Serving Poor Rural Clients Efficiently in East Africa: An Ethiopian Model

WISDOM Micro-financing Institution, a regulated Ethiopian MFI, has been serving very poor rural households since 1999. Even though most of its lending has been in rural areas to support agricultural activities of households, it is twice as efficient as the average African MFI, it serves clients at a third of the cost, and it charges half of the rate of other African MFIs. WISDOM has achieved profitability comparable to other African MFIs through a strategy of decentralizing operations, maintaining a low overhead, and building an organizational structure that limits non-revenue generating staff. WISDOM, and the Ethiopian market in general, offer important lessons for African MFIs on how to serve very low-income rural clients and achieve sustainability without charging high rates.