Dedebit Credit and Savings Institution (DECSI) was established in 1997 as a microfinance institution (MFI) providing credit and savings services for the rural and urban poor in the Tigray region of Ethiopia.
DECSI evolved from a program established by the Relief Society of Tigray (REST), a local NGO founded in 1978. In 1993, REST conducted a socio-economic study on rural poverty in Tigray that indicated an unmet demand for finance by the rural poor. Based on this study, the Rural Credit Scheme in Tigray (RCST) was established under REST in the following year.
The goal of RCST was to provide affordable and accessible microfinance services to poor communities in the Tigray region. Due to the rapid growth of its operations, RCST formally registered in 1997 with the National Bank of Ethiopia, the country’s central bank, and began operation as an MFI under its new name Dedebit Credit and Savings Institution.
The mission of DECSI is to provide microfinance services to individuals not able to access the formal financial sector. The ownership structure of DECSI is 25 percent government-owned and 75 percent owned by nongovernmental organizations (NGOs), farmers associations and women and youth associations. By the end of 2008, DECSI had a gross loan portfolio equivalent to USD 145.8 million and approximately 464,000 borrowers. According to DECSI’s own figures, about 51 percent of its clients are individual borrowers, and the remaining borrowers consist of “solidarity groups” and village banking societies. The average loan balance per borrower is equivalent to USD 314. By 2008, DECSI had a total deposits equivalent to USD 40 million and approximately 261,000 depositors. DECSI maintains 139 offices which employ 1,887 staff.
In 2008, DECSI’s total assets were equivalent to USD 185.8 million. DECSI’s overall financial performance in 2008 was measured by a return on assets (ROA) of 2.06 percent as compared to ROA of 3.85 percent in 2007. Likewise, DECSI’s return on equity (ROE) reflected this decrease in 2008 of 10.51 percent from 18.82 percent in 2007.
The products and services provided by DECSI fall into three categories: loans, voluntary savings and fund transfer services. DECSI’s loan products are as follows:
– General Loans have a maximum loan amount of ETB 5,000 (USD 392) and a maximum loan term of 12 months. General loans are typically given for income generating activities, such as agriculture, trade and handicrafts.
– Agricultural Package Loans have a maximum loan amount of ETB 5,000 (USD 392) and a maximum loan term of 12 months. These loans provide rural households, that qualify under government-sponsored “Agricultural Package Program, food security at the household level by financing the purchase of dairy cows, dairy goats, beehives, water pumps and poultry.
– Agricultural Input Loans have a maximum loan amount of ETB 350 (USD 27) and a maximum loan term of 8 months. These loans are disbursed to Agricultural Extension Program beneficiaries for the purchase of inputs, such as soil fertilizer, pesticides and seeds. The government sponsored Agricultural Extension Program provides training to farmers, promotes agricultural research and disseminates technology to farmers.
– Civil Servant Loans have a maximum loan amount of ETB 8,000 (USD 628) and a maximum loan term of 24 months.
– Micro and Small Enterprise (MSE) Loans have a maximum loan amount of ETB 30,000 (USD 2,356) and a maximum loan term of 36-48 months.
– Housing Loans information is not available.
DECSI offers two types of savings accounts: compulsory deposits of group and village center savings and voluntary deposits from individuals. DECSI’s money transfer services also cover pension payment services for retired military and civil personnel.
A study commissioned in 2003 by DECSI and Norwegian People’s Aid found that DECSI clients reported that their life situation had improved over five years as compared with non-clients. Compared to non-clients, DECSI clients found improvement in terms of income, consumption and assets. DECSI clients also seemed to have more food security and were less vulnerable to emergencies. Based on the constraints of the study, it was difficult to determine the economic and non-economic impact of DECSI at the community level. However, the study concluded that the existence of DECSI could be linked to increased agricultural productivity, improved market access and a reduction of interest rates charged by moneylenders.
Mr. Ataklti Kiros is the general manager of DECSI. In July 2008, Mr. Kiros gave a lecture titled, “Institutional Performance and Challenges in financing the Rural Value Chains,” at the East African Sub-Saharan workshop co-hosted by the African Rural and Agricultural Credit Association (AFRACA) and the Commercial Bank of Ethiopia. DECSI receives funds and loans from international donors, government agencies and local sources. Donors of DECSI include the following: Norwegian People’s Aid, International Fund for Population Development (IFPD), Glimmer of Hope, RUFIP Scheme and the International Agricultural Development Fund. DECSI has loans from the Development Bank of Ethiopia and the Commercial Bank of Ethiopia and receives matching funds from the Ethiopian government, including the Bureau of Trade and Industry and the Food Security Co-ordination Office.
Additional Resources:
[1] DECSI website unavailable, however, information available on Ethiopian trade association website: http://www.bds-ethiopia.net/finance/dedebit.html
[2] Microfinance Information Exchange, Inc. (MIX) report on DECSI: http://www.mixmarket.org/mfi/decsi; DECSI Audit Report, Year-End 2008: http://www.mixmarket.org/sites/default/files/DECSI_AFS_08.pdf
[3] REST website: http://www.rest-tigray.org.et/index.php?option=com_content&view=article&id=71&Itemid=65
[4] Norwegian impact study on DECSI: http://english.nupi.no/Publications/Books-and-reports/2004-2000/Credible-Credit.-Impact-Study-of-the-Dedebit-Credit-and-Savings-Institution-DECSI-Tigray-Ehtiopia
[5] CGAP pilot on Ethiopia: http://www2.cgap.org/p/site/c/template.rc/1.26.11123/
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