One of Ethiopia’s nine states, Somalia State, got its second micro finance institution (MFI) which is dubbed Rays MFI. The institution is going extend loan with an interest rate ranging from 10 percent to 20 percent.
It was on Monday, January 26, 2015 Rays secured its license from the National Bank of Ethiopia (NBE). According to Abdiaziz Hassan, manager of the Institution, branches will be opened in Addis Ababa, Wajale, Hargelle and Fik in three weeks time. This is in addition to the two branches; Jigjiga and Gobe branches. The plan is to open eleven branches across Somalia State and the two federal cities during a year time.
The founding shareholders of Rays are six individuals and they found the company in July 2014. They had a paid-up capital of 200,000 Birr.
The new MFI, among other loan services, will be rendering Group Guaranteed Loan (GGL). According to Fortune GGL is a mechanism which allows a group of individuals to provide collateral or loan guarantee through group repayment pledge.
According to the newspaper initial average loan for the first cycle of clients reaches 4000 Birr during the first year of operation. The interest rate on the other hand is going to be 10 to 20 percent.
Rays will also extend loan to cooperatives through co-signatory or collateral of immovable or vehicles. The average loan for the first cycle is going to be 7,500 Birr for the first year of operation. On the other hand the loan term is going to be one year with monthly repayment frequency and 10 percent interest rate.
Rays has a compulsory saving system that requires all active borrowers. Saving is also allowed for non debtors with a minimum saving of 10 Birr for individuals and 100 Birr for fictitious persons.
In addition to this the company has concluded a deal with Neptun Software Limited for the supply of core banking system. Neptun is going to install Orbit-R, a core banking solution designed for MFIs.
According to Badanga Raymond, country manager of Neptune Software Limited, the company is going to start installing the system in 10 days and it will take two months. Integrating the system with ATMs, Mobile banking and other systems on the hand, will take another one month.
Source: Fortune
