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Company Profile

INTRODUCTION

 

1.1  Establishment and Development of Awach SACCOS

 

Before the foundation of Awach Saving and Credit Primary Cooperative Society Ltd (ASACCOS Ltd), the founder and the existing General Manager of Awach, Mr. Zerihun Sheleme Erensa has passed an undulating path that paved way for the foundation of the ASACCOS. Mr. Zerihun had been engaged in philanthropic community service in which one of the intervention areas in the program was improving the livelihood of parents to enhance the holistic development of children through the establishment of community-saving and credit schemes. He observed the life change of the program beneficiaries; whereas the life of staff who served the community was subsistence, poverty was knocking the door of them. The situation demanded the scarification of someone volunteer; then, Mr. Zerihun dedicated himself without any payment to organize the first 41 founding members (33 female and 8 male) with an initial capital of 15,236.00 Birr.

Awach SACCOS Ltd is legally registered and recognized an organization in the Federal Democratic Republic of Ethiopia (registration number 147/98) and it is registered on September 20, 2016, by Federal Cooperative Agency (FCA) with registration number 005/09 to work in Addis Ababa and Finfinne Liyu Zone of Oromia Region, around Addis Ababa. It is a model community based primary cooperative that has 76 employees (30 male and 46 female) and improves more than 25,000 people livelihood through creating access of loans for 5,136 members, out of which about 42% beneficiaries are female. Awach SACCOS is shooting up in members' growth, saving,  loan disbursement and profit with an average increment of more than 80% yearly for the last three years. Awach introduced children saving and benefits about 1000 children and their savings are about 1,009,395 Birr. It has won the attention of many government sectors and became the center of excellence; many university students, other cooperatives and unions are being visited frequently. Besides that, Kenyan’s cooperative members and the International Co-operative Alliance (ICA) delegates visited Awach SACCOS.

Awach is a pioneer to become the first member of ICA and an associate member of the African Confederation of Cooperative Savings and Credit Association (ACOSSCA) from Ethiopia. It paved way for Oromia Coffee Cooperative Union to be a second member of ICA from Ethiopia. It has an unlimited contribution to the promotion of cooperatives through celebrating world cooperative day, National Cooperatives’ exhibition, bazaar, and symposium. Awach is a leading cooperative in taking part in the development and taking the initiative role in accomplishing social responsibilities. As a result, it has got three certificates of recognition for contribution in the development of cooperatives nationwide and four certificates of appreciation and significant contribution for the events of ‘National Cooperatives’ exhibition, bazaar, and symposium from Federal Cooperative Agency of Ethiopia (FCA). Addis Ababa Cooperative Agency also awarded three recognition certificates due to Awach’s great contribution to the accomplishment of social responsibilities and celebration of World Saving and Credit Day.

ASACCOS has faced multi-faceted challenges for the first four years, the growth rate was also very low; members grow from 41 in 2007 to 302 in 2011. The second four years have shown improvement; members grow from 302 in 2011 to 2247 in 2015. The third four years is skyrocketing; members grow from 2247 to 20366 up to the end of June 2019. Likewise, the saving grows from 12,064 in 2007 to 289,571,620.79 ETB for the same period.

Loan size which used to be ETB 10,000 for a single borrower during the initial years has gradually increased and reached ETB 1,000,000 for a single borrower with a repayment period of ten years. The loan default rate is observed to be less than one percent which shows the operational soundness of Awach. Most of the loans are utilized for the housing, purchase of vehicles, business expansion, purchase of assets, and working capital for existing as well as new businesses and a small proportion for consumption purposes. Awach has received so many awards from the Federal cooperative Agency and Addis Ababa cooperative office for three consecutive years which justifies the outstanding performance of the cooperative to meet its organizational objectives.

Due to the dynamic change in Awach SACCOS, the organization prepares five years strategic plan from 2019/20 to 2023/24 (2011/12 to 2015/16 EC) using internal and external assessments.

1.2  Vision of Awach

To be a World-Class Saving and Credit Cooperative Society in 2030

1.3  Mission of Awach

Improve socio-economic conditions of members & other people through mobilizing saving and creating access to credit & asset building using relevant technology and highly motivated staffs in consideration of social governance aspects.

1.4  Objectives of Awach

  • Build a saving the culture and facilitate credit with a fair interest rate for members;
  • Improve socio-economic conditions  of members & other people by equipping with entrepreneurship & business development skills through training;
  • Encourage businesses that address climate, environment and social governance aspects;
  • Contribute to poverty reduction through creating employment opportunity especially for women and youth

1.5 Principles and Core values of Awach

According to the ICA statement on the cooperative identity (1995), cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others. Cooperative principles are guidelines by which cooperatives put their values into practice.

According to Baarda (2006), cooperative principles are fundamental and immutable doctrine or tenet that defines and identifies distinctive characteristics of the cooperative organization. They are the settled rules of action and are identified as the coordinates that go to make a cooperative society and as such are indispensable. Accordingly, Awach SACCO operates under seven principles which are formulated by the ICA in 1995: 

1.5.1 Principles

  • Voluntary and Open Membership: open to all persons without any  discrimination;
  • Democratic Member Control: controlled by its members with equal voting rights; 
  •  Member Economic Participation: contribute equitably;
  • Autonomy and Independence: self - help organization;
  • Education, Training, and Information: to the development of the cooperative;
  • Cooperation among Cooperatives: working together through local, national,        regional and international structure;
  • Concern for the Community: for the sustainable development of its communities.

1.5.2 Core Values

  • Accountability
  • Dedication
  • Integrity
  • Impartiality
  • Respect
  • Teamwork

1.6 Motto/Slogan

Saving is modernization. Save to change!

1.7  Awach SACCO Objectives.

  • Encourage and develop a saving culture among members
  • Provide members loan with a fair interest rate
  • Improve members economic, social, and financial conditions 
  • Provide members savings and credit service and other products required by members
  • Save the members from unnecessary loan interest
  • Contribute to the second growth and transformation plan of Ethiopia and play its role in the national economic development

2. ORGANIZATIONAL SET UP

The governance structure of Awach is led by a representative council elected by the general assembly of all cooperative members. The representative council is constituted by all members who generally meet once a year to discuss general policies, laws and procedures, challenges and strategies to bring out the best possible benefit for individual cooperative members. Each member of the general assembly is technically a part-owner of the cooperative through purchasing a share value that is usually available during membership registration. Other routine company activities are regularly managed by the board and the general manager and other staff.

In conjunction with regular staff, three independent committees support the overall organizational function namely the control committee responsible for general oversight check and balance, loan committee (basically in charge of appraising loan applications) and a social committee who have an important role in handling social issues of ASACCOS.

3. AWACH SERVICES

3.1 Members mobilization

As stated in the introduction, Awach started with only 41 members in 2007 G.C. With its great effort currently Awach has more than 20000 members.

Year

Male

Female

Total

Yearly growth/ increment %

Growth Rate

1999

8

33

41

---

---

2000

31

38

69

68 %

41%

2001

60

45

105

52 %

34%

2002

101

96

197

88%

47%

2003

163

140

303

54%

35%

2004

300

322

622

105%

51%

2005

524

676

1200

93 %

48 %

2006

740

860

1600

33 %

25 %

2007

931

1316

2247

40 %

29 %

2008

1951

1362

3313

47 %

32 %

2009

3453

2358

5811

75 %

43 %

2010

6759

4492

11251

94 %

48 %

2011

11920

8446

20366

81 %

  1.  

3.1.1. Awach SACCO’s Requirement for membership

Any individual could become a member of Awach SACCO if:

  • S/he  is eighteen (18) or above
  • S/he is capable to pay the registration fee, minimum share amount and regular saving
  • S/he accepts and abided by the cooperative rules and regulations.
  • S/he is willing to execute his or her responsibilities
  • S/he lives in the operation areas of Awach SACCO and has regular income
  • S/he could bring two passport size photograph
  • S/he could bring a copy of the kebele identification card.
  • S/he is not stripped of his/her legal rights

3.1.2. Registration Fee

          Any person should pay Br. 1000 in one payment as a registration fee. The registration fee is used to cover awach SACCO expenses.

3.1.3. Share

           The value of one (1) share is Br. 1000 and a member has to buy at least two shares    (i.e., 2000 birr).

3.2 Saving service

3.2.1 Compulsory Saving

Any person who is a member of the cooperative should pay Br. 350 or 10% of his/her income regularly once in a month. This compulsory saving could only be withdrawn when there is a termination of membership.

3.2.2 Voluntary Saving   

A member of the cooperative could save any amount of money as a voluntary saving that could be withdrawn at any time.

3.2.3 House saving

A member saves and takes credit to buy, construct or maintain a house. A member could borrow up to 1,000,000 (One million) Ethiopian birr as a house loan.

3.2.4 Automobile Saving

A member could save for a car loan. A member could borrow up to 600,000 (Six hundred thousand) Ethiopian birr to buy an Automobile.

3.2.5 Transport car Saving

Members could save and borrow up to 800,000 (Eight hundred thousand) Ethiopian birr to buy a car for business.

3.2.6 Children saving

To make a society develop the habit of saving, it is important to include every member of society including children. In addition to saving, awach SACCO is educating parents and children to share and spend money properly. In awach SACCO children through their parents or guardian save money without any set requirements.

    A member of the awach SACCO will get a 7% annual saving interest for the deposits made in her/his account.   

 

3.3 Loan service

Loan/ Credit provision is the other primary undertaking in Awach SACCO. All members have an equal right to benefit from the credit service. Apart from fulfilling the pre-credit requirements in the bylaw, Awach’s loan committee takes various factors mentioned below before deciding on each credit application. Segregation of duty during the loan approval process applies because once the loan committee approves a particular case; the request will be authorized by the board chairman and finance manager before effecting any payment.

3.3.1 Requirements to get a loan from the cooperative

  • The member should save regularly for at least six consecutive months that amounts one fourth (1/4) of the requested/needed loan amount.
  • For a house or a vehicle loan, a member has to save at least for a year. The pre-loan saving for a house loan is 30% and 40% for a vehicle. 
  • Should bring a letter from her/his employer institution that specify the monthly income of the member.
  • Business operators should bring a renewed trade license and cash flow statement that indicates their monthly cash flow.
  • Should bring guarantee for the loan
  • Should bring one member from the cooperative as a guarantee.
  • Should be willing to pay 1% service charge and 1% insurance

3.3.2 Loan Amount

  • A member could take up to 300,000 (three hundred thousand) Ethiopian birr loan for social services, business, health, and education.
  • A member could take up to 600,000 (Six hundred thousand) Ethiopian birr loan to purchase an automobile.
  • A member could take up to0 800,000 (Eight hundred thousand) Ethiopian birr loan to purchase a car for business purposes.
  • A member could take up to 1,000,000 (One million) Ethiopian birr to buy, construct or maintain a house.

3.3.3 Loan Interest

The loan interest rate is 13.5% per year for social or business loans, 14.5 % per year for the vehicle loan and 15.5 % per year for the house loan. The interest is paid on the remaining loan and the system of calculation is called Amortization.

3.3.4 Loan disbursed and collection

Currently, Awach has disbursed loan that amounts over Br. 372,400,479.00 Ethiopian birrs for more than 6500 members. A thorough post-credit evaluation shows that more than 99% of credit users have utilized their loans to open their shops, construct houses used for renting, own business cars, and most members able to participate in different business activities to increase their income. Awach’s credit service has benefited its women members in many ways. Numerous women members have an exit out of destitution, started supporting their family and quite several women expand their business by multiplying their investment.

 

Year

Total Asset

Yearly % growth

Loan given

Yearly % growth

Profit

Yearly % growth

1999

15,237

---

---

---

494

---

2000

45,999

202 %

17,700

---

1,244

152 %

2001

173,230

277 %

218,300

1133 %

6,519

424 %

2002

448,954

159 %

567,590

160 %

18,065

177 %

2003

1,183,295

164 %

1,601,875

182 %

41,941

132 %

2004

3,391,704

187 %

4,727,674

195 %

49,214

17 %

2005

8,737,155

158 %

8,576,310

81 %

164,083

233 %

2006

15,356,883

76 %

12,645,300

48 %

462,585

182 %

2007

27,002,895

76 %

18,024,071

43 %

824,209

78 %

2008

48,630,001

80 %

36,887,340

105 %

1,229,921

58 %

2009

94,947,602

95 %

72,053,900

95 %

2,783,183

126 %

2010

217,119,969

129 %

177,099,244

146 %

8,277,188

197 %

2011

510,081,257

135 %

372,400,479

110 %

20,264,962

145 %