• Eritrea
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  • Access to Capital
  • Access to Capital

Access to capital for Eritrean women entrepreneurs

Women entrepreneurs in Eritrea have limited access to finance. This is partly because of the limited number of financial institutions in the country and CSOs that provide credit. The major micro credit institution providing access to finance include: Saving and Microcredit Program (SMCP); National Union of Eritrean Women (NUEW); National Union of Eritrean Youth and Students (NUEYS); and National Union of Eritrean war disabled association. The Commercial Bank of Eritrea (CBE) and the Investment and Development Bank of Eritrea (IDBE) also provide loan to women owned business in Eritrea.

Access to capital in general and finance in particular is essential for start-up and growing businesses. Economic empowerment makes women independent and enhances their confidence in doing business. Thus, to start and grow their own business they need access to capital. 

angle-left Saving and Micro Credit Program (SMCP)

Saving and Micro Credit Program (SMCP)

SMCP commenced its operations in July 1996 as a component of a project called Eritrean Community Development Fund, to provide financial services. In the first five years, it was under the Ministry of Local Government and since 2002, it has been operating under the Ministry of National Development.

As of the end of 2018, there were 267 staff at SMCP who served 71,680 active clients out of which women comprise 55.7 %. During the same period, there were 702 village banks in all six regions of the country spread over in 65 out of the 67 sub regions. Out of 2,606 villages in the country, 1,838 (which is 65%) get SMCP service.  In the past 23 years, SMCP disbursed more than 3.19 Billion ERN in total, and yearly loan outstanding balance remaining with clients was 296.8 million Nakfa at the end of year 2018.

FINANCIAL PRODUCTS

1. Group loan
Group loan component, after the potential clients become organized by joining the SMCP-sponsored solidarity groups then they form their Village banks. Each Village bank should have between 35 to 105 members.

Micro Business Loan (MBL) 

• Loan size from 6,000.00 up to 20,000 repayment is Monthly, for One Year Loan term
• Loan cycle: Five different loan cycle
• Repayment: Loans are paid back in twelve monthly installments. 
• Savings: 10% of approved loan as initial deposit 
• Interest rate: 16% Amortization Declining Method per Annum 
• The solidarity group configuration substitute for loan guarantee. Hence no need of collateral. 
• Approval authority: Branch Manager
• Loan processing time: Maximum two weeks in the new village banks 

Small Seasonal Agricultural Loan (SSAL)

• Loan size from 6,000.00 Up to up to 20,000, Quarterly, One Year 
• Loan cycle: Five different loan cycle
• Repayment: Loans are paid back in to three-month installments.
• Savings: 10% of approved loan as initial deposit
• Interest rate: 16% Amortization Declining Method per Annum
• The solidarity group configuration substitute for loan guarantee. Hence no need of collateral. 
• Approval authority: Branch Manager
• Loan processing time: Maximum two weeks for new village bank members

2. Individual loan
Individual loan category is supposed to assist individuals engaged in any productive activities which generate profit and can cover the expected credit repayments. Any Eritrean above the age of 18 years old living in rural and semi-urban and small towns who agrees to comply with the requirements or the terms of credit is eligible to apply for loans.

Small Business Loan (SBL)

• Loan size from 30,000 Up to 150,000.00 12/18/24 Monthly
• Loan cycle: eight different loan cycle
• Repayment: monthly installments.  
• Savings: 10% of approved loan as initial deposit
• Interest rate: 16% Amortization Declining Method per Annum
• Collateral: In addition to his/her spouse he/she must need to have collateral.  
• Approval authority: Regional Manager
• Loan processing time: Maximum One Month for new clients  

Irrigated Agricultural Loan (IAL)

• Loan size from 30,000 up to 150,000 12/18/24 Quarterly 
• Loan cycle: eight different loan cycle
• Repayment: Loans are paid back in quarterly installments over the agreed loan term 
• Savings: 10% of approved loan as initial deposit
• Interest rate: 16% Amortization Declining Method per Annum 
• Collateral: In addition to his/her spouse acquaintance he/she must need to have collateral.  
• Approval authority: Regional Manager
• Loan processing time: Maximum two weeks

3. Unrestricted Employees Loan (UEL)

This loan category was introduced in year 2006. It’s meant for governmental and private organizations employees. It is unrestricted on the subject of expending the money borrowed
• Loan size is employee’s three months’ salaries 12 Monthly or six months’ salaries 24 Monthly 
• Repayment: Clients will pay back in monthly installments from their salaries  
• Savings: No voluntary or compulsory savings is required 
• Interest rate: 7% Flat Rate Method per Annum 
• Approval authority: Branch Manager
• Loan processing time: Maximum One week

APPLICATION CRITERIA

For Group and Individual Loans

1.    The applicant must be a minimum of 18years’ old
2.    She/he has to have ER-identity card 
3.    Based on client’s loan request he/she must deposit 10% amount disbursed in advance
4.    She/he shouldn’t be an employee of governmental organization
5.    She/he; must not have any credit from others financial institution 

In addition to the above-mentioned criteria, clients for group loan are required to fulfill the following conditions:

1.    He/she should be willing to form a solidarity group
2.    Clients Within a group shouldn’t be members of the same family
3.    For Unrestricted Employees Loan: This loan consents to all governmental, non-governmental and private permanent employees.

OTHER SERVICES OFFERED TO BUSINESS PERSONS

Training:  As part of the village bank establishment process, they have to get three days training concerning the guidelines to loan repayment methods and purpose of the loans.  This kind of training is conducted before loan disbursement. Continuous follow-up and communication between clients and the loan officers is also done.

Monitoring: The branch manager and loan officer regularly monitor the women clients and explore any potential for loan outreach possibilities.

Coaching: This follows  the schedule of micro-credit and the flag rule

Advice: Giving advice on the schedules of loan repayments 

Proposal writing: SMCP conducts a feasibility study before each loan disbursement together with women clients.

CONTACT INFO

Savings and Micro Credit Program (SMCP)
Hiday Street, Dembe Sembel, Block A, ground floor. Asmara
P. O.Box 8269
Tel: 291-1-151596, 291-1-151588,
Fax: 291-1-151580

•    SMCP, Northern Rea Sea: Tel: 291-1-541189, 291-1-540512, Fax: 291-1-540657, Massawa, Eritrea
•    SMCP, Anseba: Tel: 291-1-400103, 291-1-402347, Fax: 291-1-400103, P.O. Box: 588, Keren, Eritrea
•    SMCP, Barentu: Tel: 291-1-731342, 291-1-731325, Fax: 291-1-731360, P.O. Box: 174, Barentu, Eritrea
•    SMCP, Teseney: Tel: 291-1-721119, 291-1-721317, Fax: 291-1-721380, P.O. Box: 75, Teseney, Eritrea
•    SMCP, Debub: Tel: 291-1-611118, 291-1-611836, Fax: 291-1-721380, P.O. Box: 11, Mendefera, Eritrea
•    SMCP Maekel: Tel: 291-1-110021, 291-8-209458, Fax: 291-1-110021, Asmara, Eritrea

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