Outreach and sustainability of the Amhara Credit and Saving Institution (ACSI), Ethiopia

Abstract

The two empirical questions of outreach and institutional sustainability were the themes of this paper taking ACSI as a case. The study employed both primary and secondary data. Evaluations of outreach, operational and financial self-sufficiencies were made using the operational and the audited financial reports for the period 2001 to 2005. The field survey was conducted with a sample size of 118 clients selected randomly from two sub branch offices and the descriptive statistics was analysed using SPSS. ACSI has covered 77% of the Amhara region in its operation by the end of 2005. It served more than half a million clients. Over 1.6 million loans had been disbursed worth Birr 1.5 billion. The expansion was not only in loan portfolio but also accompanied with aggressive savings mobilization as a perennial source of loanable fund. ACSI financed more than half of its portfolio from savings in 2005. By the end of 2005, the institution was operationally and financially self-sufficient at 119.9% and 115.3% respectively. ACSI is among a few microfinance institutions which are able to achieve the highest efficiency at the lowest cost per borrower. The operating cost per Birr lent was as low as five cents in 2005. Such lowest operational costs did contribute to the attainment of operational and financial self-sufficiencies. ACSI has a high portfolio quality. Loans infected with delinquency virus account only 1.9% of the portfolio in 2005. The repayment rate was at average 98.8% over the five year period. Based on the level of income and expenditure, asset ownership in the form of livestock and land, and housing conditions the clients of ACSI are the poorest of the poor. ACSI is working with and for the poor and poorest sections of the society. Such a remarkable performance shows the attainment of the twin targets of institutional sustainability and serving the poor who are excluded from banking services.