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The Savings Club Rubbing Shoulders With Banks

Finance

→ SACCOs are member-owned saving and lending institutions. Think equb’s more formal, more ambitious cousin.
→ Some Ethiopian SACCOs are now managing billions of birr, rubbing shoulders with conventional banks.
→ They could become a powerful layer of financial inclusion, but with more than 23,000 of them in the country, not all are created equal.

Most of us know the usual ways Ethiopians deal with money.

There is the bank, where your money officially lives. There is ዕቁብ, where your money enters a social lottery with better refreshments. There is እድር, where community support becomes a social institution.

And then there is the classic family loan system, where the interest rate is zero but the emotional cost is 17%!

Somewhere in the middle of all this sits Savings and Credit Cooperatives (SACCO). Few people have heard of them, fewer can explain them.

So let’s keep it simple.

A SACCO is a group of people who save money together and lend that money to each other. Members put money in. Members borrow from the pool. If the SACCO performs well, members can benefit through access to loans, interest, dividends, and other services.

Basically, if equb is ‘everyone contributes and one person takes the pot’, a SACCO is ‘everyone contributes and members can borrow when they need it.’

The closest global comparison is a credit union, which much like SACCOs is just a financial institution owned by the same people who use it instead of outside shareholders.

That ownership part matters.

Notice we keep saying “members” instead “customers” when referring to SACCOs. That’s because one of the requirements to join one is to buy a minimum number of shares of the institution, making you entitled to receive dividends on its profits.

That makes you a member-owner. You are putting money into a system you partly own, and that means both the upside and downside are more personal; if you take out a loan but fail to repay, that loss will be reflected in your own dividends at the end of every year.

In plain English: you are not just the customer at the counter. You are also, in a small way, one of the people behind the counter.

That is both the beauty and the headache.

It is like owning a tiny slice of a small bank. But don’t confuse simple with small.

Awach SACCO, established in 2007, says it now has more than 164,000 members, ETB 13.7 billion in assets, ETB 13.5 billion in member savings, and ETB 20.3 billion in loans disbursed.
Amigos SACCO, established in 2013, has more than 15,500 members, 30+ branches, ETB 7 billion in assets, ETB 14 billion+ in loans disbursed, and claim less than 1% of their loans are not repaid. Their dividend payouts were ~50% for the last 3 years in a row.

We’re talking serious financial-institution territory and this is why SACCOs deserve more attention.

They are usually closer to members and so tend to understand the borrower better. They encourage regular saving, which can easily be converted into ownership shares.

For someone who needs a car loan, house-related loan, emergency loan, school-fee support, or small business financing, a good SACCO can feel less like begging a bank and more like borrowing from a system you helped build.

That is powerful.

Now let’s put on the serious uncle face.

Ethiopia reportedly has over 23,000 SACCOs, most in rural areas. That is an absolutely ridiculous number. For context, we have 31 commercial banks. Thirty-one. SACCOs are basically multiplying in the background like the first months of COVID.

And when you have that many institutions collecting savings and giving loans, the big question becomes: who is watching the money?

Because not all SACCOs are Awach or Amigos.

The answer? Nope, not the National Bank of Ethiopia (NBE). Not yet, anyway.

It’s the never heard of Ethiopian Cooperative Commission or ECC that is tasked with regulating them. What a headache that must be! You’d think an institution this big would at least have a website but no, just a Facebook page…

Some may be well-run, audited, transparent, and professionally managed. Most will be running on good intentions, weak controls, and one Excel file named “Final_Finale_Real_Updatd.xlsx.”

That’s no good.

The other danger with them is familiarity itself.

A SACCO is only as strong as its governance. In theory, members own the institution, elect leaders, and hold management accountable.

In practice, things can get blurry. Loans may be approved because someone is well known. Late repayments may be tolerated because someone is connected. Reports may be vague because “why are you asking so many questions?”

And suddenly, the warm community feeling becomes a financial cloud.

“We know him, he’s a good guy” is not a risk management system. It is how people end up lending money to someone because he wore a nice jacket to the general assembly.

The risks are real.

If loans are given carelessly, members’ savings are exposed. If too much money is locked in long-term loans, members may struggle to withdraw when they need cash.

If leadership is not accountable, the SACCO can slowly become “Ato Someone and Friends Financial Services.”

Is the ECC up to the task of regulating them? If it brings their supervision under its wing, does the NBE have the resources to manage 23,000 of them?

Both are highly questionable.

This does not mean SACCOs are bad. Far from it.

They may be one of Ethiopia’s most important financial inclusion tools. They are local, member-owned, familiar, and built on a culture Ethiopians already understand: pooling money to solve problems.

And so, SACCOs sit in a fascinating middle ground: more structured than equb, more personal than banks, and potentially more accessible than many traditional lenders.

But as they grow, trust alone is not enough.

Handled well, they can help millions save, borrow, invest, and build assets. Handled badly, they become very efficient ways to lose money together.

If you’re looking to join and, by extension, invest in a SACCO, don’t look too far beyond the two we mentioned.

ፍራንክ Picks 

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🗞️ In the news: The Big Boy, makes a big noise on the stock exchange

♟️ Innovation: Insurtech is pushing to get permanent seat on the Insurance table

Making Cents Of Transactions

Fintech

If you’ve been following the Ethiopian economy with anything less than a magnifying glass, you might have missed that we’re “just” adopting mobile money.

Yes, mobile money has been around for some time now, but we haven’t taken full advantage of its potential.

Just five years ago, having a mobile money account was a niche hobby for the tech-savvy. Fast forward to 2026, and the National Bank of Ethiopia (NBE) is overseeing a market with over 136 million mobile money accounts.

Before you question that figure, yes we know, that’s more accounts than there are people in the country. This is thanks to our love for multiple SIM cards and multiple providers.

We are now entering a phase where "having an account" is the baseline, and the real magic is happening in the plumbing beneath the surface.

By a large margin, Telebirr can be considered the Goliath in town, moving an eye-watering ETB 1.03 trillion in just the first half of the 2024/25 budget year. But the monopoly seems to be challenged lately.

Safaricom’s M-Pesa (a.k.a David) has landed a deal and they are moving fast.

The "Errif be M-Pesa" partnership with Awash Bank offers a digital credit for bills and airtime when your wallet is dry. This is exactly the kind of friction-less Buy Now Pay Later finance that wins markets.

EthSwitch is also seeking to play a larger role on this front. If mobile money providers are the cars, EthSwitch is the expressway.

They are moving past simple interbank transfers to become a true fintech powerhouse. Two massive updates are currently on the radar:

We are moving past the Mobile Money Transfer phase. According to FSD Ethiopia, the real potential lies in Value-Added Services (VAS).

Digital transaction history is becoming the new "financial identity" for the previously unbanked.

The Integration gap is still wide.

The data generated through mobile transactions remains “invisible to credit underwriters”. Meaning transactions are not labeled to identify whether it’s for essentials (rent, utility, groceries), recreational (eating out, travel, ጭፈራ) or any other categories.

This is holding back digital credit underwriters from offering loans based on your transaction history. EthSwitch could solve for this with its Merchant portal.

The message is clear: the infrastructure is here. We can now leverage AI to learn spending habits by doing away with "screenshot-to-verify" era and replacing it with merchant details (identifying the retailer and products/services rendered).

Businesses also stand to benefit, as they can leverage their daily sales to access short term loans such as overdrafts.

If your business isn’t planning to integrate into this ecosystem, you’ll end up behind the curve.

Thanks for sticking with us, ፍራንክ family! Keep those wallets smart and your inbox open - we’ll be sliding in next week!