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Federal Negarit Gazeta of the Federal Democratic Republic of Ethiopia

What are the guiding principles of microfinance laws in Ethiopia?
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This is the official document of the Ethiopian law relating to microfinance. The document provides the rationale for a separate proclamation on microfinance:

  • To bring the activities of Ethiopian microfinance institutions (MFIs) within the country's monetary and financial policies;
  • The existing laws did not cater to the needs of the MFIs.

The proclamation defines the business of microfinance as An activity of extending credit to peasant farmers or urban small entrepreneurs, the loan size of which shall be fixed by the National Bank of Ethiopia Microfinancing Institution has been defined as A company licensed under the proclamation to engage in microfinancing business in rural and urban areas.

The provisions of this proclamation include:

  • Purpose and duties of Ethiopian MFIs;
  • Licensing of MFIs;
  • Conditions required to undertake the business of microfinance;
  • Authorization of commencement of operations;
  • Revocation of license;
  • Financial requirements and conditions including minimum capital requirements, consolidation and mergers and opening of branches.

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