A local telecom products and services distributor has jumped into the financial industry by establishing the 39th microfinance institution in the nation, which is expected to start operations this month.
The National Bank of Ethiopia (NBE) granted the operational license to the Grand Micro Finance Institute three months ago. Initiated by Hidasie Telecom, the establishment process of the firm has been three years in the making.
The company started selling shares two years ago and has mobilised 12 million Br in paid-up capital, which is more than the 10 million Br minimum required by the central bank to establish a microfinance institution.
Currently, the Grand Micro Finance Institute has 367 shareholders, and Hidasie, which was established with an initial capital of 200,000 Br and 2,508 shareholders, holds 90pc of the shares. The minimum amount of shares a shareholder could buy was 50 shares with a par value of 100 Br.
Hidase, which is involved in the distribution of mobile prepaid cards, SIM cards, bill collection, sales of mobile phones and accessories and vehicle maintenance, currently has 4,500 employees and declared 497 million Br in revenues and 52 million Br in net profits last year.
The microfinance institution was established to provide financial support for companies, especially to those that supply solar products to farmers, according to Tekolla Demssie, board chairperson of the company.
The formation process took more time than expected due to the departure of the employees who crafted the business plan and the negotiations with the central bank to finalise it, according to Tekolla.
When it commences operations, the company will join the 38 microfinance institutions already operating in the country. In the last fiscal year, these companies’ total capital and assets increased by 20.3pc and 24.1pc and reached 16.6 billion Br and 83.5 billion Br, respectively.