A youth-focused savings and credit cooperative (SACCO), supported by a $60 million USAID grant under the Kefeta Integrated Youth Activity, has distributed nearly 50 million birr in loans.
The initiative, facilitated by Amref Health Africa, began two years ago in Hawassa, Sidama Regional State, with 55 members. It has since expanded to 7,810 members and accumulated 60 million birr in savings.
The Kefeta National Youth Saving and Credit Cooperatives was officially launched last week at the Skylight Hotel by Minister of Women & Social Affairs Ergoge Tesfaye (PhD), who hinted at possible prospects of evolving into a bank. She lauded the psychosocial support provided by Amref as fundamentally aligned with the Ministry’s efforts at curtailing damages arising from prevalent drug use in Ethiopia’s youth.
“It’s inclusivity is remarkable,” Ergoge remarked.
In 2022, the United States Agency for International Development (USAID) introduced the $60 million (3.1 billion birr) program aimed at empowering two million vulnerable youth across Ethiopia. Over a five-year period, the USAID Kefeta initiative—which means “to elevate” in Amharic—seeks to assist youth in 18 cities to secure meaningful employment and amplify their voices in Ethiopia’s civic discourse through a combination of social, civic, and economic development projects. It also aims to enhance youth access to essential services such as banking, family planning, and healthcare.
Kefeta’s youth-focused SACCO has made significant headway in expanding inclusivity, with females accounting for 38% of its members and disabled youth at 6%.
During the two-day Youth Development and Learning Forum, a series of presentations and lectures highlighted the cross-cutting challenges of inclusive finance for Ethiopia’s youth.
Mission director for USAID Ethiopia, Scott Hocklander, heralded the project as a key component in expanding access to finance and youth empowerment in the country.
“Kefeta is one of my favorite projects,” he proclaimed.
The SACCO has established its presence in 18 branches nationwide while providing loans to 416 of its members. Its members have access to consumption, business, small vehicle, and house renewal loans as long as they are between 18 and 35 years old and meet the minimum requirements. After purchasing four shares worth 1000 birr with a 200 birr registration fee, members are required to save 300 birr monthly to qualify. The loans have loan interest rates and lengthy repayment periods alongside Sharia-compliant services.
Misrak Mekonen, Amref’s country director, heralded the initiative as a milestone for all Ethiopian youth with wide-reaching socio-economic implications. She underscored the importance of youth-led, youth-owned, and youth-managed cooperatives to address the challenges of financial access.
While there are over 21,000 SACCOs in Ethiopia, with membership estimated at above five million individuals, limited financial education and access to technology have restricted their efficacy and accessibility.
Berhanu Dufera, Head of Financial Cooperatives at the Ethiopian Cooperative Commission (ECC), says a massive overhaul of the supervision of cooperatives in the country is currently underway. He says the reorganization of scattered groups into regional or even national associations is crucial to improving their operations.
“We welcome efforts at modernizing and empowering the SACCOs,” Berhanu told Shega.
The official appreciated Kefeta’s focus on youth as it contributes to the Commission’s aspirations for enhancing financial literacy nationwide. He revealed ongoing projects to introduce automated capacities to SACCO’s ranging from simple software solutions to complicated core banking systems.
“Automation has become one of our main targets,” the commissioner underscored.
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