Back to risk management!

Last month I got an e-mail from SharePeople (http://www.sharepeople.nl/en/home) with the blunt but somehow intriguing question: “Do you want to go to Ethiopia for a project?”. As a bit of background – SharePeople is an organisation in the Netherlands that sends professionals and managers from Europe to developing countries to bring expertise in short projects. I had contacted them at the beginning of the year when we were still staying in the Netherlands, to see if they might have a nice project in South Africa. Well, a few months later no project around Pretoria but an opportunity in Addis Ababa. And since things should go quickly, ten days later I landed in northern Africa.

The deal is that SharePeople provides a basic training on “what does it mean to go and do a development project” - which we had already done via PSO on account of Marjolein's project ;-). The professional gets him- / herself to the country where the project is, and the organisation/NGO in that country provides accommodation and tasty local food!

My organisation is Gasha Micro Financing S.C. (http://ethiopiabook.com/banks-and-finance/financial-institution/gasha-micro-financing-sc-14088.html), which provides micro loans and micro savings both in Addis Ababa and some of the rural areas around the city. The project was to develop a total risk management policy for the organisation, as ordered by the National Bank of Ethiopia. Now that is a bit much for me to cover, as my experience is in credit and

market risk at large banks, while you also need to consider operational, liquidity and strategic risk. And things you take for granted at a bank in the Netherlands (computers, databases, e-mail, electricity) can be more of a challenge at a Micro Finance Institution in Addis Ababa. Although the power outages were not that frequent (having a laptop helps!), internet is only available via the mobile network and can be very slow. That means that PC and PC skills are still relatively new things, and not widespread. For Gasha and its 6 branches spread around and outside the city, this means that the loan administration is not digitized but mainly on paper at the branch offices. So developing a risk management system means hard work on making the basic information available to management.

The places I've seen where Gasha is active are the Sandafa satellite branch about 30km outside of Addis, as well as the DebraZeit branch and its satellite which is about 80km out of Addis Ababa in a beautiful rural setting (visited a livestock market!). It was great to see that some of the entrepreneurs use the loans to buy Holsteiner cows, or fertilizer and teff seed. Because what is Ethiopia without teff to make the famous injera (http://en.wikipedia.org/wiki/Injera). It is important to remember of the approximately 85 million inhabitants of Ethiopia, less than 4 million live in the biggest city, Addis Ababa. So especially from an air-plane you can see the vast areas of small agricultural plots where most Ethiopians live. So micro loans to bridge the time between the outlay for seed and fertilizer and the income from harvest, is vitally important for many Ethiopians.

So what did I do in two and a half week at Gasha? I got a crash course in how a Micro Finance works, the challenges they face, but also the importance of helping their clients. Digging through the procedures used, and the rules that the National Bank of Ethiopia wants to impose (http://www.nbe.gov.et/bankrisk/guidelines.htm) took up the first days.

And interviewing the people at the head office on what information was available, what they would like to see and how we can build a simple risk management function. In the second week I visited two branches, and went into overdrive to build a basic database in MS-Access and Excel sheets that can be used for data-entry with added checks and balances to make sure the inputs are correct. This will drive the risk management reports. And of-course worked on the draft of the policy! Time was too short, unfortunately, so when I finish writing this post I will get back to writing more of the policy.

So – some ongoing work but also a lot of great memories of Assegder, Nebiyeul and all the other people at Gasha who welcomed me and gave me lots of tasty injera and tibbs, plus very very strong coffee! And for Petrus for teaching me that you need at least 5 tea-spoons of sugar in your (small) cup of tea or coffee.

Later I may show you more of my touristy experiences as well!