Creating Opportunity Where It’s needed Most
ASA-OCF Lending Group
A microfinance venture in Ethiopia
2013
2014
2015
2016
GDP($ bn)
43.2
45.6
49.3
51.2
GDP(Birr bn)
94.1
96.5
98.9
101.4
population
94.1
96.5
98.9
101.4
GDP Per capita
1355
1431
1522
1614
3%
Age Structure
4%
29% 44%
0-14
15-24
25-54
55-64
20%
Elder
6.3
Youth
77.2
Total
83.5
0
50
Dependancy Ratio
100
70%
Unemployment Rate
Ethiopia’s potential
ASA
• Association for Social
Advancement
• Largest MFI
• In Existence Since 1978,
Headquarter Dhaka
• Product: Loan Ranging from
$100 to $ 4868
• Services: Education and
Training
• Success rate: 99.36%
Who we are
OCF
• Oromia Coffee Farmer Coopertive
• Est. 1999
• Represent 102,000 farmers
• Promotes standard, organic and
fair trade practices
• Profit share 70:30
• Name: ASA-OCF Lending Partners
• Customer Segment :Coffee growers of Ethiopia
Transnational strategy:
• Standard global product offering
• Localized loan interest rates
ASA49%
OCF –
51%
Benefits
ASA
OCF
Access to OCF network
Access to ASA’s financial/non financial
resources
Risk sharing
Increase market share and bargaining
power
Joint Venture Structure
• Category: Primary Loan
• Loan Amount: Birr 1,000 - Birr 8,000($50 - $400)
• Interest rate: 18-20% and 16% for population with good credit
rating
• Repayment Terms: 18 and 24 months
• Incremental Increase on next installment: Birr 12,000 (Max)
Product Details
Regulatory
Environment
Ethiopia’s
Factor
Conditions
Local
Demand
Resources
Available/to
Develop
Positioning for Success
Cost
Expenses/Average assets - 16.48% (2002) to 21.34% in 2011.
Financial costs/total average assets - 2.65% in 2002 to 4.00% in 2011.
Administrative costs on total expenses - 58.02% in 2002 to 65.94% in 2011.
Growth
The number of savers - 2.14M in 2002 to 4.94M in 2011.
The value of saving - $3,2178,929 in 2002 to $171,852,182 in 2011.
The number of borrowers -1.98M in 2002 to 4.36M in 2011.
Efficiency
Effective yield on assets - 11.94% in 1992 to 25.13% in 2011.
ROE(Return on equity) - 2.07% in 1992 to 11.82% in 2011.
ROA(Return on assets) - 1.31% in 1992 to 7.06% in 2011.
Cost Benefit Analysis
Management Risk
Mitigation Plan
• Corporate restructuring
• Cultural analysis and integration
• Incorporation of Vision an Mission at macro and micro level
Risk Analysis
corruption
Mitigation Plan
• Decision making with higher management
• Employee rotation at equal interval
Risk Analysis
Exit Strategy
Sell off to the Local Competitor
OR
Spin Off and take public
OR
Close down and sell asset
• Maintain Operational Self Sufficiency above 190% and Financial Self
Sufficiency above 128% in Ethiopia
• Reach Break even Point in 2 years
• Maintain
• Rate of recovery to 99.36%
• Loan Ratio to 0.22 percent
• Market capitalization : 2% of Birr 13044 Mn: Growth targeted at 10%
Benchmark for Success
Thank You