December 17, 2013
U.K. Department of International Development (DFID) Permanent Secretary Mark Lowcock recently met with women entrepreneurs who are part of a DFID-funded project to boost lending to small and women-owned firms in Ethiopia. The project—called Private Enterprise Programme Ethiopia (PEPE)—works through microfinance institutions so they can make more financial products available to micro, small, and medium-sized enterprises.
While visiting a market in Addis Ababa with the project team, Lowcock met with Elsa Yergalem, one of the project’s potential beneficiaries. Yergalem, a grocer, already rents out a stall at the market but wants to expand her operation. Though her business has been successful, she has no collateral to offer a microfinance institution in order to secure an individual loan.
Elsa Yergalem, potential WEDP client, (from left), Binyam Tadesse, WEDP microfinance institution consultant, and Mark Lowcock, DFID Permanent Secretary. Photo by Tony Storrow
In Ethiopia, small enterprises such as Yergalem’s often fall into the “missing middle”—in between microfinance loans, which have predominantly provided loans using a group guarantee methodology, whereas the newly introduced individual loans, have to be fully collateralized.
Under PEPE’s Women’s Entrepreneurship Development Project (WEDP), Yergalem could be a candidate to receive a loan based on her credit record, character, and cash flow rather than tangible security.
The WEDP, co-funded by the World Bank and DFID, will enable microfinance institutions to lend more effectively to growing, women-owned businesses. It does so through provision of a credit line of $42 million from the World Bank and technical assistance funded by DFID, which increases the institutions’ capacity to lend through individual loans suited to small—but growing—enterprises.
“The WEDP project works closely with the microfinance partner institutions to ensure they have the capability and capacity to provide women like Yergalem access to individual, higher loan sizes,” says Fran Toomey-Mys, who leads the WEDP team. “Yergalem—with her current success and her aspirations to expand—is just the kind of woman we want to reach.”