Midre Geez Microfinance S.C. became the 40th microfinance institution in the nation after holding its founding general assembly at the end of last month.

Founded by 14 people, the company held its first general assembly on February 29, 2020, at Planet Hotel. During the assembly, the shareholders elected 11 board directors and the chairperson and vice-chairperson, who will be serving the company for the coming three years.

Incepted 10 months ago, the company that is headquartered in Meqelle has closed the sale of shares to preferred shareholders. But it is still selling ordinary shares for an unlimited period of time.

The company started selling shares eight months ago after getting a license from the National Bank of Ethiopia (NBE). It has mobilised 78 million Br in paid-up capital, which is more than the 10 million Br minimum required by the NBE to establish a microfinance institution. A total of 1,500 shareholders have purchased 137 million Br worth of shares.

The minimum and maximum amount of shares a preference shareholder could buy was 50 shares and 2,500 shares, respectively, with a par value of 1,000 Br. Preference share buyers paid 25pc of their subscribed share value along with a five percent service charge. The remaining 75pc will be paid until the end of April 2020. An ordinary shareholder can buy a minimum of five shares with a maximum limit of 2,500 shares.

The microfinance institution is established to serve people with low income residing in urban and semi-urban areas by increasing access to finance. The institution intends to help solve the problem of financial exclusion, which is a major challenge, according to Mulugeta Hagos, vice-chairperson of the company's board of directors.

"It'll focus on local social developments, increasing social responsibilities and improving the lives of the community," said Mulugeta.

Midre Geez passed two stages of the establishment process, and the founders submitted a letter to the central bank last week to get a final go-ahead, according to Abreha Gebrewahid, board chairperson of the company.

"We'll immediately launch operations upon securing the license from the central bank," said Abreha.

The company will start operations with seven branches in major cities in Tigray Regional State. It will also have an office inside the premises of Wegagen Bank in Addis Abeba. The two signed a memorandum of understanding that entails Wegagen will provide office space for Midre Geez, while the latter will transact its cash through the Bank.

Upon becoming operational, Midre Geez will be the fourth microfinance institution in Tigray Regional State along with Dedebit, Adeday and Lideta. Dedebit, which commenced operations in 1994, is owned by the Endowment Fund for the Rehabilitation of Tigray (EFFORT). Adeday is founded by the Women’s Association of Tigray, while Lideta is owned by the Adigrat Catholic Church.

In the last fiscal year, the 38 operational companies' total capital and assets increased by 20.3pc and 24.1pc to reach 16.6 billion Br and 83.5 billion Br, respectively. Their deposits surged by 26.1pc and reached 41.9 billion Br, while their outstanding credit went up by 30.5pc to 58.7 billion Br.  Along with Midre Geez, 15 microfinance institutions are under formation.