

ACSI offers financial services that mainly targets the rural community. It currently has 240 branches and more than 1 million depositors and 775000 borrowers

About Project

Problem: What problem is this project trying to address?

ACSIs financial inclusion pre-pilot project(ACSI-FIP) aims at serving rural people residing far from bank branches. Experiences so far showed that the majority of these people, if they are to get financial services from these branches, they will be required to walk a distance of 5 to 20 kilometres to get to branches.It is also estimated that they could spend 10 to 30 Birr ($0.55-$1.66) on transport using the bus. This is excluding the time taken and the associated opportunity cost of walking on foot. Serving this significant segments of people particularly with savings services using conventional branch networks is clearly a costly activity. ACSI-FIP is the first of its kind in Ethiopia that currently opening a new savings transaction window for this unbanked population.

Solution: What is the proposed solution? Please be specific!

ACSI- financial inclusion pre-pilot project aims at making financial services inclusive to the un-banked rural population. It achieves this by deepening the penetration of formal financial institutions through establishing satellite offices in rural markets by creating ‘satellite branches'. For this, POS (point of sale devices are deployed flexibly in multiple market locations. Adopting such technologies requires ACSI to collaborate with a Technology Service Provider (TSP) that enables the deployment and management of the ‘POS channel’linked to its CBS (core banking software) at satellite branches. In order to foster usage of financial services at satellite branches by the rural people, ACSI-FIP works with social transfer programs(payments-led) and voluntary(savings-led) communities in the project locations. The initiative is designed to ensure access to financial services to chronically food insecure households and potentially surplus producing farmers and other rural inhabitants.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

The project is designed to help rural people access modern financial services particularly savings services. It targets two different segment of the larger community in Ethiopia-the agriculturally surplus producing and the chronically food insecure districts of Amhara region in Ethiopia. As such, voluntary savers living in hard to access areas can be given a chance to access modern voluntary savings services through the POS technology. On the other hand the poorest segment such as the chronically food insecure rural households can be taught about savings services and be encouraged to practice it through linkages made with government conditional cash transfer program. The household can decide how much to leave in her/his savings account from the social transfer amount. For the above to happen, a financial inclusion support program has been initiated from both the government and the donor (Bill & Melinda Gates Foundation). ACSI has developed a comprehensive design document with the consultancy support obtained through the Gates Foundation. Enrollment and payment activities have been implemented as per the design and the work plan attached to it. As per the implementation so far more than 8,361 have got their social transfers through their savings accounts, of which 67% has left some amount in their respective savings accounts at ACSI voluntarily. In the surplus producing district and after the start of voluntary savings mobilization using the same technology, on July 21st 2012, more than 200 has participated voluntarily. They have been able to open and transact savings.

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

The market competition for financial services, particularly for rural markets is generally low in Ethiopia. Conventional banks in Ethiopia operate in major towns. Microfinance institutions in the country operate in different geographic locations leaving little ground for market competition. There are currently informal financial institutions that hold the larger sum of rural cash in terms of savings. As another challenge, many new players including commercial banks may also gradually enter into the rural market. We expect that the use of technologies, the door step services, and the integrated financial education services will give ACSI a competitive advantage over these informal players.

Founding Story

It was on the 26th of May, the news went as follows: “Ethiopia’s first electronic conditional cash transfers (CCTs) “go live” for PSNP1 beneficiaries in rural Amhara, Ethiopia”. As stated in the news, 64% of the payees retained some of their PSNP transfers in their ACSI savings accounts for future needs Everybody has been very happy seeing these first rural based electronic transactions being live. Clients were also excited with what they are experiencing. One of the clients who got the opportunity to receive their social transfer money through authentication using finger prints said. “Thank you for training us in how to use our technology and savings accounts, we will save a lot of time and money using this system” Managing directors of the ACSI and the TSP sent an SMS congratulation message to project managers and to each other when they heard that the first electronic payment (savings withdrawal) has happened in one of the remote rural communities of Ethiopia.
About You
Amhara Credit and Savings Institution (ACSI)
About You
First Name


Last Name


About Your Organization
Organization Name

Amhara Credit and Savings Institution (ACSI)

Organization Country

, AH, Bahir Dar

Country where this project is creating social impact

, AH, Bahir Dar

How long has your organization been operating?

More than 5 years

Has the organization received awards or honors? Please tell us about them

ACSI has received many awards; to name a few of the recent ones:
a.African Banker awards: Microfinance Bank of the year, 2010
b.Global microfinance Impact Awards, 2009
c. Grammeen Foundation microfinance excellence Award, 2007
d. International Award for Excellence and business prestige, 2007

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How long have you been in operation?

Operating for less than a year

Which of the following best describes the barrier(s) your innovation addresses? Choose up to two

Access, Cost.

Social Impact
Please describe the goal of your initiative; outline what you are trying to achieve

The goal of ACSI-FIP is to make financial services inclusive of the rural unbanked population through the use of mobile technologies, specifically Point of Sale (POS) devices. For this it will at first test,
•whether conditional cash based social transfer payments (plus other services, e.g., remittances payments) can drive sufficient volumes to make out of branch banking sustainable
•how to tie financial services such as savings with conditional cash transfer payments and explore other transfer payments (donors' and government of Ethiopia’s)
• whether a strong savings market can be tapped by ACSI using out-of-branch models and,
• Understand specific products for ACSI agricultural finance entry points
The approach helps ACSI to streamline its electronic and/or mobile banking model

Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)

Physical and other accessibility obstacles that prevent communities from reaching financial services, The lack of affordable financial products tailored to the needs of underserved and excluded communities,.

If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:
For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?

Ethiopia currently has predominantly agrarian economy. More than 85% of the population live in rural areas.ACSI currently operates mainly in Amhara region, the second most populus region of the country. The Amhara region has more than 20 million people with more than 85% of them living in rural areas. Ethiopia as well as the Amhara region has very low financial inclusion rate. Studies show that only about 14% of the adults have access to formal/semi formal financial services. The ACSI-Financial inclusion pre-pilot project targets to reach the rural community, particularly those who reside from distant locations from ACSI or other bank branches. It targets both the poorest of the poor such as the food insecure households as well as the moderate poor such as surplus producing farmers. It is also best solution to offer inclusive financial services to the rural youth who otherwise would be excluded from the modern banking system. In the process, the women poor also get special advantage.

Could your solution work in other geographies or regions? If so, where?

The initiative is to be scaled up to other parts of the region where ACSI is operating starting from January 2013. In addition, it is also learned that other microfinance institutions (MFIs) in the country will adopt the initiative. Banks, MFIs and Technology Service Providers (TSPs) will get a new opportunity to learn and augment their services to the community. The ultimate benefit is to the community of Ethiopia who currently are under-served as far as financial services are concerned. Given the fact that out-of branch banking in remote rural areas is yet to be optimized in many developing countries, there is also great potential that this solution will be shared to other countries in which they can adapt into their situations and implement accordingly. Specifically speaking:
One is that other districts of Amhara region will get the service through roll-out phases.
Other regions (other than Amhara) and other countries will be exposed to the model of intervention and adapt it

If your solution is dramatically successful, how will things be different in 10 years?

Early stage evaluation of the project has showed that the solution has greater chance to success in this and in its other phases. Greater number of people will be served with savings and other financial services. National level efforts to achieve targets related to financial inclusion (such as domestic savings rate and financial inclusion rate) will be supported greatly. The poverty rate of the country will be enhanced as many people’s livelihood will be improved due to increased access to financial services. The outcome will benefit MFIs like ACSI to grow dramatically and become sustainable and with greater impact on the lives of the clients. Its service diversification will be augmented; the model will help ACSI to deliver full-fledged banking services. Customer satisfaction and the associated impact benefits will be optimized. Loans will be fully financed from savings.
It is estimated that ACSI's customer base, portfolio amount, and clie impact will grow by more than five times.

What will have had to have changed to make this happen?

In order to optimize our financial services reach and hence attain financial inclusion objectives, it is expected that the current initiative will be enhanced both in terms of content and efficiency. As part of its content enhancement, additional technology solutions suitable to the different segment of targeted communities will be introduced. The agent model that uses individual phones and other kiosk based IT solutions can be explored further. In addition, a business correspondence model correctly aligned with TSPs and ACSI's delivery systems need to be established. The current mobile operating system in the country is expected to grow further and meet these and other needs of the project. Staff training as well as customer education accompanied by different modes of financial literacy campaigns needs to be implemented concurrently. Funding requirements of the initiative, especially areas needing high capital but worth investing for optimal expansion needs to be explored well.

What has been the impact of your solution to date?

Customer enrollment at the food insecure district started in 20th of April, 2012. A total of 8,876 household heads has been enrolled and opened voluntary savings from ACSI using the satellite structure. Out of these, ACSI has successfully paid 8,361(94% of the total)household heads electronically. This means that 8,361 chronically food insecure households has been able to use their savings accounts at ACSI. They received their social transfer money through the new savings linked POS based mobile payment system. About 67% (5700) people have saved some part of their social transfer cash (US$1.2 on average) into their savings account. In a surplus producing district, total accounts opened equals 200 with US$2.8 average savings balance. In addition the same people have received financial education training which is currently helping them to increase their understanding about savings.
Most importantly, the potential to reach more unbanked people in the country has been clearly understood.

What is your projected impact over the next five years?

Recently (June 2012) the ACSI board meeting has approved the proposal that ACSI to scale up the mobile banking services system to the rest of the rural locations of the MFI's operational areas, showing the presence of synergies and management buy-in for the scaling up of the financial inclusion project. Successful roll out of the project will help savings mobilization to be significant helping ACSI to finance its loans 100% from savings. The client, including the rural poor, the women poor and the youth outreach and livelihood improvement will greatly be increased(projected growth doubling the recent last three years average growth by end of next five years).
This will help ACSI to contribute lion share in meeting Ethiopia's national five years goal(Growth and Transformation-GTP 2011-12)

What barriers might hinder the success of your project? How do you plan to overcome them?

Barriers to the current financial inclusion project are the poor infrastructure (particularly of the road network, telecommunication and power services) existing in the rural areas of the operations. Telecommunication related challenges are going to be mitigated with a partnership that is going to be established among ACSI, a TSP, and Ethio-Telecom. Dealing with other infrastructure challenges will be promising given the current encouraging effort of the government in improving social services. The government has plan of connecting rural village centers with all weather roads and power supply. ACSI is also working to also have alternative power solutions (such as solar energy and fuel using fuel based generators).

Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact

Lessons learned from the pre-pilot project is consolidated and become ready for scale up. Access to savings accounts is guarant

Identify three major tasks you will have to complete to reach your six-month milestone
Task 1

Strategy and monitoring system development incorporating them into ACSI over all and annual plan

Task 2

Staff training on new processes and on the use of end point devices, particularly of the POS devices

Task 3

Develop and implement comprehensive budget and marketing plan for the scaling up of the financial inclusion project

Now think bigger! Identify your 12-month impact milestone

The umber of active savings accounts at ACSI increased by 120,000 and implemented in a total of 16 branches; money transfer plat

Identify three major tasks you will have to complete to reach your 12-month milestone
Task 1

Continue to provide quality services also track operational data as per the monitoring system developed

Task 2

Implement marketing and customer education extensively and as per the plan

Task 3

Monitoring and evaluating of achievements and challenges

Tell us about your partnerships

ACSI financial inclusion project is implemented in collaboration with different government and non-governmental organizations. The Bill and Melinda Gates Foundation provides financial support covering the cost of project designing and implementation. Kifiya Technologies plc, locally owned Technology Service Provider, provides the needed technology service. Ministry of Finance, Food Security coordination office,and Agricultural Transformation Agency (ATA) collaborate the implementation of the project representing and linking to the national savings program of the government. The government

Are you currently targeting other specific populations, locations, or markets for your innovation? If so, where and why?

To enhance rural development by improving the number of banked population in rural Ethiopia, ACSI-FIP targets rural communities, Chronically food insecure households in food insecure districts of the region are one of the targeted communities. Given that these segment of the population has conditional cash transfers,secured and efficient payment services linked to savings services is delivered to them. There are about 2.5 million food insecure household people in Amhara region (and about 13,000 in the pilot location)
Moreover,surplus producing rural areas are also targeted.

What type of operating environment and internal organizational factors make your innovation successful?

ACSI recently introducing a continuous improvement in customer services. This applies both for external and internal customers. In order to the initiative to be successful, we believe that there should be high customer service excellence along the operations as well as other aspects of the project. That is, delivering what has been promised, dealing well with problems/queries, and always targeting to exceeding customer expectations.
In addition, aligning the project objectives to the corporate and other individual departments and stakeholders is also critical for bringing success to this project is still important.
The model also requires development of systems and effective business correspondence(BC). It is good that ACSI internal structure to easily aspire effective alliances.

Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list

ACSI-FIP can contribute towards dialogues that aim at developing sustainable financial inclusion model to specially for locations such as in Ethiopian rural areas where the people's settlement and economic activity set ups are mostly unique.On the other hand, we also need to expose the initiative to best practices elsewhere and support it with additional resources(technical and monetary resources)