`

W.A. Liqii fi Qusannaa Oromiyaa

የኦሮሚያ ብድርና ቁጠባ አ.ማ
Oromia Credit and Saving (S.C.)
Final of final

4th Strategic Business plan of OCSSCO

(2020/21 to 2025/26)

June 2020
Finfinnee, OCSSCO

1
Contents
Background.................................................................................................................................................4
1. Introduction.........................................................................................................................................4
2. Objectives...........................................................................................................................................5
3. Brief Country, Regional and Company Profiles..............................................................................6
2.1. Country Profile..............................................................................................................................6
2.2. Regional Profile...............................................................................................................................6
2.3. Company profile............................................................................................................................8
CHAPTER I: Fundamental Issues..........................................................................................................9
1.1. Mandate Analysis..........................................................................................................................9
1.2. Mission, Vision and Values.........................................................................................................11
CHAPTER II: Stakeholders, Collaborators Analysis.........................................................................12
2.1. Stakeholders Analysis............................................................................................................12
2.1.1. Internal Stakeholders.........................................................................................................12
2.1.2. External Stakeholders........................................................................................................14
2.2. Collaborators Analysis............................................................................................................16
CHAPTER III: Situation Analysis..........................................................................................................17
3.1. Internal Situations..................................................................................................................17
3.1.1. Organizational Structure& Governance.....................................................................................17
3.1.2. Workforce of the company........................................................................................................20
3.1.3. Physical Resources Assessments.............................................................................................21
3.1.4. Products / Services.........................................................................................................................22
3.1.5. Brief Financial Performance Review.........................................................................................27
3.1.5.1 sustainability/profitability..............................................................................................................27
3.2. External Situations......................................................................................................................29
3.2.5. Political Situations...................................................................................................................30
3.2.6. Economic Situation..................................................................................................................31
3.2.7. Socio-cultural Situations.........................................................................................................33
3.2.8. Technological Situations..........................................................................................................36
3.2.9. Legal situations........................................................................................................................37
3.3. Market Analysis & Planning.......................................................................................................37
3.3.5. Microfinance Credit Service seeker projection.....................................................................37
3.3.6. Competitors analysis................................................................................................................40
3.4. SWOT Matrix................................................................................................................................42

2
CHAPTER IV: Key Strategic Problems, Goals & Objectives...........................................................43
4.1. Key strategic Problems.....................................................................................................................43
4.2. Fundamental Strategic Goals..........................................................................................................43
4.3. Strategic Objectives..........................................................................................................................44
CHAPTER V: Strategic Enablers and Potential Risks........................................................................56
5.1. Strategic enablers.............................................................................................................................56
5.2. Potential Risks and Risk Management Strategies..........................................................................58
5.2.1. Types of Microfinance risks..........................................................................................................58
Chapter VI: Monitoring & evaluation System.....................................................................................61
6.1. Roles & responsibilities of company Organs..................................................................................62
6.1.1. Monitoring.....................................................................................................................................62
6.1.2. Evaluation......................................................................................................................................63

3
Background
1. Introduction
Oromia Credit and saving Share Company (OCSSCO) was legally established as microfinance
institution on August 4, 1997 by satisfying the requirements of the National Bank of Ethiopia
following the endorsement of Proclamation No 40/1996, the proclamation that stipulates the
Licensing and Supervision of Micro Financing Institutions in Ethiopia. Before, licensing to MFI,
it has provided credit service in Rural Oromia by the name Oromia Rural Credit Development
Scheme Project from 1996 to August 4,1997 under Oromia self-help Organization (OSHO).
This indicates that the company has been in operation for the last 26 years.

OCSSCO begun microfinance operation by opening four branches in Oromia National Regional
State namely, Hexosa in Arsi zone, Shashemene in West Arsi Zone, Sinana In Bale Zone and
Kuyu in North Showa zone. Currently the company has 19 zone offices and 396 branches
across Oromia Regional sate which geographically gave coverage to 99% of the districts in the
region and around 85 % of the Areda ( local administration) in the region in 2020. The number
of clients annually get services of microfinance has been increasing from year-to-year
corresponding to the growth of the company. Simultaneously, the loan disbursement, and the
mobilized deposit shows significant growth, but not adequate, in the past operational years. For
instance, in 2019/2020 fiscal year the company provided financial services to over one million
active clients, disbursed birr over 8 billion to farmers, MSMEs operators , women entrepreneurs
and other section of the society. In the same year, around birr 7 billion deposit was mobilized
through its channels to cover the credit demand of the people in rural and urban. The company
also diversified its credit and saving products through time to ensure the financial accessibilities
of society particularly low-income people. The manpower, which is the backbone of the financial
institution, tremendously increased from less than 100 at the beginning of operation to current
figure of 600 permanent staffs.

As history of the company shows, this is the 4 th five year strategic business plan that the
company has formulated since its establishment. The first five year long term strategic business
plan was formulated in 2004/5 to 2009/10. The second strategic business period was 2010/11 to
2015/16 and this the time when OCSSCO shows fundamental growth in comparison to the
previous periods. The third strategic business plan year has been extended from 2015/16 to
2019/20 and ended in June 30/2020. The period was characterized by mass protest, violence,

4
displacement, instability and insecurity particularly in Oromia regional state which has adversely
affect the implementation of the goals and objectives. this document, which is the 4 th strategic
plan which extends from 2020/21 up to 2025/26 take into account such social unrest and protest
and the mitigation strategy in case of the occurrence of the same incidents and recommended to
take revision when the problem is beyond control.

This business strategy is organized in 6chapters that discuss and analyze specific issues that build
up the whole document. The first chapter deals with fundamental issues such as mandate
analysis, vision, mission and values and adopted for this strategic plan. The second chapter gave
emphasis to internal and external situations analysis to construct and design the strategic
document. In internal situation analysis, internal capacity of the company such as organizational
structure, resources such as manpower, material and financial capacity, products and services
etc., were deeply assessed to understand where the company is and to forecast the ultimate goals
in the coming five years. Economic, political, social and technological external factors including
market assessment, which are uncontrollable environment, was realized for their positive as well
as negative impacts. Finally, strengths, weakness, opportunity and threat were organized in the
summery of SWOT matrix. In chapter four, strategic issues, goals and objectives was identified
specific 6 specific goals were set to move the company forward in the period. Chapter six and
seven discuss strategic assumptions and monitoring and evaluation system. Finally the document
incorporates annexes of Microfin financial projections and key performance indicators to
measure the output.

2. Objectives
This strategic business plan has numerous objective that aims at ensuring the growth of the
company and maintaining financial as well as operational sustainability. The major
objectives are to;

 set overall goals for company business and develop a plan to achieve them

 To maximize the profitability of the company that in turn maintains sustainability
 project the growth roadmap for the year 2020/21 to 2025/26 and work towards it
 think in advance for allocation of necessary resources so that the smooth implementation
of the plan shall be in place.
 To ensure optimal utilization of resources

5
 3. Brief Country, Regional and Company Profiles
2.1. Country Profile
The Federal Democratic Republic of Ethiopia, is a landlocked country in the Horn of Africa. It
shares borders with Eritrea to the north, Djibouti to the northeast, Somalia to the east, Kenya to the
south, South Sudan to the west and Sudan to the northwest. With over 109 million inhabitants as
of 2019,(World bank) Ethiopia is the most populous landlocked country in the world and the
second-most populous nation on the African continent. The country has a total area of 1,100,000
km2 (420,000 sq mi). Its capital and largest city is Addis Ababa, which is part of Oromia national
regional state.

Diverse nations, nationalities, peoples, and linguistic groups are the main characteristics of the
country.(MOI, 2004).Currently, Ethiopia is administratively structured into nine national
regional states—Oromia, Tigray, Affar, Amhara, Somali, Benishangul-Gumuz, Southern Nations
Nationalities and Peoples (SNNP), Gambela, and Harari—and two city administrations, Addis
Ababa and Dire Dawa.

Ethnically, the population of Ethiopia is heterogeneous. The principal ethnic groups is Oromo
followed by Amhara, Sumalee, Sidama and Tigre etc. Christianity, Islam and protestant are the
dominant religions with significant number of traditional religion. Increased throughout the
1990s. In 1992, manufacturing constituted 3.9 percent of the GDP, whereas its percentage share
had slightly increased to 4.3 percent by 1998.

2.2. Regional Profile

Oromia is one of the 9 national regional states of Ethiopia. Its estimated area is about 363,375
km2, (KWO-2009) that accounting for about 34.3% of the country's total area. It is also largest
State in Ethiopia in terms of population size and areal coverage
(https://www.oromiabofed.gov.et/). It is bordered by the Somali Region to the east; the Amhara
Region, the Afar Region and the Benishangul-Gumuz Region to the north; South
Sudan, Gambela Region, and Southern Nations, Nationalities, and Peoples' Region to the west;
and Kenya to the south. The two chartered city administrations, Finfinne and Dire Dawa are fully
encircled by the region. Having its capital in Finfinne, the administrative arrangement of the
region is structured into 21 zones, 30 town administrations 382 districts /336 rural and 46 urban/
and about 6,446 Peasant association and 684 Urban Dwellers Gandas /KWO: 2009.

6
Oromia is characterized by diverse relief and demographic features. It has three climatic zones,
highland, semi-highland and lowland that varies from 500m-4377m above sea level. /Oromia
bulletin/ with majority of highlands and semi-highlands. The average maximum annual rainfall is
approximately 2400mm in parts of Bale, Ilubabor Central and Western Highlands and the
minimum is 400mm in parts of Borena in Southern Oromia. The average temperature for the
region is ranges from less than 7.5oC highlands and greater than 27.5oC in some parts of the low
lands. The highland areas are characterized by sedentary rain-fed agriculture and livestock
production, while the lowlands are largely inhabited by pastoralist communities who depend on
livestock production. Oromia has experienced high and sustainable economic growth, which is
mostly attributable to growth in the agricultural sector.
The population of Oromia region was estimated to be 36,830,815 by 2010 EC (KWO,2010) In
2020 it is projected to nearly 39 million, with 50% male % 49% female. According to KWO,
out of the total population, 85 % lives in rural and 15 % live in urban. About 47.6% of the
population is under 15 years, 49.2% of the population age range between 15-64 year of age and
3.2% above 65. Other ethnic groups Amhara, Somali, Gurage, Sidama, and Tigray lives in the
region.

a) Economic Activities
Oromia’s economy, like the country’s economy, is dominated by agriculture and followed by
service and industry sector. Agriculture, which includes crop production, livestock raising and
fishing, is the back bone of the regional economy. The sector provides foodstuffs, and industrial
materials and export products like coffee, and cereal crops. Chat is also the other cash plant that
mainly growing in the region. The contribution of the sector to national as well as regional GDP
is remained high. 1n 2016/17 the contribution of agriculture to national GDP was 36.3%,
industry 23.7% ( Manufacturing 6.4% 7 construction 18.2%) service sector 39.3%.( GTP-II
midterm review report). As reported on Kitaba Waggaa Oromiyaa 2009 EC the sectorial
contribution to regional GDP were, agriculture51.0%, Industry15.2% and Service 33.8%. This
indicates that agriculture dominate the economy of the region and followed by service and
industry. Within industry manufacturing contributed 8.1 % which is still emerging. In the Home
Grown Economic Policy, the government gives due emphasis to the proportional growth of all
sectors with special emphasis to industry. The role of microfinance in sectorial growth is significant
in financing SME operators and farmers.

7
 b) Infrastructure
Due to its geographical location many parts of Oromia regional state has better infrastructure like
road, railway, telephone, internet and electricity. With regarding road coverage the region has
49329.93 km rural roads which implies that the linkage between gandas and anas have shown
encouraging increment especially in URRAP implementation. Ibd. No data was found about the
user of mobile and wire telephone, internet, and electricity. However, as stated above, Oromia is
one of the regions with better coverage of this services.

c) Education

Since it is a populous region, the number of students, teachers and education facilities in the region are
large in numbers. The region had 48,89 1st level primary schools ( grade1-4), with total number of
enrollment of 3,731,230. The numbers of 2 nd level primary schools (grade 5-8) were 5, 853 and the
number of enrolled students were 1,781,335. The region had 447 secondary schools (grade 9-10) that had
546,961 students. Preparatory schools (11-12) in the region reached 163 in number with71, 035 students.
According to BOFED report /2011/ “The health status of Oromia Region is generally poor as it is true for
the country as a whole compared to other low income countries.

2.3. Company profile

OCSSCO is a transformation of Oromia Rural Credit and Saving Scheme Development Project
(ORCSDP). It was initiated by Oromia National Regional State to access sustainable financial services,
especially for those financial resource poor rural and urban societies which do not have access to
conventional banks in the region..

OCSSCO, as a microfinance institution, was established in the form of Share Company defined under
article 304 of the Commercial Code of Ethiopia (CCE). The Code defines a share company as “a
company whose capital is fixed in advance and divided into share and whose liabilities are met only by
the assets of the company.” The NBE registered and licensed OCSSCO upon fulfilling the requirements
set by the MFIs Proclamation No. 40/1996. Accordingly, OCSSCO has gotten its legal status and begun
its formal operational activities on August 4, 1997. Proclamation No. 40/1996 was repealed and replaced
by the new Micro Financing Business regulation, Proclamation No 626/2009 in 2009, and then after the
new law has been governing the industry. Amendment was made on the existing proclamation 626/2009
which referred as Micro-finance Business (Amendment) Proclamation No. 1164/2020 and this
proclamation came into force commencing from January 2020.

8
OCSSCO was established as a Share Company by five shareholders and owned by these shareholders.
However, the number of shareholders were grown to 11 namely: Oromia National Regional State, Oromo
Self-Help Organization (OSHO), Oromia Forestry Development Enterprise, One Natural person, Oromia
Development Association (ODA), Shashemane, Burayou, Jimma, Nekemte, Sebeta, and Bishoftu Towns
Administrations. Up on establishment, OCSSCO has an authorized capital of Birr 60.00 million out of
which Birr 20.00 million has been subscribed by the founding shareholders. Currently the amount of
capital is raised to 11 shareholders and the paid up capital of 120 million. Out of the total shareholders
amount Oromia National Regional State has the highest share of 25%. Burayou contributes 17.9%,
Shashemene 16.7%, Jimma and Nekemte 13.9% each. The remaining shareholders contribute below 5%
each.

OCSSCO, as developmental tool, has been becoming an increasingly important role player in the
development activity of the region. The Company’s operation has spread across 21 zones and 385
branches in the regional government, other regions city administrations. The Company has been
providing credit, saving, micro insurance, local money transfer and mobile and agent banking in the
Oromia National regional state, Harari regional state and Finfina & Dire Dawa City Administration.

CHAPTER I: Fundamental Issues

1.1. Mandate Analysis
Mandate analysis is reviewing the purposes and duties of the Company established for, i.e.
purpose of its establishment and to perform what? Two consecutive proclamations and one
amendment for the latest proclamation were issued in order to set clear mandates of MFIs and
regulate them. The 2nd Micro financing Business Proclamation No. 626/2009 and its amendment
Proclamation No. 1164/2019 have incorporated clear purposes and duties of micro financing
institutions. According to the latest Micro financing Business proclamation and its amendments,
MFIs including OCSSCO has the following mandates:

a) Accepting both voluntary and compulsory savings as well as demand and time deposits;

b) Extending credit to rural and urban farmers and people engaged in other similar activities as
well as micro and small-scale rural and urban entrepreneurs;

c) Drawing and accepting drafts payable within Ethiopia;

d) Provide micro-insurance business;

9
e) Purchasing income-generating financial instruments such as treasury bills and other short
term instruments as appropriate;

f) Acquiring, maintaining and transferring any movable and immovable property including
premises for carrying out its business;

g) Supporting income generating projects of urban and rural micro and small scale operators or
others engaged in productive activities;

h) Rendering managerial, marketing, technical and administrative advice to customers and

assisting them to obtain services in those fields;

i) Managing funds for micro and small scale businesses or others engaged in productive
activities;

j) Providing financial leasing service to lessees in accordance with Capital Goods Leasing
Business Proclamation.

k) Providing local money transfer services;

l) Provide digital financial services

m) Perform mobile and agent banking activities;

n) Provide interest free microfinance service

o) Engaging in other relevant activities;

As microfinance institution, the mandate has granted OCSSCO to involve in wide financial
services. From the stated mandates OCSSCO did not apply payable through drafts which has
customer demand and a major area of completion with banks. The micro insurance is limited
only for GB loans and does not include other insurances like weather index insurance, livestock
and cattle insurance. The micro insurance service is also not detached from the company and
function independently. There is also limitation in acquiring, maintaining and transferring any
movable and immovable property including premises for carrying out its business particularly
the movable one. Mandates stated under ‘j’ and ‘l’ are not fully implemented. Therefore, it is
valid to address the gap in the mandate and swell the businesses of the company. Since the
financial industry has been intensifying the implementing digital services, which OCSSCO has
severe limitation, this strategic business plan should give special emphasis to the less emphasized

10
service to cope up with the industries as well as the world. Amplifying the service is also part of
achieving the vision of the company. Furthermore interest free microfinance service, which was
neglected in the previous strategic business plan should be the main concern of this strategic
business plan as the major operational region of OCSSCO is equally dominated by Muslim
inhabitants.

1.2. Mission, Vision and Values

 Mission Statement

A reexamination of an organization’s current mission was made in order to accept the existing
one or alter it with the new mission that fit with the Company’s mandate and objectives. The
current mission statement of OCSSCO is:

Provide affordable, innovative and customers responsive

financial services to rural and urban economically active people
to improve their income.

The existing mission statement is very clear and states the Company’s objectives,
operational area and activities. Besides, it is short and easily memorable and expressed to
others. However, it lacks how the company is going to bring customer satisfaction and win
the competition, which is through the use of modern financial technologies. Hence, it is
advisable to accept and use the existing mission statement for this strategic plan year.

 Vision Statement

OCSSCO’s vision stated on the 3rd Strategic Business Plan which had been in use for the past
five years stated as “Aspire to be a world class MFI contributing to economically empowered
and transformed society by 2025”. This vision has limitations such as over ambition expressed
by “world class” and the year set to become ‘world class’ , which seems unrealistic. To make it
short and realistic it is modified to “Aspires to be a bench mark financial institution”

 Core Values
Organizational core values guide organization’s thinking and behaviors.  It can be thought in
terms of dimensions like pro-social activities, market, performance, people, corporate culture and
achievement. The existing core values of OCSSCO is easily memorable but it is has redundant

11
concepts and difficult to state each letter in the acronym. Considering this it is reshaped to the
following core values.

 Integrity: Exhibiting the highest levels of objectivity, accountability, honesty, transparency,

fairness and responsibility at all times;
 Customer Focus: Placing the customer at the core of Company’s business and ensuring high
quality services and inclusiveness;
 Diligence: Highest levels of proficiency and due professional thoroughness;
 Innovation: Adaptability, ensuring the optimum use of information technology and current
financial novelty.
 Teamwork: Working in teams, building team spirit, cooperation, communication achieved
objectives in the set timeframes at all times;

CHAPTER II: Stakeholders, Collaborators Analysis

2.1. Stakeholders Analysis

Stakeholders of the Company are organizations groups and individuals who are in a position to influence
Company’s operation or place their interests/demands on the Company’s normal operational activities or
those who can affect the normal operational activities of the Company directly or indirectly.
Stakeholders’ analysis helps the Company to clarify their demand, expectations and influences and work
toward fulfilling their expectations.

2.1.1. Internal Stakeholders

Internal stakeholders are those individuals or groups within a business who have an interest in the
company. It includes Company’s General Assembly (shareholders), BODs top and middle Management
and employees at large. Analysis of this group/individual is very important in strategic business plan
because it directly or indirectly influence the activities of the company. OCSSCO’s internal stakeholders
are analyzed below on table ------

Table 4. 1. Internal Stakeholders Identification & Analysis

12
Stakeholde Expectation/s Likely Reaction and Degree of Institutional Response
rs Impact if Expectation is Importance
not met

Sharehol  Influence 1  Strategically plan

ders the governance and set appropriate targets
 Sustainability of the
to identify the periodically monitoring
Company;
gaps for and evaluating the
 Transform the
correction; performances against the
Company to high level
 Inject expectation;
financial services provider;
additional  Gaps’ identification
capital to and notify for remedial
enhance actions;
capacity;  Strongly work on
 Take Company’s capacity
Board of  Achievement of  appropriate
Provide 1  building
Strategically
to meet plan,the
Director goals and objectives of necessary set appropriate targets
s the company; execution periodically monitoring
 Implementation of capacity and evaluating the
policies and directives; building performances against the
 Timely plans and activities; expectation;
reports;  Take  Gaps’ identification
 Continuous Administrative and notify for remedial
improvement in and corrective actions;
institutional capacity; measures;  Strongly work on
Company’s capacity
Top  Conducive and  High 1  building
Creating conducive
to meet the
managem encouraging working management and encouraging working
ent environment; turnover environment;
 Recognition and  Weak  Developing
reward for efforts; commitment and application of recognition
 Competent salary performance. and reward systems;
and other  Weak innovation  Developing &
remunerations; employing competent
 Learning, promotion salary and benefit
& development packages;
opportunities;  Creating learning
and development
opportunities;

13
 Stakeholde Expectation/s Likely Reaction and Degree of Institutional Response
rs Impact if Expectation is Importance
not met

Employe  High staff 1  Creating conducive and

es turnover; encouraging working
 Better working
 Weak environment;
environment;
commitment &  Developing recognition
 Competent salary and
performance; and reward systems;
benefit packages;
 High  Developing competent
 Recognition and
absenteeism; salary and benefit
reward for efforts;
 De motivation; packages;
 Fair treatment and
 Fraud and  Creating learning,
equal opportunities;
embezzlement; promotion and
 Learning, promotion
 Weak development
and development;
innovation; opportunities based on
opportunities
performance results;

2.1.2. External Stakeholders

External stakeholders are groups, individuals or organizations outside of a company such as
its customers (those individuals who purchase its goods and services), creditors (individuals or groups to
whom the company owes money), the government, suppliers (companies from whom the business
purchases its products), or society in general. The external stakeholders of OCSSCO are summarized in
table---------below.

Table 4.2. External Stakeholders Analysis

Stakeholders Expectation(s) Likely Reaction and Degree of Institutional Response

Impact, if Expectation is Importanc
not met e

OCSSCO’s  Efficient,  Dissatisfact 1  Regularly review

Clients/Custo reliable, competent ion and quit; the institutional
mers and quality financial  Failed to services;
services (credit, repay loans;  Identify
savings, insurance,  Low saving problems and provide
etc. mobilization; solutions through
 Fitting  Reputation market research;
Products risk/damage;  Regularly
 Quality service  Company’s monitor service quality
 Affordable sustainability to ensure customers’
Price might be satisfaction;
14
Stakeholders Expectation(s) Likely Reaction and Degree of Institutional Response
Impact, if Expectation is Importanc
not met e

Oromia  Participate on  Loss of 1  Conduct need

Regional the implementation confidence; assessment and act
Government of government  Take accordingly;
policies and appropriate  Improve the
strategies; measures; Company’s capacity
 Expanded and operational
outreach and efficiency;
efficient financial  Conduct
services; customers’ satisfaction
 Significant survey and impact
contribution to assessment to meet the
Bureau of job  poverty
Timely and  Enforces or 1  expectation;
Improve
creation provision of influences the Company’s execution
Opportunity financial service to regional capacity;
& Urban food the organized MSEs government to  Timely and
security operators; intervene; efficient financial
TVET Create job opportunities  Enforces or 3  Provide
service provision;
Commission through provision of influences the financial service to
of Oromia financial services regional viable businesses;
government to
Financers  intervene;
Categorize as 2  Committed to terms of
(DBE, CBE bad client; agreement;
 Adherence to
and others)  Cut/reject  Provide timely
the terms of
loan request and report;
agreement and
other capacity
timely report;
 Strict adherence  building
Enforce
 Adherence to
to NBE’s adherence to the
National legal requirements;
proclamation and proclamation
Bank of  Identify the
subsequent and subsequent 1
Ethiopia bottleneck provision
directives; directives;
(NBE) and notify the Bank for
 Timely  Provide
the subsequent actions;
operational and Capacity
financial reports; building;

15
 Stakeholders Expectation(s) Likely Reaction and Degree of Institutional Response
Impact, if Expectation is Importanc
not met e

 Wider access  Influence  Follow up and timely

and opportunities to the government response to public
financial service; and shareholders; need or demands;
 Respect  Hinder  Respect
Public at norms, culture and Company’s societies’ norms,
2
large involvement of the operations and culture and encourage
communities; distort the their involvement;
 Market and reputation:  Conduct
employment continuous market
opportunities; research;
 Develop

2.2. Collaborators Analysis

Collaborator is a person who works jointly on an activity or project; an associate; as Oxford dictionary
defined the term. This definition can be extended to organizations. Collaborators are useful for
businesses as they allow for an increase in the creation of ideas, as well as an increase in the likelihood of
gaining more business opportunities. The following organizations are identified as collaborators of
OCSSCO.

Table 4.3. Collaborators analysis

Collaborator Field of Collaboration Company’s Advantage

Association of Ethiopian
Micro Finance Institution
(AEMFI)
 Training;  Capacity building;
 Development of Industry  Policy and regulatory improvement;
standards;  Experience share;
 Advocacy;
 Information on micro
finance performances ;
 Technical assistance;

Other Micro Finance  Experience share;  Experience share;

Institutions  Information exchange;  Information exchange;
 Common stand and  Improvement in working; policies and
influence; environment;
Police Commission  Escorting Company’s  Secured cash movements;
cash movements;

16
 NGOs  Capacity building;  Capacity building;
 Restricted intervention  Outreach expansion;
fund management;  Attain social mission;

CHAPTER III: Situation Analysis

3.1. Internal Situations

3.1.1. Organizational Structure& Governance

Organizational structure is a system that outlines how certain activities are directed in order to achieve the
goals of an organization. These activities can include rules, roles, and responsibilities. The organizational
structure also determines how information flows between levels within the company. During the period of
the 3rd strategic business plan OCSSCO’s Organization structure studied and implemented two times, in
2017, & 2020 with minor horizontal change of structure. The first one was studied by external consultants
while the second one has studied by internal staffs. In both studies, the vertical hierarchy of the
company’s structure remained the same by comprising of head Office, zonal Office and branch offices
despite debate on the changing of zone to district office.

The governing organs of the company of the company consists of General assembly, Board of Directors
and top Management.

a) General Assembly

General Assembly is the supreme organ of the company that have the power of decided upon everything
relevant to the company in general that includes driving policies, appoint and dismiss Board of Directors,
amend memorandum and article of association, examine and approve annual budgets, activity and
performance reports. (Initial Memorandum of Association Article 8) OCSSCO has 11 shareholders who
assume the power of general assembly and out of which 10 are organizations and one is natural person.
One of the problem in OCSSCO general assembly is the replication of General assembly and Board of
directors that minimize the check & balance of the two structures. In most cases all the Seven Board of
Directors with higher votes and even with higher political authority are member of the general assembly
and influences the decisions of the supreme organs. Rising the number of shareholders help the company
to inject additional capital and also solve the limitation of check and balance in the general assembly
meeting.
b) Board of Directors

Historically OCSSCO’s Board of directors members are senior government authorities with enormous

17
duties and responsibilities. The current Board members are people in ministerial level, regional cabinets,
and mayors of city’s administrations. Powers and duties of the BODs are clearly stated on the
memorandum of association article 10. In addition, literatures show the BODs have the fiduciary,
strategic, supervisory and management development role to maintain the qualitative as well as the
quantitative growth of the company. Although their role in this regard are undeniable, it has not been
satisfactory due to many tangible reasons and this also adversely affect the operation of the company.
The limitation observed from the BODs side are

 Not conducting regular meeting as per the regulatory and general assembly schedule.
 In ability to find them for decisions under their authority limit and for decisions that needs
their directions
 Many of them lacks live experiences in financial business management particularly
microfinance industry
 Difficulty to change the chairperson of the BODs as only one natural person in the
shareholder, and organization shall not authorized to the chairperson of BODs according to
commercial code of the country.
 In ability to allocate adequate time for BODs meeting to look into issues in-depth.
 Lacks of different board committees that support the BODs

Considering the challenges of microfinance business operation and the demand for instant decisions it is
recommended to establish strong BODs that have sufficient time, experience and knowledge in the
financial industry. In addition, rising the number of natural person shareholder is very important to obtain
alternative Board chairperson that replace the only one natural person whose term of assignment is
limited to only three years according to regulatory body. In addition establishing board committees is
mandatory as regulatory requirement and also useful to minimize the burden of the Bods.

c) Executive Management

Executive management is the highest level of management in an organization and responsible for
planning, leading and controlling, supervising a company’s business. In OCSSCO, the top
management classified into two categories: executive management and top management.
Executive management consists of EMD and three Deputy EMD with high level responsibility.
The management is consists of the executive committee, and 14 Directorates and one service
managers totally 19 members. From the total 19 number of management members six have
experience of greater than 10 years in OCSSCO top management and 4 have between 5-10 years,
three of them have 2-5 years and 6 of them recently joined the management after the
implementation of 2020 structural study and have experience of less than one year as

18
management member but have accumulated experiences in different position form 10-22 year.
Qualification wise many of them have acquired post graduate level except few of them. Hence
the composition of OCSSCO top management in terms of education qualification and work
experience depicts that they are capable to discharge duties and responsibilities assigned to them
as corporate management. The combination also assures the existence of succession plan in the
management foreseeing the future. However, the management has not been gender sensitive and male
only management and this also need rectification effort.

Although the combination is good enough and promising to run the company, there are limitations that
have been observed and needs rectification measurements. These includes;

 No clear demarcation of authorities, between executive committee and top management

 The large size of top management is not apt to conduct short meeting and take decision on issues.
 Becoming male dominated management and lacks gender sensitiveness
 Negligence of some management members and derecognizing themselves as not decision maker
in company’s affairs
 Deficiency of self confidence in making decision and bringing even the simple case that the
director should act on at his/her boundary, to the higher body approval and confirmation
 Fear of each other and submissiveness is also observed in some management members
 The management members contained themselves in daily routine activities that could be handled
by senior level experts rather than strategic corporate issues.

Many of the gaps arise from absence of t high level managerial capacity building training, capacity
building, experience sharing and exposure visit etc. It is also recommended to clearly demarcate the
authorities between the two organs to ensure transparency, accountability and responsibility. The size of
the members of management is also demand revision and segregation. The gender issue is also needs
attentions.

3.1.2. Workforce of the company

Human resource is the personnel of a business or organization, regarded as a significant asset in
terms of skills and abilities. It also include the department of a business or organization that deals
with the hiring, administration, and training of staff. (Oxford Dictionary).
OCSSCO staffs at all levels has shown rapid quantitative as well as qualitative growth in the past
years. On June 30, 2015, the initial year of the 3 rd strategic business plan the number of Staffs of
OCSSCO was 4, 583 and the data shows the proportion of male to female was 73.69% and
26.31% respectively. Nearly 90% of the employees worked at branch level. Regarding

19
qualification, only 10 staffs or 0.22% have post graduate qualification and 753 or 16.5%were
first degree graduate. Around 55 % of the staffs at this time has possessed diploma or level IV
qualifications. On June 30/2019, the fourth year of the 3 rd strategic business plan, the total work
force of the company at all level reached 5869 excluding 301 outsourced security guards. This
number is higher than the 2015 OCSSCO manpower by 1,286 staff or by 28.06 % with annual
average increment of about 7%. From the total staffs 86.31 % have been working at branch level.
The data indicates that the proportion of the branch staffs shows diminishing trends while zone
office slightly show increment. The proportion of male to female is almost the same with
previous period. The number of customer relations officer was 1,250 while the number of
customer service officer and branch accountant was 1, 675, which is higher than CROs by 425.
The CROs proportion to total branch staff was 23.67 %. CROs are the motors of OCSSCO in
running the operation of the company and generation revenues.
Qualification wise there have been change when compared to the previous period. However, yet
22% of the employees below diploma/Level IV qualification and this should be the point of
attention of the management. Table below summarize the qualification of the general employees.
Qualification Male Female Total percentage
MA/MSC 37 3 4
0 1
BA/BSC 1,483 527 2,01
0 34
Level IV/Dip 1,858 689 2,54
7
43
Less Than Level 917 355 1,27
Iv/Dip 2 22
Grand Total 4,295 1,574 5,86
9 100

In general OCSSCO has strong work forces in terms of age combination, qualification diversity
and gender mix and highly contributed to company growth & success if properly managed and
utilized. However, the following issue needs attention
 Timely Response to company’s employee salary and benefit demand ahead of the
demand arises and shake the company
 The proportion of customer relations officer should be need attention as they are the
engine of the company.
 Ensuring good governance, fairness in administration, promotion, transfer and other
benefits

20
  Consistent and continuous capacity building training
 Sharing company mission and vision, orienting their rights and obligations to act
accordingly

3.1.3. Physical Resources Assessments

A) Buildings: In its third strategic business plan OCSSCO planned to own different
building at all structure. For instance it planned to construct one mixed use building in
Finfinne, 20 branch offices and 12 zonal offices. However, none of the plan was
implemented and it remained as aspirations. Progress has been observed only in
possessing plots of land in many districts and few zones. Therefore, the company
currently has head office buildings and 13 condominium rooms in Finfinne and Metu
Zone office like before five years. The cost of office rent at branch and zone offices has
been escalating in the past five years and challenging the sustainability of the company.
Rapid action should be taken in the coming years to minimize the teat.
B) Vehicles and Motorbikes: Vehicles, including motorbike, are the soul and flesh
of microfinance operation. Without motorbike serving rural people in distant is very
difficult as practically observed. The same to motorbike, vehicles are also important to
run the operation at least at head office and zonal offices. With regarding the supply of
these resources the plan of third strategic business plan meet very limitedly. The plan
was providing one motorbike for newly opened branches upon opening but it became
difficult to implement and many new and existing branches have no motorbikes or have
non-functional old one. The cost of spare parts, the cost for frequent field work for
maintenance services, the dissatisfaction of branch workers, the scarce availability of
spare parts summed together and negatively impact on the growth of the institutions
and contribute for declining of operation.

With regarding zone, in fact, old and cost centered vehicles have been supplied in the
past five years. Some of them have become the source of revenue for garages. In these
vehicles it will be more difficult to run the operation of the company in many zones as
immediate and frequent support for branch becomes mandatory. Similar to zonal
offices, some of the vehicles at head office have served for more than 10 year and seldom
functioning. The plan to purchase three vehicle per year (totally 15) was partially done

21
 by purchasing five pick-up cars and three automobiles. By and large, OCSSCO should
give emphasis for the supply of motorbike, and vehicles to support its growing operation.
Concerning motorbike, in addition to its scarcity, the way it has been handled has visible
problems. Using the motors for training, not controlling and replace its lubricants and
motor oil, negligence in driving are some of the problems. Creating awareness and
establishing controlling system like GPS installation is very important

3.1.4. Products / Services

OCSSCO is an MFI that was established according to the earlier MFI Proclamation 40/1996
which was later replaced by Microfinance Business Proclamation No. 626/2009 and its recent
amendment 1164-2019 and has been rendering services with the scope of legal mandate for the
last 23 years. The company has been providing financial services which includes Micro-credit,
saving mobilization, Micro insurance, local money transfer, and non-financial services like
advisory services. Highlight views of the products/services are presented below.
a) Loan Products
OCSSCO has a variety of loan products and lending methodologies that have been functionalized in the
past operation years. Solidarity group based (urban and rural), micro and small enterprise (MSE) loan,
General Purpose Loan, Business Loan, Housing Loan, WEDP Loan are among the main loan products.

Group Based Loan: GB loan, Urban and rural) is the oldest and main component of OCSSCO loan
which constitutes significant portion of the loan portfolio of the company. The loan targets mainly rural
farmers to increase their productivity through provision of agriculture based loan. To serve petty traders
and in urban area, the company also render urban group based loan but not significantly increasing.

Year RGB UGB Total

     
Client Outstanding PA Clien Outstanding PA client Outstanding
Portfolio R t Portfolio R Portfolio
2014/1 2,580,209,22 0.02 130,581,5 0.04 849,5 2,710,790,7
5 785,93 0 63,58 43 12 63
2 0
2015/1 2,800,421,88 0.03 96,172,3 0.09 722,6 2,896,594,2
6 695,58 3 27,11 90 99 72
4 5
2016/1 3,261,831,70 0.03 137,059,0 0.04 831,3 3,398,890,7
7 796,67 3 34,71 05 98 08
9 9
2017/1 4,278,877,22 0.03 193,748,0 0.04 916,6 4,472,625,3
8 871,62 9 45,01 88 40 17

22
 1 9
201 5,567,163,62 0.05 295,863,5 0.06 934,7 5,863,027,1
8/19 874,67 2 60,07 40 49 62
5 4
878,16 5,537,688,851.4 0.08 317,404,272.7 0.09 62,605
2019/2 3 5 2
0

As shown above, the group base loan portfolio particularly the rural group based one has shown
tremendous growth by double fold as compared to base year, but clients who has gotten the service has
not been significantly changed. This indicates, the growth in loan size rather than no of clients and at the
same time the demand for this product is high. However; this product has been suffering from low
average loan size and group formation problem. As indicated on different supervision report the farmers
have been complaining for better average loan size as inflation annually increased and prices of goods
and services has been continuously escalating. The group formation and linked group co-guarantee and
joint liability has not been easing the borrowers and even the company because it challenges repayment in
some aspects. Demanding for individual loan is quest at hand. Therefore it is better to address these issues
in this strategic business plan so as to sustain the business in assertive condition. In addition, distant from
the service provision centre that expose farmers to high transaction cost, poor client screening by CROs,
insufficient training & follow up and inadequate client handling are the other problems associated with
this product.

Enterprise Loans: Micro and small enterprise loan, (MSE) women entrepreneurs Development Loan
(WEDP) and business loan are categorized under this component. Of the three products MSE loan, which
has been rendered to un-employed youths, aiming to encourage self-employment has been a challenging
one as indicated below.

Year MSE WEDP BL

       
client Outstanding PA clien Outstanding PA client Outstanding PAR
Portfolio R t Portfolio R Portfolio
2014/15 0.18 54,62 0.02 54,516 0.04
100,55 521,634,350 598 8,905 943 ,001
9*
2015/16 0.14 50,45 0.12 28,967 0.13
13,027 435,570,518 651 2,507 415 ,492

2016/17 2 0.01 50,70 0.04 45,998 0.02

30,785 ,083,207,319 503 4,931 693 ,077

2017/18 3,10 0.04 85,095,98 0.01 69,081,68 0.01

42,301 6,018,468 749 1.66 770 6.79

23
 2018/1 2 0.13 207,02 0.01 146,219,42 0.01
9 45,330 ,994,553,843 1,11 8,137 1,348 8.76
5
2019/20** 3 0.09 199,89 0.01 1,7 232,715,51 0.01
47,799 ,349,062,428 1,12 1,686 28.00 9.86
6
*May be by individual member **only Six month performance

From the above table one can understand that the number of borrowers and the amount of
outstanding loan portfolio has been increasing from year to year except in few situations. The
recovery rate of the loan has been in challenge with special reference to MSE. The Par of MSE
product is very high including in 2016/17. In this year it seem very low however the reality
shows that the PAR was hidden due to large disbursement of youth fund. The Portfolio at risk for
WEDP and Business loan is within the range of industry average and this could be attributed for
the loan is secured by collateral and it is demand driven loans. As observed from field
supervision and OCSSCO annual report the repayment challenge with regard to MSE is very
tough and difficult to maintain the regulatory requirement. This is because of supply driven
nature of the loan that the government direction to render the service for unemployed youths. In
addition, this loan is easily exposed to favoritism, nepotism, misdeeds, staffs negative attitude
toward the product, and political interest, not supported by strong collateral and guarantee like
WEDP & business loan. Problem of Enterprise group formation, member’s variation in interest
to run the business as per their plan, sharing of borrowed money for personal consumption,
disappearance of MSE after accessing the loan, business failures have been the sources of the
miscarriage for this loan. If strategically and independently managed, making it demand driven,
minimized political interference, the product is the main solution for the current unemployment
problem.

b) Savings products

OCSSCO, as the vanguard financial institution that introduces modern saving to rural community, its
share of the saving market very limited in terms of accounts and cashes. What is undeniable is that the
volume of saving has shown essential growth in the past two decades but has mismatch with the potential
of the region of Oromia.

Year      
  Total Saver  Saving Mobilization Total Net saving
Com Vol

24
 2014/15 1,175, 425,015, 1,712,987, 2,138,003,1 2,256,911,6
588 847 282 28 64
2015/16 1,168, 427,024, 1,968,680, 2,395,705,7 2,340,065,1
016 938 851 89 53
2016/17 2,496, 1,088,598,0 3,741,579, 4,830,177,9 3,750,012,9
230 08 911 19 80

2017/18 1,600,711 749,086, 5,092,780, 5,841,867,3 4,512,337,4

727 657 84 76
2018/ 1,793, 663,595, 5,475,745, 6,139,340,6 4,601,266,2
19 817 373 286 59 09
2019/20 1,752,670 309,145, 2,837,652, 3,146,798,3 4,853,430,9
850 471 21 66
Compiled from OCSSCO planning data.

The table depicts that the amount of annually mobilized saving has grown incrementally with slow rate.
For instance the number of saving accounts couldn’t able to pass one million in the last five years. The
net saving only grow nearly by 100% in five years. The amount of saving annually collected has not been
satisfactory for a big mass base company like OCSSCO.

In fact the company has diversified its saving products like commercial banks and paying reasonable
interest to savers. In some contractual saving products like Handhura, Sorema and Sebeta Ayo, OCSSCO
pays rather attractive interest rate than even the commercial banks. However, the amount of cash
collected from these products have not been significant. The reasons for low saving mobilizations are

1. Low emphasis paid to saving mobilization from the inception period of the institution
2. The community including its clients know OCSSCO better in loan provision rather than
saving mobilization
3. Less introduction of saving products to the market
4. Not marketing some saving products( handhura, Sorma, sebeta Ayo) as required
5. Branch level staffs also give priority for loan and do not want to face challenges of saving
mobilization.
6. Poor service provision in account opening and withdrawal as well
7. Lack of effective and dependable saving mobilization strategy

c) Micro Credit life Insurance

Micro credit life insurance is one of the products of OCSSCO which have been in operation since
-----------. The purpose of micro credit is to minimize repayment risk in case of loan client’s deceased,

25
develop group self-guarantee confidence and support family of the clients. The product has been applied
for only group based loan clients. The rate of insurance premium are 1%, 1.5% and 2% of the gross loan
with different benefit packages for the insurer. In most cases clients prefer 1% premium rather than other
options and this shows either the benefit packages are not attractive or no awareness creation tasks have
been deployed to clients for the remaining other options. The other problem related to this product is the
increasing number of reported deceased clients from year-to- year. In addition, OCSSCO couldn’t able to
expand the products to index base crop and live livestock insurances and other like fire, health etc
insurances.

d) Local Money Transfer and M-Birr Services

According to the financial regulation of the country, MFIs are mandated to provide local money transfer
services. In this regard, OCSSCO has entered into agreement with Cash Africa RORAIMA and started
the service in 2009/10 and this service had stopped offering service few years back. Currently the
company has been providing money transfer service via M-birr platforms which has been demonstrating
significant growth. The local many transfer service has been declining not only in MFI but also in
commercial banks due to digitization of the financial services and core-banking system in which anybody
can deposit certain amount of money in the accounts of an individual in distant and automatic withdrawal
is possible instead of transferring via telegram or other means. Therefore, the local money transfer
service has little benefit to local customer as a result of other fast delivery system.

OCSSCO started provision of M-birr service in 2012 as pilot service at Sululta, Sebeta and Dandii
branches. Later it was decided to fully implement and it has been rolled out to all branches with slow
growth. The platform avail saving, withdrawal, buy goods and mobile cards in addition to sending money.
As the transaction number rise up the revenue generated from this service has been increasing as shown in
table below. In addition to generating revenue, the service has solved the problem related to PSNP
payment system in Oromia region and benefit the poor and the government as well. The service seems to
rely on this program and couldn’t expanded to the community at large.

Year Service provision centers Transaction (Birr Revenue

  Branch Agent Total    
2014/15 5 101 106 89,589,432 317,889
2015/16 191 501 692 314,144,779 900,500
2016/17 277 906 1,183 1,215,505,816 1,138,057
2017/18 347 1,680 2,027 2,397,449,213 3,528,195
2018/19 372 2,315 2,687 3,226,020,573 5,007,514
2019/20          

26
Currently almost all branches of despite some progress the service has different problems that requires
attention. Some of the problems are

 No attention was given by branches to expand the service

 Some branches indirectly decline to take M- Birr as OCSSCO service
 Many of the agents are so dormant that they couldn’t render services
 Complain of unfair profit sharing

e) Service Provision

OCSSCO has over couple of decade experiences in microfinance service provision. In these years of
services it has brought economic changes in rural as well as urban by creating financial access to mainly
the poor, unemployed youths and women. The service provision as studied by OCSSCO has limitations
that require immediate action to implement this strategic business plan. In this regard, the major problems
are;

 Lack of prompt service in loan processing and deposit withdrawal and no set standard service
time.
 Time consuming service that exposes clients to additional transaction coast
 Lack of respecting customers and treating as ‘king’
 Problems of loyalty in provision of services
 Unfair treatment of customers and reflection of favouritism, partiality, preference etc

3.1.5. Brief Financial Performance Review

A numbers of ratio projection was made on the third strategic business plan document. Some of
them reviewed below for understanding the financial situation of the company.

3.1.5.1 sustainability/profitability
a) Return on Asset: Return on assets (ROA) is a profitability ratio that provides how
much profit a company is able to generate from its assets. It measures how efficient a
company's management is in generating earnings from their economic resources or assets
on their balance sheet. It also best used for comparing a company’s current performance
to its previous performance. Table below shows OCSSCO’s return on asset for the last
four years.

Years Assets Average asset Net Profit ROA

2014/15 4,723,190,702.00 0 310,126,637.00 Base line

27
 2015/16 5,165,615,453.00 4,944,403,077.50 306,812,596.00 6.21
2016/17 8,628,006,709.00 6,896,811,081.00 378,176,193.00 5.48
2017/18 12,184,985,130.00 10,406,495,919.50 505,326,869.00 4.86
13,634,811,224.0
2018/19 0 12,909,898,177.00 595,402,929.00 4.61
14,390,759,628.0 375,240,296.0
2019/20 0 14,012,785,426.00 0 2.68

According to this efficiency indicator, OCSSCO return on asset has been positive and the
amount of profit shows annual increment. However, the ROA ration is with continuous
diminishing trends from year to year in the last five-year. This indicates the declining of the
company’s earnings from its economic resources or assets.

b) Return on equity (ROE)

Return on equity (ROE) is one of the measures of financial performance calculated by
dividing net income by shareholders' equity. ROE is considered a measure of the
profitability of a company in relation to stockholders’ equity. Tebel below shows the
trends of return on equity for OCSSCO starting from the baseline period of 2014/15.

Years Net Profit Shareholders' equity ROE Remarks

310,126,637.0 25.7
2014/15 0 1,205,253,654.00 3
306,812,596.0 20.2
2015/16 0 1,514,618,935.00 6  
378,176,193.0 25.5
2016/17 0 1,480,927,257.00 4  
505,326,869.0 26.7
2017/18 0 1,892,433,380.00 0  
595,402,929.0 23.8
2018/19 0 2,493,306,676.00 8  
375,240,296.0 13.2
2019/20 0 2,841,506,860.00 1  

Satisfaction of return on asset depends on what is normal for the industry or company
peers. However ROE is a key profitability ratio that investors use to measure the
amount of a company's income that is returned as shareholders' equity. As some
literature shows ROEs of 15–20% are generally considered good and therefore it had
been good for OCSSCO fort 2016 to 2019. In 2020 it shows unsatisfactory achievement.
What is generally observed from the above table is that the ROE of OCSSCO has been

28
fluctuating from year to year and did not show growth in the past five years. hence it is
one of the strategic issues that should be considered to maximize the profitability of the
company.

c) Operational self-sufficiency:
Operational Self Sufficiency (OSS), expressed in percentage terms, provides an indication as to
whether a Microfinance Institution (MFI) is earning sufficient revenue (through interest, fee and
commission income) so as to cover its total costs-financial costs, operational costs and loan loss
provisions. (https://www.researchgate.net/publication/ I t is when the operating income is
sufficient enough to cover operational costs like salaries, supplies, loan losses, and other
administrative costs. ( Anand Rai, Anil Kanwal, Meghna Sharma) the projection of OCSSCO in
this regard was 192.60% in the first year, 167.90%, 174.30%, 181.30% and 184.%in the 3 rd
strategic business plan. The performance is close to the projection with small differences
160.01% , 160.90%, 164.02% for three years. Greater 100% is acceptable ratio and as it is far
from this breakeven point ensures the company’s operational sustainability.

d) Financial self-sufficiency

Financial self-sustainability is when MFIs can also cover the costs of funds and other forms of
subsidies received when they are valued at market prices. Meyer (2002) indicated, "Measuring
financial sustainability requires that MFIs maintain good financial accounts and follow
recognized accounting practices that provide full transparency for income, expenses, loan
recovery, and potential losses." In the strategic business plan, 150.80%, 131.00%, 137.70%,
143.10% and 145.20%. OCSSCO is not financially self-sufficient because it is exempted from
government tax, over birr 4 billion fund injection at zero cost of fund, and experience of huge
concessional loans which need to adjust to its revenue.

3.2. External Situations

Political, Economic, Socio-Cultural and Technological (PEST) environment analysis describes a
framework of macro-environmental factors used in the environmental scanning component of
strategic management. It is a strategic tool for understanding market growth or decline, business
position, potential and direction for operations.

29
3.2.5. Political Situations
Ethiopia is one of the diversified countries with different nations, nationalities and peoples with
varied but interrelated cultures, norms, values and interests too. After the fall of Derg regime in
1991, the Ethiopian politics scored many prudential progresses with regard to economy, social,
and political ever before. The spark light of democracy and the essence of equality, justice,
human right and private property has been shown. People relatively have better standard of
living ever before, live in peace and stability, and have better access to infrastructure,
educational institutions (college/universities) and

Political instability: Since 2014 the people, particularly the Qeerroo & and Qarree Movements
political groups and activists revolt against the ruling Ethiopian People’s Revolutionary
Democratic Front (EPRDF) government in quest for democracy, equality, good governance,
justice and human rights. Despite the revolt ended with inner party reform that later bring about
ideological change, the political instability have been existed yet in almost all regional state of
the country mainly in Oromia where OCSSCO has been operating for the last 22 years. Armed
struggle in significant zones, insurgent movements, hostility among political parties prevails here
and there since the last five years. The 4th implementation of the 4th strategic business plan of
OCSSCO had highly been affected by this instability. Fall in repayment, increase in PAR,
limited expansion, rise in irregularities & disorders, and lose creditworthiness have been among
the manifestation of the impact of political instability. This instability is not fully changed to
stability at current time and there is a fear it may be continued for some years here after.
Therefore, this strategic business plan should take into account how to manage this incident if it
will continue for certain period of time.

Social unrest: Social unrest is characterized by the general dissatisfaction of a group or a

people. It expressed by violent action and/or rioting due to political, economic, environmental
etc; causes. Racial and ethnic tensions are the main causes of social unrest in Ethiopia and
Oromia too. The effect of previous social unrest on the country’s political, economic and social
bases have not been freeze yet and at any circumstances the country is vulnerable for this social
unrest and this should be point of consideration during the formulation of the 4 th strategic
business plan.

Election 2020 and its consequence: According the constitution of FDRE, the national election
shall take place at mid of August, 2020. However due to COVID-19 pandemic, the election

30
schedule is postponed to unknown time. Whatever the time, the political situation during election
becomes stiff and may be result in chaos and social disorder. In addition, the change of the ruling
party may be a challenge for OCSSCO because it is a government affiliated MFI that was
established by the current ruling party. If the election is concluded peacefully and power is
transferred in due process of law it is an opportunity to OCSSCO in maintain peace & stability.
By and large, the upcoming election is another political challenge and opportunity for OCSSCO
in one way or another.

3.2.6. Economic Situation

The economy of Ethiopia is a mixed and transition economy with a large public sector. The
government of Ethiopia is in the process of privatizing many of the state-owned businesses and
moving toward a market economy. In the last three decades the country has been liberalized its
economy and as a result a numbers of government owned firms has been privatized and the
financial sector’s operation has been opened to Ethiopian citizens. As a result, 16 private
commercial banks, 41 MFIs and 17 insurance companies entered the financial market under the
supervision of the National bank of Ethiopia. Due to this economic policy measure the country
has been registering double digit economic (on average 10%) growth for over one decade despite
the fact that it is still one of the poorest countries in the world. As the World Bank Group
overview, Ethiopia's economy experienced strong, broad-based growth averaging 9.9% a year
from 2007/08 to 2017/18, compared to a regional average of 5.4%. But, Ethiopia’s real gross
domestic product (GDP) growth decelerated to 7.7% in 2017/18 due to reduced government
public expenditure aimed at tackling the growing current account deficit and indebtedness.
Political uncertainty and severe foreign exchange shortages also diminished growth.

Ethiopia's economy is based on agriculture, where coffee is a major export crop. As of 2015,
agriculture accounts for almost 40.5% of GDP, 81 percent of exports, and 85 percent of the labor
force. Many other economic activities depend on agriculture, including marketing, processing,
and export of agricultural products but the government is pushing to diversify into
manufacturing, textiles, and energy generation. Therefore, the economic basis is suitable for the
operation of microfinance institutions like OCSSCO who has been dominantly financing
farmers, SMEs organized agro industries, food processing and value chains.

31
Inflation: By definition, inflation is a quantitative measure of the rate at which the average price
level of a basket of selected goods and services in an economy increases over some period of
time. It indicates a decrease in the purchasing power of a nation's currency by decreases the
value of money and rising the commodity prices.

The inflation rate in Ethiopia varies from month to month and the average annual rate has been
6.63%, 10.69%, 13.83%14.6% /https://www.statista.com/ from 2016 to 2019 %respectively. This
is by far higher than the current deposit rate of the country which is 7%. The implication of
higher inflation rate above the deposit rate discourage savings that because the value of deposited
money is falling over time. It also affects the price of borrowing to cover financial as well as
operating costs. In its strategic business plan OCSSCO should take into account the effect of this
macro-economic conditions that will result in increasing loan size and at the same time the
sources of fund to cover the demand.

Interest Rate: Interest rate can be seen from two perspectives. The first one is deposit rate on
saving and the second one is lending rate.

a) Deposit rate: It was raised from 5% to 7% during the 3rd strategic business plan last
two years and this implies that the cost of fund on deposit increases by the same percent
while OCSSCO did not revise its lending rate and absorb the costs but other commercial
banks has revised their price and increased by the same percent. Decline to adjust the
result in decreasing of OCSSCO revenue by 2% for the last two strategic plan year. The
central bank set only the minimum threshold of deposit rate and left the other for markets.
As practically visible e commercial banks and MFIs pay above the threshold for some
saving products.

b) Lending interest rate: It is the amount that banks/MFIs charges on money that it lends.
One of the reasons that MFI costs higher interest rate is that it inevitably higher operating
costs for small-size loans as compared to typical bank loans. Though the nominal interest
rate of OCSSCO seems high the effective rate was acceptable because the company
applying decline rate of interest. OCSSCO did not revise its lending interest rate in the
past five years even when the government adjusted the deposit rate from 5% to 7%. In the
coming strategic business plan the OCSSCO should revisit the rate and adjust to its

32
 continuously growing operating costs as well as cost of fund due to inflation and other
economic factors.

Devaluation: Devaluation is the reduction in the official value of a currency in relation to other
currencies. The National Bank of Ethiopia (NBE) has announced a devaluation of the country's
currency, the birr by 15% effective from October 11, 2017. It is obvious that devaluation has
long-run and short-run impacts on individual institution and on countries as well. The previous
devaluation has contributed to inflation and increase the cost of goods and services. Like other
institution it has impacts on OCSSCO. Although there is no indication of government measures
in connection with this, however, it is essential to consider its effect on company’s strategic
business plan.

Recession & Depression: Other economic factors like recession and depression paly significant
role in financial planning. Recession is widespread economic decline that lasts for at least six
months whereas depression is a more severe decline that lasts for several years. The two
economic factors arises uncertainly due to different factors like pandemic disease COVID-19
which disrupts the global economy and stock market crushes, deregulation and high interest rate.
The recession in Ethiopia affects microfinance mainly in delaying repayment, decreasing credit
demand and may be discouraging of saving. This strategic business plan consider this uncertainty
and its mitigation strategy.

Demand & supply: Like other firms, financial markets can be analyzed by using the theories
of supply and demand. Those who save money whether individuals or businesses, are on
the supply side of the financial market. Those who borrow money are on the demand side of
the financial market. With regarding these factors, demand and supply, OCSSCO has clear gaps
that should be addressed in this strategic business plan document, the market analysis show
higher credit demand in the market. The Microfinance credit market potential is high in the
region the company has been operating. Contrary to this, OCSSCO suffer from loanable fund in
its more than two decades operation. Therefore, it needs effective strategy on how the supply of
the loan rises to address at least major portion of the clients although it is very difficult to
maintain financial equilibrium by OCSSCO alone.

33
3.2.7. Socio-cultural Situations
A social environment includes the values, beliefs, customs, and practices of a group of people. A
business is subject to an external social environment and also its own internal social
environment. Studies show that that socio-cultural factors affect participation, loan repayment,
leadership and the survival of the groups. In the first place, social hierarchy in society
influences aspects of group formation, savings and even loan repayment in MFI loan groups
(2004). Hence Understanding of local culture is the main reason of the effectiveness of
microfinance

Macroeconomic factors have direct impact on the attractiveness of various strategies in the
organization. Because of this they have been seriously considered in the strategic business plan.
Among those factors, the followings are very essential during the strategic business planning.

Credit & saving culture: Culture plays the vital role in the industry of microfinance because the
industry mainly operates in rural area where the people is highly influenced by socio-cultural
beliefs. The existence of socio-cultural influence has impact on financial inclusion both credit,
saving and insurance services. According to National Financial Inclusion Strategy of Ethiopia
(2014-20), there were 19.3 million bank, 11.4 million MFIs accounts in 2016 which indicates
68 transaction accounts per 100 adults (15+ ages). The plan was to increase 90 transaction in
2020. The strategy document also state that in 2014 (Citing Findex 2014) approximately 56%
of adults reported not owning an account but either saving, borrowing or insuring themselves
against risks through informal means. 48% of adults reported that they saved or set money aside,
but only 14% reported has saving account at financial institution. 44% adults reported that they
borrowed money in some form with in the last year [2013] but only 7% reported borrowing from
financial institutions. This shows that majority of the adults in Ethiopia are excluded from the
service provided by the formal financial sector. As targeted on the financial inclusion strategy
document, the fingers may be changed and increased but there is gap in financial inclusion in
Ethiopia. People still going to local money lender to satisfy their credit demand. They continue
save their money in traditional ways. This is mainly because non-proximity of financial
institution, financial illiteracy, cultural influence and so on.

With regarding to credit, deterioration of repayment culture has been increasing in the loanee
clients of OCSSCO due to various internal and external factors and therefore it should get

34
emphasis in this strategic business plan to bring back to its earlier position. This habit is
completely against the deep rooted culture of the Oromo society. Repaying ones loan weather it
is in kind or cash is mandatory according to Geda rules and regulation. Installing this through
financial literacy help to secure the portfolio quality of the company.

Considering the national gap in financial inclusion and the cultural influences, OCSSCO should
work on accommodating the acceptable culture to fulfill the demand of the society and expand
its outreaches.

Geda System: People in the operational are of OCSSCO speaks Afan Oromo as their mother
tongue. Traditionally it is ruled by Geda Syatem and by the leader called Abba Gada who
remains in power for only 8 years. Understanding this system of governance and providing micro
financial services result in proper utilization of the credit, ensure repayment and brings about the
expected social changes.
Respect: Since our society is more traditional and multi-cultural with diverse norms, religions,
values and norms, treating them according to their culture is essential. Giving respects for
elders, religion leaders, women etc. developing products that also reflects their culture, norms
and language is also important to become effective in MFI operation.
Existence of Social Trust: trust has more value than formal contract in microfinance operation
as studies also confirmed. As, practically visible in OCSSCO operation, people need more trust,
respect, faith than aggressively enforcing law through group-by law to commit repayment. The
legal enforcement can may force them to retaliation.
Avoid cheating: Cheating, looting, bribery and other corruption means are condemned by the
Oromo society. They are honest, truthful but not tolerate what has not been accepted by their
culture. If somebody ask them for water they provide you milk for free. They leave bedroom for
guests for due respect. However, when they identify somebody engaged in cheating they know
what measures to be followed. Therefore, approaching these clients genuinely, lead the MFIs to
success.
HRM Practice: Effect of culture on microfinance institution’s human resources practice
mainly can be occurred when MFIs do recruitment of their staff. Many of microfinance
institutions make an effort to hire their staff from local community. This preferential hiring is
based on the reason that local staffs from local community are familiar with cultures where the
MFI located. Local staffs tend to instill confidence in clients and make it easier for them to

35
communicate with the MFI (Legderwood,1998). If the personnel are able to speak in the local
language, understand the local custom and traditions as well as have good social skills, they do
the marketing well and effective
In general, OCSSCO should give more emphasis to understand cultural orientation of the
society to properly manage the MFI. By understanding cultural aspects will contribute to the
success of microfinance practices.

3.2.8. Technological Situations

We are in the era of rapid financial technology (Fintech) growth and change. Serval application
software have been in use in the financial industries that make ease the service provision for
customers. Broadly, finch describes any company using the internet, mobile devices, and
software technology or cloud services to perform or connect with financial services. ATM,
VTM, internet banking, mobile banking, cryptocurrency are among the technologies in effect.
The in the future additional new financial technologies may be evolved because of the fast
technological innovation. These technology outputs drive the e-payment system, which is a way
of making transactions or paying for goods and services through an electronic medium, without
the use of checks or cash.
The government has good intention to automate the financial industry to cope with the world.
Although it has limited implementation the national payment system proclamation was declared
in 2011. Regulation of mobile and agent banking directives was issued in 2012. Recently, the
government has drafting Ethiopian Electronic Transactions Proclamation (ETA) to make
electronic marketing better. The legal infrastructures are facilitated to convert the current
manual services to technology supported businesses and transform the financial service system to
digitization and create cashless society. However, illiteracy shall affect the full transformation.
Ethiopian microfinance institutions including the giant ones, are not yet well introduced their
services to financial technology. Efforts has been exerted to implement core-banking system
which is not fully functional. They are the first implementers of mobile and agent banking with
M-birr but the service is very slow and not promoted and stretched as required. No ATM, VDM,
internet banking services in all MFIs.
Like other microfinance institutions in Ethiopia, OCSSCO is not automated as required and this
highly affect its services. It can’t service the market completion with banks specially in saving
mobilization. The cost of transaction is high due to manual works. Wastage of clients’ working
time is visible.

36
As of OCSSCO, a huge has been invested and exerted all necessary efforts on acquiring
appropriate MIS. But with the so far greater efforts, OCSSCO couldn’t be successful in making
use of the intended technological services. The so far stared struggle for acquiring of reliable
MIS & Core Banking System solution will be continue till it will be confirmed.

In general the financial technology environment is very dynamic so that coping with this
environment is decisive for the survival of MFIs in the industry.

3.2.9. Legal situations

The microfinance business proclamation 626/2009 and its amendment, Proclamation No.
1147/2019 which provide for movable property security right and the ongoing land use policy of
the country create favorable market for microfinance industry. The democratization process in
the country, if as expected, the establishment of youth fund and its disbursement through MFIs,
if continued and planned ahead, the support from regulatory body etc; creates conducive
conditions for the operation of the MFIs.

Customers Analysis: MFIs are considered as one of the world most powerful new solutions to
poverty eradication through financial service provision for economically poor people. As indicated in
country and regional profile section still significant percentage of Ethiopian households who live both in
rural and urban suffer from poverty and living below poverty line. Youths in general and particularly
those who annually graduates from higher learning institutions are exposed o unemployment unless they
are supported by providing finance to engaged in self-employment by creating jobs. Women, who is
shouldering high responsibility in the society needs financial access to engage in income generating
activities. Moreover, beginner entrepreneurs require financial access in order to expand their business and
exist in the high completion environment. The same is true for employees, small business operators and
those who want to construct dwelling houses. By and large, OCSSCO’s customers are those un-bankable
rural and urban households and small level business entities with expectation of accessing loans, deposits,
effecting payments, money transfers etc..

It is expected that these customers requires quality services from the company. Adequate loan
size, prompt loan processing, timely services, security for their deposit, instant saving acceptance
and withdrawal, reliable and timely transfer service, better treatment and handling, transparency
and the like. In this juncture, OCSSCO should revise its service delivery system to satisfy the
needy customers and achieve its mission.

37
 3.3. Market Analysis & Planning
Market potential analysis is a strategic tool to identify market opportunities and invest resources
where they will have the greatest return in the long run.  The estimation of the current population of
Oromia region is 37,267,000. (CSA.)

3.3.5. Microfinance Credit Service seeker projection

This projection has been conducted based on the following basic assumptions in Oromia national
regional states.

i. Projected population data by CSA for 2017 was used as a base for this projection. The
projection was made by rate of 2.54% annual population growth.
ii. Productive age group population of the country’s which is 15 – 64 years (CSA) is
considered from the total population
iii. From the above productive age group, numbers of economically active people are taken
employing economically active rate of the region in 2018 which is 71.59% (CSA). This
rate is assumed to remain constant during the projection period.
iv. From the total economically active population in the region, 25.56% (rural poverty
headcount index 2015/16 CSA) of them are assumed to be the microfinance credit
service seekers because they live below poverty line.
v. 10% contingency is considered because the population projection is less of the recent
Ethiopian population (World Bank estimation)

Based on the above assumption, the number of population in the region that seeks for
microfinance credit service is projected in the table below.

Table # Projected Microfinance Credit Service Seekers

Description CSA 4th SBP        

Populatio 2020 Period of
n Years
Projection
in 2017
      2
2021 2022 2023 2024 025
Productive Age 19,548,692 21,076,45 21,611,80 22,160,74 22,723,62 23,300,80 23,892,644
Category 15 - 64 9 1 1 4 4
Years
%age of 13,994,909 15,088,63 15,471,88 15,864,87 16,267,84 16,681,04 17,104,744
Economically 7 8 4 2 5
Active (18-64age)

38
 %age of MF 3,577,099 3,856,65 3,954,61 4,055,06 4,158,06 4,263,67 4,371,973
credit Service 6 5 2 0 5
Seekers
Contingency 10% 437
357,710 385,666 395,462 405,506 415,806 426,368 ,197
Total 4, 4, 4, 4, 4,809
3,934,809 4,242,32 350,077 460,568 573,866 690,043 ,170
2

The demand in terms of money value can be projected based on OCSSCO ‘s average loan size
growth trends. The average loan size growth in the last four years of the 3 rd strategic 18.95%.
The average loan size was inflated due to the high loan size for MSE product for the purpose of
this projection 10% annual growth was considered which is average group base loan size. The
demand is projected; the number of estimated credit service seekers is multiplied by the
average loan size of the company for 2018/19 Birr 9,738.11 plus 10% annual growth.

Table. No. of credit seekers and money value 2020/2021 to 2024/2025

Year Credit seekers Yearly Av. Loan 10% Projected credit
size increment Av. loan size demand/year
/individual
2020/201 4,35 10 46,174,066,319.
0,077.00 9,738.11 876.43 ,614.54 58
2021/22 4,46 11 51,608,096,430.
0,568.00 10,614.54 955.31 ,569.85 00
2022/23 4,57 1, 12 57,681,641,478.
3,866.00 11,569.85 041.29 ,611.13 99
2023/24 4,69 1, 13 64,469,974,184.
0,043.00 12,611.13 135.00 ,746.14 48
2024/25 4,80 1, 14 72,057,186,184.
9,170.00 13,746.14 237.15 ,983.29 90

As shown on the above projection, in very conservative assumption, the expected number of
credit seeker population is greater than 4 million annually. OCCSCO has annually served less
than a million potential credit customer in the past service years. The MFIs operating in Oromia
collectively couldn’t have the capacity to serve half of OCSSCO. Therefore, Oromia has a
potential credit market that even couldn’t satisfy by OCSSCO. In addition to Oromia market,
OCSSCO can expand to neighboring towns and regional administration if it has the capacity.

Saving Markets
Oromia contribute 60% of Ethiopia’s GDP. The region covers the largest geographic area with
abundant natural resources and has potential for multifaceted investments and economic

39
activities. It’s also the most populous region in the nation. In parallel with the national economic
growth witnessed for the last ten years, Oromia is one of the regions possessing the higher
growth as well. Due to these facts, the saving potential of the region is described as huge but not
yet exploited enough.

Gross domestic savings % of GDP in Ethiopia was reported at 24.3 % in 2018, according to the

World Bank collection of development indicators. This indicates that saving culture in Ethiopia
is at infant stage as compared to developed economies however it has been showing significant
growth. The saving market has stiff competition and shark commercial banks have exploited the
majority of the markets. OCSSCO, as a microfinance is assumed to share from saving annually
mobilized by financial institution.

3.3.6. Competitors analysis

Micro finance institutions: There are 46 microfinance institutions in Ethiopia (NBE, 2020).
These microfinance institutions can be categorized three based on their owners. Government
Affiliated, Private commercial MFIs and NGO affiliated.

As some data show, about 75% of MFIs in the nation operate in Oromia Regional State. As
currently observed since these MFIs are small in capacity and operational area they are not threat
to OCSSCO in sharing significant market of credit and saving. What should be taken into
consideration is that, first, existing small size MFIS are growing fast. Secondly the largest MFIs
has plan to expand their services to Oromia to seek potential markets. For instance ADCSI has
started to stretch its foot to towns around Finfine like Legetafo, Sululta, Burayou and sebeta.
The giant MFIs in the country, ACSI, seems to look at Oromia market. It has started to operate in
Finfinne and the second expansion region is expected to be Oromia because of reach credit &
saving potentials. The same may be true for DECSI in Tigray. Thirdly, new entry MFIs have
been loading to the Oromia market may be in better technology and service delivery. Fourthly
the support, operational, technical and financial, given to OCSSCO by government may be halt
at any time due to various reasons. Therefore, OCSSCO should take into account the ongoing
and coming stiff completion from the microfinance and act strategically to maintain its position
and have large market share not only in Oromia bat also in other regional state like Amhara
Oromia zone and other parts, Finfinne ( where OCSSCO gave no attention for the last two
decades) Benishangul Gumuz, Gambela, SNNP, Harari, Dire Dawa.

40
Commercial banks: Commercial banks and OCSSCO are the main competitors saving market
despite the fact that they have strong share and high market position in saving when compared
MFIs.

According to NBE, there are about 17 commercial banks in Ethiopia which have been operating
in the country for many years; more of them above two decades. Statistically, the oldest and
giant Commercial Bank of Ethiopia has over 1000 branches across the country. The main
operational area of the emerging Cooperative Bank of Oromia has been flourishing in Oromia
regional state. Awash Bank flooding the region of Oromia. Other banks are also the Oromia
potential saving markets. The banks influence OCSSCO for the time being in saving. Due to
their reputation, long time built up trusts, technology and instant service delivery, they have the
capacity to get rid of OCSSCO from the market unless otherwise strong competition capacity
will be built and all round service delivery shall be improved. The credit demand market has also
been attracting the banks with special reference to small and medium enterprises. They are
pointing to address these market via SME window services and this shall affect the credit market
of the MFIs in spite the fact that the market is wide-ranging to accommodate all.

Saving and Credit Cooperatives: In addition, the fast growth of cooperative associations in
rural and urban areas of the country as well as the region are becoming share takers in the saving
as well as credit markets. There are many cooperative associations known as ‘Savings and Credit
Cooperatives’ (SACCos) in Oromia. These SACCs provide loans to members from members’
savings. They mobilize savings from members and reimburse to members in need of credit with
relatively lower price. These Cooperatives aren’t independently functioning as formal and
bureaucratic financial institutions, rather they often work attached to other banks or MFIs
particularly for saving accumulations though their attachment with OCSSCO can be said poor so
far. The institutions with most advanced service delivery means and stretched accessibilities
were able to attract the SACCs.

In general, market shares of the institutions vary depending on their capital, outreach coverage,
reputations and level of supports from partners and governments. With this regard, government
affiliated banks and MFIs are found to obtain the greater shares than the private ones. For
example, the bank sector, Commercial Bank of Ethiopia is the highest market share taker
mobilizing most of the country’s financial assets. Not in the same scenario but the leading MFIs
in market share among the MFIs in the country are those government affiliated ones including

41
OCSSCO. This may be mainly because government and many other partners that work on social
development endeavors assist and work with the MFIs directly or indirectly.

Capital Goods Financing: Capital goods financing institutions area recent phenomena in
Ethiopia Financial service provision. The capital goods financing company has established in all
regional state of Ethiopia including the two city administrations and issue loans for machinery
equipment. In Oromia, Oromia capital goods financing company, is not strong to share the
market significantly.

Marketing and Growth Strategy

3.4. SWOT Matrix

SWOT analysis or SWOT matrix is a strategic planning technique used to help a person or organization
identify strengths, weaknesses, opportunities, and threats related to business competition or project
planning. Summary of OCSSCO SWOT analysis is presented here.

Strengths Weakness

  Less coordinated and unstable leadership

Maintaining Company’s operational and financial sustainability; (governance, top, middle and frontline
managements)

In ability to create sense of ownership &

Smooth work relationship with stakeholders at all levels;
organizational citizenship behavior (new)

Inadequate work-tuned staffs’ capacity

Employees’ commitment to sustain the company. development, high internal staffs mobility,
not supported by training

Failure to attach responsibility and

 Expansion and penetration to address financial inclusion
accountability

Unable to build qualified and strong

Ability to Work at very challenging conditions
management team at branch level.

Lose logistic supply and inefficient

 Empowerment and decentralization of duties and responsibilities; maintenance service (vehicle, motorbike, It
materials

Failure to establish uniform and

Readiness to fulfill manpower as operation gets expanded; standardized service according to working
manuals, set standards, directions

Inability to provide digitized financial

Working in partnerships with different development organization
services, despite long time effort

42
 Lack of system that detect favoritism,
discrimination, injustice, enticement

  Poor delinquency management and

prevalence of high portfolio at risk;

  Inability to ensure customer satisfaction

  Inability to assure quality service (internal

& external )

Opportunities Threats

High demand for MF services Political instability & social unrest

Advancement of Financial digitization, telecommunication,

Outbreak of epidemics, pandemics ; pests
computer system

Unplanned interference in company’s

Favorable legal environment
activities

potential and fertile working environment Inflation, Recession of the economy;

Natural disasters such as flood, snow and

Competitors
drought;

CHAPTER IV: Key Strategic Problems, Goals & Objectives

4.1. Key strategic Problems
1. Weak human resource management and development that affects efficiency, effectiveness &
productivity
2. Incapability to utilize & catch up with information technologies to renovate service provision
3. Deteriorating portfolio quality that affects the sustainability of the company
4. Limited operational expansion that affects service accessibility and growth of the company
5. Inadequate physical resources acquisition & management

4.2. Fundamental Strategic Goals

1. Transforming human resource management and development to enhance productivity &
profitability of the company
2. Realizing technological transformation through adopting and implementing modern
Information Systems

43
 3. Radical operational expansion to maintain company’s sustainability & growth
4. Fundamentally improving the portfolio quality of outstanding loan through taking
strategic measures.
5. Focused physical resources acquisition and ensuring its professional management
6. Expanding company’s financial services to banking business (relicensing) in the 1st year
of the strategic business plan

4.3. Strategic Objectives

Goal-I: Transforming human resource management and development to enhance
productivity & profitability of the company

Objective1. Achieving higher employee satisfaction and engagement to enhance

productivity throughout the plan period

Activities

 Amending the HRMD policy & procedures in a way to ensure employees’ right and
responsibility as well as accountability in the first year of the strategic business plan
period; implementing accordingly.
 Implementing all human resource management practices only according to company’s
HRMD policy, procedures and other pertinent laws.
 Implementing standardized result based performance evaluation which entails reward as
well as punishment at all level to boost efficiency, productivity that result in profitability
of the company starting from the first year of the plan.
 In placing good governance and respectful treatment in the overall human resource
management practices
 Promoting trust and positive relationship between employees and managements through
training, mentoring etc.
 Introducing a well organized system to recognize employee job performance
continuously with appropriate feedback, incentives and rewards in 2020/21.
 Measuring employee engagement every year and take subsequent actions to attain the
maximum engagement level.
 Bringing the working environments to the industry standard ensuring its safety and
suitableness for work.

44
  Promoting appropriate work ethics, values and organizational citizenship behavior to
sensitize for higher commitment
Objectives 2. Automating human resource data and its overall management practices in the
first year of the strategic business plan period.
Activities

 Planning activities to automate HRMD services

 Owning the HRM software application
 Capturing, organizing and entering employees’ data into the system
 Effectively implementing and utilizing the application in human resource
management and development service

Objective 3. Applying continuous knowledge and skills gap assessment and implementing
capacity building programs to improve staffs’ efficiency, productivity
Activities
 Conducting knowledge and skills gaps assessments in the third quarter of every year
 Facilitating provision of induction as well as need based job specific training
 Conducting training impact assessments on job after each training
 Establishing evaluation and certification mechanism after each training; and the result
shall be kept in employees’ file which is to be considered during promotion and other
competitions starting from the first year of the strategic business plan.
 Arranging experience sharing visit for BODs, top and middle level management and best
performing employees to increase the quality of leadership and management in selective
ways
Objective 4. Revising the current organizational structure to be compatible with the
company growth and business demands in 2023/24
Activities
 Following, supervising, identifying and organizing any shortfalls of the current
organizational structure and HRMD policy manual in implementation
 Conducting continuous internal and external business environment assessment and
analysis
 Selection and hiring capable consultant firm

45
Objective 5. Fully Functionalizing the research and training center of OCSSCO at the end
of the strategic business plan period.

Activities
 Fulfilling competent manpower in the 1st two strategic business plan year
 Identifying appropriate training courses taking into account training demands from
internal and external financial institutions (banks & MFIs)
 Selecting capable trainers from internal and external
 Developing standardized training module for each training course in the 1st and 2nd year
 Exercising applied researches in connection to company’s problems

Goal-II: Realizing technological transformation through adopting and implementing

modern Information Systems
Objective 1. Finalizing the ongoing core-banking system implementation within the coming
12 months
Activities
 Ensuring supply of computers, printers and other necessary materials in the 2020/21
 Planning, organizing & mobilizing resources (human & material) for efficient data
capturing at branch
 Preparing branch staffs with adequate core banking and related trainings which will be
provided at Head Office as well as at selected zonal offices through decentralization.
 Quickly finalizing the scanning of photo & signature of customer and attaching to the
system and start any branch banking services (inter-branch connection)
 Working instantly on clearing customers and account information file in non-roll out
branches
 Conducting VPN subscriptions, LAN installations and other related tasks in a very
organized and planned ways.
 Completing the migration of all branches manual ledger data into the existing system
within the 1st years and making them go-live
 Finalizing Pending issues and system upgrade of our current Core banking system

Objective 2. Strengthening the security of the core-banking system at standardized stage to

mitigate risks.

46
Activities
 Reviewing and strengthening the work unit structure that works to safeguard the security
of company’s system.
 Revising (Modifying) and implementing a policy for our company system security that
governs its overall applications and administrations with clear duties, responsibilities and
accountabilities.
 Implementing System Auditing on regular basis
 Strengthening employees capacity through providing training
 Conducting system quality survey on consistent basis
 Implementing list privileges to all users who access company system based on their
assignment
 Properly utilizing existing company security equipment and expanding it gradually from
head office through zones and branches
 Change default configuration deployed with hardware and during software installation
 Disabling all default configuration that exist on our IT resources
 Implementing licenses for mission critical IT resources either for hardware or software

Objective 3. Acquisition of new core-banking system in the 2 nd year of the strategic

business plan and implementing in the 3rd year.

Activities
 Conduct gap analysis of existing CBS in the 1st year of the SBP.
 Preparing bid document and others for new CBS purchase in the 1 st year and procuring
the system in the 2nd year
 Planning the transition tasks from existing to new system to minimize challenges of
transition during 2nd year
 Ensuring quality of data in the existing system before transition
 Organizing Request for Proposal (RFP) for new system implementation
 Implementing, monitoring and enriching the system to attain the maximum benefit of it.
 Working on different alternate banking system in parallel to new core banking like
internet banking, mobile banking, interfacing our new core banking to other
organization, ATM service etc.

47
  Properly and effectively using platform acquired from technology provider like M-Birr or
strategically exiting this service

Objective 2.4. Standardize company network and upgrade or expansion of existing data
center

Activities
 Using standardized network materials for company LAN
 Technically performing inventory on material deployed in data center either hardware or
software and work on upgrade or expansion
 Identify outdated spare parts and services of data center and timely replacing them.
 Working on virtualization technology to minimize number of servers deployed in the data
center
 Establishing strong data center management system to mitigate associated risks
Goal III. Radical operational expansion to maintain company’s
sustainability & profitability
Objective 1. Achieving above 5 billion net profit at the end of the strategic plan year through
increasing productivity and proper cost management.
Activities/strategies

 Operational expansion in and out of Oromia national regional states

 Exerting outmost effort in resources mobilization particularly focusing on deposits
 Reducing the non-performing loan to less than 2% to minimize loan loss provision
expense
 Achieving annual disbursement plan stated on the strategic business plan
 Starting banking services in 2021/22 by relicensing the microfinance services
 Strengthening relationship with stakeholders and sources of funds

Objective.2 Increasing each year annual disbursement by 50% from the base line year birr
8.33 billion to reach 63.22 billion at the end of the strategic business plan.
According to microfin projection, the disbursement of the next five year will presented below.

Projected
Year Remarks
Disbursement (Birr)

48
 2019/20 8,325,763,560 Baseline year
2020/21 16,739,445,678.00  
2021/22 24,234,058,332.00  
2022/23 33,078,579,503.00  
2023/24 45,095,291,404.00  
2024/25 63,218,396,035.00  

Activities/strategies

 Generating loanable fund through intensive deposit mobilization from different

sources to ensure loanable fund demand

 Diversifying deposit products to attract different market segments

 Maintaining above 97% fresh outstanding loan repayment rate

 Collecting defaulted loans in the previous years

 seeking loanable funds from different sources of funds

 developing proposals to obtaining finance sources from local and international

organizations & communities

 working closely with government organs

Objective. 3 Increase branch networking from the current 392 to 687 branch offices by 2024/25
by opening 59 branches each year; and opening 100 sub-branches on average 20 sub branches
each year
Activities
 Splitting the existing huge branches to branches & sub-branches for market
deepening and maintain operation quality
 Opening branches and sub-branches in new potential and commercial areas within
Oromia
 Expanding to neighboring regional states and city administrations by opening
branches

Objective 4. Introducing additional new products and refining of the existing products on
regular basis so that marketable products shall be maintained and non-profitable products
should be dropped from operation.
49
Activities
 Refining the existing products to make it suitable to customers regularly
 Conducting product fitness assessment in selected geographical areas and develop
appropriate products and operationalizing it
 Introducing new products up on market research as demanded

Objective 5. Maintaining between 80% to90% loan-to-deposit ratio (LDR) in every-year of

the strategic business plan so as to generate loanable fund from deposits.

The projected savings to be mobilized in the strategic period year is forecasted as stated on table
below.

Projected Projected Projected total

Projected Voluntry Remar
Year Disbursement compulsry deposit LDR
Saving ks
(Birr) Saving mobilization
  Baseli
2019/20 8,325,763,560     ne
  year

2020/21 16,739,445,678.00 1,769,731,508.00  

8,708,250,213.00 10,477,981,721.00 159.76

2021/22 24,234,058,332.00 3,024,314,841.00  

27,670,713,829.00 30,695,028,670.00 78.95

2022/23 33,078,579,503.00 4,733,439,217.00  

36,147,759,217.00 40,881,198,434.00 80.91

2023/24 45,095,291,404.00 7,004,630,224.00  

48,394,918,330.00 55,399,548,554.00 81.40

2024/25 63,218,396,035.00 9,656,826,954.00  

67,097,448,052.00 76,754,275,006.00 82.36

Activities/strategies

 Increasing the number non borrower depositors’ from the current less than one million to
3,277,382

 Capacitating program level staffs to shift from credit-led mentality to saving led.

 Making branches to cover its disbursement by saving mobilization with minimum loan to
deposit ratio of 80%

 Diversifying saving products to attract different market segments

 Assigning saving mobilization for all branch staffs besides CROs

 Increasing the compulsory saving attached to each products based on research

50
  Improving customer handling as to bring satisfaction.

 Encouraging loan clients to save voluntary savings at OCSSCO branches

 Improving withdrawal services via implementing automation to attract savings

 Implementing saving mobilization strategies that map saving areas and intend to realize
broad community based saving mobilizations

 Promoting the saving products through different means

 digitalized payment system that fit with the current financial services in 2021/22 FY

Objective 6. Retaining existing customers and acquiring quality clients to ensure financial
access.

Activities/ Strategies

 Reducing the annual client dropout to less than 5% in providing quality and
instant services to retain them

 Improving client targeting, screening, training, supervision etc practices

 Serving new clients by opening new branches in commercial & potential areas

 Strengthening the advisory services to clients to be successful in their business

 Establishing client monitoring & tracking system

 Improving customer services

 Availing need based products

 Improving loan size in consideration to market inflation

Objective 7. Increase the number of women borrowers from the existing 38% in 2019/20 to
at least 50% by the end of the plan period annually increasing by 2%.

Activities

 Developing and/or modifying products that fit financial services needs of women

 Setting affirmative interest rate for women based on research to initiate them to take
loan and run small businesses

51
  Assigning targets to zones and branches

 Selecting some zones and branches in places where women business engagement is
high to focus on ensuring financial access.

 Working on awareness creation and promoting products for women

Objective 8. Increase yearly borrowers clients outreach from the current about 752,554
clients in 2019/20 to 2,310, 782 clients by the end of the plan period to enhance financial
service access.

Strategies

 Opening new branches to ensure financial inclusion in rural& urban areas.

 Implementing Market penetration and development
 Expanding to other regional states of the country

Goal IV. Fundamentally improving the portfolio quality of outstanding loan through
taking strategic measures.

Objective 1. Reducing and managing PAR of the company to below 3 %

Activities/strategies

 Improving current repayment rate (CRR) of the company to >=97%.

 Attaching responsibilities to CROs at individual level to ensure his/her repayment of

current matured loan to >98%

 Attaching accountability to branches and zonal offices to annually maintain above

98% repayment rate

 Attaching accountability to branch managers and CROs and taking administrative

actions for less performance accordingly.

 Putting in place proper client targeting, screening, training and loan follow-up
mechanism

 Ensuring proper data capturing and management at all level and maintain consistent
quality reporting

52
  Improving loan processing capacity of CROs through training and attaching
responsibility for non-replayed loans due to their negligence, breach of policy,
misconduct etc

 Identifying products with repayment problems and take appropriate measures through
research.

 Product diversification to mitigate risks associated with certain loan products

 Paying emphasis to collateral supported loans

 In placing appropriate professional collateral evaluation before releasing loan

 Issuing demand driven loan rather than supply driven loans

 Enforcement of for-closure rights, which OCSSCO did not implement yet

 Enacting legal measures on clients who fail to timely repay the matured loan
according to the agreement entered between the two parties.

Objective 2: Implementing loan write-off policy every year

Activities

 Identifying loan for write-off as per company policy and regulatory body
direction

 Preparing evidence to present loan for write-off

 Endorsing the write-off proposal

 Collecting the write-off loan incase it is collectable

Objective 3. Enforcing the establishment of credit guarantee scheme in collaboration with

stakeholders in the 2st strategic plan year.

Activities

 Preparation of concept papers on the importance of establishment of Credit guarantee

scheme

 Discussion with domestic & international stakeholders on the importance of the issue and
the international practice

53
  Development of credit guarantee fund manual/policy

 Establishment of the fund as part of OCSSCO or independently

Goal-V. Focused physical resources acquisition and ensuring its professional management

Objective-1. Purchasing 20 pickup vehicles, 16 automobiles and 450 motorbikes to

strengthen institutional capacity at admin and program level during the strategic period.

Activities

 Purchasing at least 4 pickup cars to support operations by replacing timeworn

cars, 4 automobiles

 Supplying one motorbike for new branch up on opening

 Replacing non-functional motorbikes step-by-step on annual base plan

Objective 2. Acquiring sites and constructing mixed purpose buildings for office and
income generating

Activities

 Finalizing the building design of Bole, Lege Tafo, Bedelle and Arboye; and entering
into construction in the first year of SBP period and completing within 30 months.

 Completing the building designs of Odaa Tower Expansion, Agaro and Jima sites in
the 1st year; and starting construction in the 2nd year of the plan to be finished the 4th
year SBP.

 Completing design works of RTC and Gandhi Buildings in the 3nd year; and
commencing their first phase constructions in the 5th year.

 Constructing cost effective branch offices in selected towns

 Acquire the research and training center (RTC) site at Gelan town;

 Acquiring construction sites in other commercial towns including in Finfinne

Objective 3. Improving company’s property administration system

Activities/ Strategies

54
  Introducing information system based property management

 Capacitating the property admin staffs in order to enable them implement effective
property administration

 Conducting timely and accurate property inventory at all level

 Annually auditing the property inventory results

 Implementing efficient and prompt logistic distribution

Objective 4. Ensuring provision of efficient motorbike maintenance service

Activities/ Strategies

 Establishing mini maintenance pool at selected locations which may serve 3 or more
zones

 Fulfilling sufficient and competent manpower to the pool

 Establishing warehouse for each pool and supplying adequate spare parts in advance

 Introducing proactive and planned maintenance service delivery system

Objective 5. Fundamentally improving procurement system of the company

Strategies

 Developing and implementing procurement manual in the first year of the SBP
period.

 Implementing efficient and effective plan based procurement

 Conducting timely and proper procurement need identification

 Focus on bulk and efficient procurement mechanisms

 Strengthening implementation capacity of the work unit through training the staffs
and procurement committee members

 Timely purchasing and supplying required goods and services

Goal- VI. Expanding company’s financial services to banking business (relicensing) in the
1st year of the strategic business plan

55
Objective- 1. Fulfilling preconditions to start the banking business

Strategies

o Conducting feasibility assessment for the expansion

o Developing legally as well as operationally required documents

o Preparing and presenting the relicensing proposal for BoD and GA

o Requesting and obtaining legal license from NBE

Objective – 2. Strengthening institutional capacity for the new business

Strategies

 Studying and establishing appropriate structure

 Identifying branches for the service expansion step by step
 Standardizing branches identified for the banking business
 Providing capacity building trainings for employees
 Developing products and services to be implemented in the banking business
 Conducting corporate rebranding assessment and implementing
 Implementing and promoting the banking business

CHAPTER V: Strategic Enablers and Potential Risks

As literature shows strategic enablers are matters that enable an organization to execute
its strategy more efficiently and effectively, aligning the company more closely with its strategic
goals and objectives (Yves Poullet). Business risks are applies to any event or circumstance that
has the potential to prevent an organization from achieving its business goals or objectives.

5.1. Strategic enablers

Strategic enablers are variables that enable an organization to execute its strategy more
efficiently and effectively. It aligns the company more closely with its strategic goals and

56
objectives. For the efficient achievement of this strategy, it is important to consider the following
enablers.

Strategic Leadership: Strategic leadership is one of the determining factors for the success of
this strategic business plan. Strategic leadership as its name indicates a managers potential to
express a strategic vision for the organization and persuade fellow employees to acquire that
vision or to undertake necessary actions toward the success of the vision. In this regard, the
company’s executive management, top and middle level management leadership role would
empower other followers to strive for better success.  

Workforce: Empowering and engagement of employees in activities related to company help as

an enabler for the strategic success. Employees’ quality, deep commitment of peoples in the
company, good relationship of management and employees enhance the achievement of this
strategic goals and objectives. Ensured good governance at all layers of the company support the
implementation of the strategic business plan. Reinforcement employees in the form of
training, incentives, promotions, and taking retention measures as well as corrective measures for
nonconformity for company policies, rules and regulations initiate them for improved
productivity, goals achievement and company ‘growth.

Integrity: Integrity, which is the quality of being honest and having strong moral principles,
contributes highly for the success of this strategic business plan. The integrity of employee’s,
management members and senior executives for each other’s, the company and the clients in
general shall be considered as a corner stone for the achievement of this strategic business plan
and one of the pillars of the success factors.

Stability: Peace and stability are important in promoting economic development of individuals
and society. Political stability is critical to progress and development since it affects all aspects
of a country’s development. Hence, Stability of the country as well as the regional state of
Oromia remain always important for the implementation of the strategic business plan.
Maintaining rules and orders, sound functioning of government administrative structures, and
government securities, justice institutions, social stabilities are among the enablers of the plan.

Favorable Regulatory Environment: Regulatory framework, which constitutes legal action of

the government and action by the regulatory environment, affects the implementation of this
strategic business plan. The recent relicensing directive for microfinance organizations are one of

57
the conducive environments that enable OCSSCO to achieve this strategic business plan goals
and objectives.

Governance Commitment: Deep commitment all level governance from general Assembly to
the lowest structure contributes for the achievement of the strategic business plan. Particularly
the roles of the Board of Director, Executive Management and top management are so
determinant extra ordinary efforts are expected from them.

Collaboration: The action of working with partnerships and stakeholders will support the
implementation of this strategic business plan. Creating smooth relationship and closely working with
government structures, agencies, local and international partnerships are key strategic enablers of
this plan.

5.2. Potential Risks and Risk Management Strategies

According to literatures, risk is defined in financial terms as the chance that an outcome or
investment's actual gains will differ from an expected outcome or return. It also includes the
possibility of losing some or all of an original investment.

5.2.1. Types of Microfinance risks

Many risks are common to financial institutions. These include credit risk, liquidity risk, market
or pricing risk, operational risk, compliance and legal risk, and strategic risk. According to
document published by GTZ titled as “A Risk Management Framework for Microfinance
Institutions (2000:10)”, microfinance institutions risks are categorized as financial, operational
and strategic risks. Financial risks includes; credit risk, transaction risk, Portfolio risk,
Liquidity Risk, Market Risk, Interest rate risk, Foreign exchange risk and investment portfolio
risk. Transaction risk, human resources risk, information & technology risk, fraud (integrity)
risk, legal & compliance risks are among operational risks. Governance risk, reputation risk,
external business risks, event risks fall under strategic risks.
The National Bank of Ethiopia ‘Risk Management Guidelines for Microfinance Institutions
(2010:4)’ identifies five risk areas in the microfinance industry. These include Strategic risk,
Credit risk, Liquidity risk, Interest rate risk, Operational risk that are common risk area in
microfinance institution. Although there are many types of risks in the financial industry
including microfinance, the risk identified by the NBE are adopted to this strategic business plan.

58
a) Strategic Risk: According to NBE, strategic risk refers to the potential negative impact
on a microfinance institution’s earnings and capital. It arise in circumstances where
decisions taken by the organization is not right. Strategic risk relates to a microfinance
institution’s ability to effectively, efficiently and prudently respond to business
opportunities in a manner that reflects a strong vision and the ability to employ the
resources necessary to achieve organizational goals in a profitable and sustainable
manner. This is one of the critical risk areas in OCSSCO, which need special attention.
Risk avoidance, risk acceptance, risk control/reduction and risk transfer are the most
common risk mitigation strategies in business organizations. With regard to strategic risk
mitigation, OCSSCO strengthen the governance structure and implementation capacity;
provide trainings, implements regular monitoring and evaluations etc;.
b) Credit Risk: It is the possibility of a loss resulting from a borrower's failure to repay a
loan or meet contractual obligations. Credit risk, according to NBE, is the risk to
earnings or capital due to borrower’s late and non- repayment of loan obligation. Credit
risk encompasses both the loss of income resulting from the MFI’s inability to collect an
anticipated interest earnings as well as the loss of principal resulting from loan defaults.
Some literatures refer concentration risk as credit risks. The credit risks in the
microfinance industry are often amplified, mostly, by two main factors: (i) lack of a
collateral pledge by borrowers; and (ii) the information asymmetry between borrowers
and lenders. (Emekter et al., 2015).
In the implementation of this strategic business plan, late or non-repayment of loan may
be encounter due to various reasons such as poor loan management and follow up,
changes in weather conditions, social unrest, epidemics/endemics etc.

To mitigate credit risks, client screening, and training, monitoring and continuous follow
up will be strengthened at program level. Group co-guarantee procedures shall be revised
and in strongly reinforced. Various forms of collateral and guarantees (including physical
collateral, personal guarantees etc.) could also be used and collateral valuation training
shall widely offered to respective staffs. Emphasis shall be paid for individual credits
transactions to strengthen the borrower’s repayment capacity.
c) Liquidity Risks: Liquidity risk is the risk of being unable to meet commitments like
repayments and withdrawals at the correct time and place. Failure to withdraw clients’

59
 savings, and inability to commit repayments of loan obtained from different sources are
common liquidity risks in financial institutions including MFIs. OCSSCO, as a
microfinance institution, mobilizes saving from voluntary and compulsory sources and
committing withdrawal at time of request is mandatory. Similarly, the company has
accessed concessional as well as commercial loans from various sources and expected to
accesses the same during this strategic business plan.
To avoid liquidity risks, the company must keep an up-to-date balance sheet that includes
accurate data on their current assets and liabilities. Identifying liquidity risks early and
monitoring & control liquidity on Regularly basis are used to mitigate the risks,.
Moreover conducting scheduled stress test and creating a contingency plan are among the
mitigation strategies. Managing liquidity risk through controlling concentrations and
relative market sizes of portfolios in the case of asset liquidity risk, and managing
through diversification, securing credit lines or other back-up funding, and limiting cash
flow gaps in the case of funding liquidity risk is common practice in financial
institutions.
d) Interest rate Risks: Interest rate risk is the exposure of microfinance institutions
financial condition to adverse movements in interest rates (NBE). Interest rate risk is
the risk that arises when the absolute level of interest rates fluctuate. Interest rates
changes on both lending and borrowing rates impact on profits especially in the short
term. Increases in cost of funds affect margins adversely, thereby affecting profitability
and operational self-sufficiency (GTZ, 2004).
With regarding OCSSCO practice the interest rate has been remained stable and will be
expected to be stable. However, in case of changes in interest rate changes that causes
interest rate risk is occurred, adjusting the business to the changeling environment is one
of the mitigation strategies. Accepting the risk is also another means that is common in
businesses. Conducting re-pricing is also another strategy to mitigate risks in this area.

e) Operational risks: According to NBE Risk Management Guideline, operational risk is

the risk of direct or indirect loss resulting from inadequate or failed internal processes,
people and systems or from external events or unforeseen catastrophes. It includes the
exposure to loss resulting from the failure of a manual or automated system to process,
produce or analyze transactions in an accurate, timely and secure manner. As studies

60
 confirmed Operational risks impact the reputation and financial stability of a business
significantly and leads to legal risks. Some of the operational risks are, business
interruption errors or omissions by employees, product failure, health and safety, failure
of IT systems, fraud, loss of key people, litigation, loss of suppliers. NBE Risk
Management Guideline the following as common operational risks in MFIs.
1. The MIS system does not correctly reflect loan tracking, e.g. information on amount
disbursed, payment received, current status of outstanding balance, aging of loan by
portfolio outstanding etc..
2. Lack of effectiveness and insecurity of management information system in general and
the portfolio management system in particular e.g. software does not have internal safety
features, inaccurate MIS and untimely reports.
3. Inconsistencies between the loan management system data and the accounting system
data.
4. Treating rescheduled loan as on-site loans
5. Lack of portfolio related fraud controls
6. Loan tracking information is not adequate, e.g. no aging of portfolio outstanding,
inadequate credit histories etc.
To mitigate or reduce operational risks; implementing effective task segregation is important to
prevents one individual from taking advantage of the numerous aspects of transactions and
business processes or practices. Curtailing complexities in business processes, curtailing
complexities in business processes which help to reducing work process is another operational
risk mitigation strategy. Reinforcing organizational ethics
within the company is highly effective in mitigating operational risks management. Assigning
the right people for the right job can reduce difficulties pertaining to business process execution
and skill and technology usage. This also results in appropriate workforce utilization, adherence
to timelines, enhanced quality, and fewer errors and process breakdown.
Strengthening monitoring and evaluations at regular intervals, conducting periodic risk
assessment and taking appropriate measures are very important. In addition, implementing
appropriate MIS highly reduces the risks in this regard.

Chapter VI: Monitoring & evaluation System

Monitoring and evaluation system is a system by which the implementation of a plan is assessed
& reviewed. It represents all the things that need to be undertaken during and after this Strategic

61
Business plan implementation in order to track and measure progress (and success) in achieving
the goals. The main purposes of the M&E system for the five years strategic business plan are to
outline various roles and responsibilities regarding M&E with a view to tracking progress and
demonstrating results and to use it as a tool for monitoring progress both in physical and
financial terms.
Monitoring & evaluation system will allow OCSSCO management and its partners to assess
more effectively, how far the strategic goals and objectives are being achieved. It also outlined
specific steps and tools for informed decision making; develop plans for data collection, analysis,
use, and data quality; to carry out oversight activities and evaluation; and organize various M&E
activities that must take place for tracking progress towards achieving results in a sustainable
manner

Taking these justifications into account, effective monitoring & evaluation will be implemented
at Board of Directors, top management, middle level management & employees level so as to
achieve the strategic goals & objectives set in the five year strategic business plan of the
company.

6.1. Roles & responsibilities of company Organs

6.1.1. Monitoring
a) Board of Directors of OCSSCO : The board is also responsible for monitoring the
execution of the strategic plan. This requires the board to oversee the implementation of
the strategic plan at least one in a year regardless of the quarterly review of the annual
plan which is derivative of the strategic plan. In addition to progress monitoring, the
Board of directors shall make systemic evaluation at midterm and end of the strategic
business plan year to examine the impact of the strategic business plan.
b) Executive Management: Top management has joint and separate responsivities in
implementing, monitoring and evaluation of the implementation of this strategic business
plan. Therefore, the top management shall monitor, evaluate and support the
implementation of this strategic plan as implementer and at the same time as controller of
the implementation. However, the following work unit & their subordinates has special
responsibilities in due process of implementation.

62
  Deputy- Operations: Deputy Operations is responsible for continuous
monitoring & periodic evaluation of the implementation of operational targets.
Therefore, it will annually cascade targets for zones in consultation with
Corporate Strategy and Transformation and establish individual result based plan
at all level and conduct appraisal on result basis.
 Deputy- Resources: Deputy Resource work unit is one of the main support for
operation and have responsibility to carry out some aspects of the strategic
business plan particularly in connection with owning fiscal resources. Hence, it
ensures the supply of logistics, fulfilment of manpower, financial management.
Corporate
 Deputy Corporate strategy and Transformation: This work unit along with its
subordinate directorates conduct evaluation of the implementation of the strategic
business plan against organizational objectives and goals. The evaluation is
conducted after elapse of each fiscal year and on the fourth year of the strategic
business plan to provide inputs for the 5th strategic business plan.
 Corporate Planning & Strategy Directorate: The directorate is responsible to
drive the annual plan from the strategic business plan of the company and timely
communicate to zonal and branch offices in coordination with responsible
directorates. In addition it continuously monitor and periodically evaluate the
implementation of this plan through supervision, controlling, reporting and
feedback.

c) Middle management: The middle level management, zone/district, as the structure

closely working with the branch level implementers shall have the responsibilities to
implement annual corporate plan which is a derivate of the strategic business plan
according to the target & time set annually.
d) Program level staffs: Program level ( branch level) staffs are the key implementers of
the strategic business plan

6.1.2. Evaluation
The evaluation of the implementation shall be done every year taking into account the objectives
set and the impact it brings about on the organization goals and objectives. This shall be

63
performed by research team of the company to maintain independency of findings and avoid
bias.

64
65
66
Annexes

67
Client outreached by year
Term Loan Projections Client Outreach by Year
Year 1 Year 2 Year 3 Year 4 Year 5 5 YEAR
FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 TOTAL
Term Ln Prod 1: Rural Group Based 658,469 941,623 1,195,149 1,314,680 1,446,165 5,556,086
Loans *

Term Ln Prod 2: Urban Group Based 49,174 83,807 116,678 136,797 160,940 547,396
Loans *

Term Ln Prod 3: Urban Enterprises 25,433 35,606 53,410 82,787 132,460 329,696
(UMSEs) *

Term Ln Prod 4: Rural Enterprise 32,682 49,024 75,988 121,583 194,535 473,812
(RMSEs) *

Term Ln Prod 5: Business Loan * 5,378 7,529 10,540 14,757 20,659 58,863

Term Ln Prod 6: WEDP loan * 1,162 1,859 2,975 4,760 7,616 18,372

Term Ln Prod 7: General Purpose 8,714 13,725 20,588 30,883 46,325 120,235
Loan(Gov. *

Term Ln Prod 8: Housing Loan 2,927 5,269 8,430 13,488 21,581 51,695
(Gov.Emplo) *

Term Ln Prod 9: ABIL (Graduated 16,695 40,069 96,163 171,716 276,960 601,603
Farmers) *

Term Ln Prod 10: Company's Staff 1,708 2,049 2,459 2,951 3,541 12,708
Loan *

Total 802,342 1,180,560 1,582,380 1,894,402 2,310,782 7,770,466

68
 Yearly Loan Disbursement Projection

Loan Disbursement Projection

S/ Term Loan
N Projections Year 1 Year 2 Year 3 Year 4 Year 5 5 YEAR

FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 TOTAL

Term Ln Prod 1:
22,498,052,70
Rural Group 9,093,173,542 12,873,788,206 16,775,861,565 19,613,665,540 80,854,541,556
3
1 Based Loans *
Term Ln Prod 2:
Urban Group 901,865,496 1,321,595,298 1,845,764,688 2,264,044,302 2,713,233,775 9,046,503,560
2 Based Loans *
Term Ln Prod 3:
Urban Enterprises 1,274,809,508 1,702,640,226 2,343,720,536 3,315,968,266 5,546,167,414 14,183,305,950
3 (UMSEs) *
Term Ln Prod 4:
Rural Enterprise 1,702,681,852 2,161,012,280 3,039,451,680 4,580,235,380 7,924,513,644 19,407,894,836
4 (RMSEs) *

Term Ln Prod 5: 14,357,118,45

2,457,089,500 3,567,338,775 4,979,089,408 8,988,199,016 34,348,835,151
Business Loan * 3
5

Term Ln Prod 6:
262,597,113 385,890,736 476,827,800 686,400,271 1,201,276,352 3,012,992,272
WEDP loan *
6
Term Ln Prod 7:
General Purpose 217,099,067 402,572,718 476,923,110 642,120,975 1,066,070,438 2,804,786,308
7 Loan(Gov. *
Term Ln Prod 8:
Housing Loan 229,845,710 493,637,372 616,613,498 901,455,636 1,357,173,026 3,598,725,242
8 (Gov.Emplo) *
Term Ln Prod 9:
ABIL (Graduated 454,090,549 1,197,630,415 2,388,528,922 3,958,079,501 6,398,524,135 14,396,853,523
9 Farmers) *
Term Ln Prod 10:
Company's Staff 146,193,340 127,952,306 135,798,296 145,122,516 156,266,096 711,332,554
10 Loan *

16,739,445,67 63,218,396,03
Total 24,234,058,332 33,078,579,503 45,095,291,404 182,365,770,951
8 5
 
Loan to Deposit
  Ratio (LDR) 159.76 78.95 80.91 81.40 82.36 85.13

69
Yearly Loan Portfolio Projection

Loan Portfolio Projection

S/ Term Loan
N Projections Year 1 Year 2 Year 3 Year 4 Year 5 5 YEAR

FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 TOTAL

Term Ln Prod
1: Rural Group 9,093,173,542 12,873,788,206 16,775,861,565 19,613,665,540 22,498,052,703 80,854,541,556
1 Based Loans *
Term Ln Prod
2: Urban Group 901,865,496 1,321,595,298 1,845,764,688 2,264,044,302 2,713,233,775 9,046,503,560
2 Based Loans *
Term Ln Prod
3: Urban
2,056,539,389 2,951,703,726 4,182,987,981 5,900,734,048 9,152,533,695 24,244,498,839
Enterprises
3 (UMSEs) *
Term Ln Prod
4: Rural
2,492,494,759 3,724,918,962 5,398,517,884 7,929,747,066 12,799,116,941 32,344,795,612
Enterprise
4 (RMSEs) *
Term Ln Prod
5: Business Loan 2,493,983,289 4,980,089,331 7,525,002,303 12,501,972,843 20,473,931,848 47,974,979,614
5 *
Term Ln Prod 350,774,905 557,616,192 754,663,840 1,043,285,926 1,692,550,889 4,398,891,752
6 6: WEDP loan *
Term Ln Prod
7: General
315,845,906 512,258,777 701,405,598 933,831,274 1,422,821,011 3,886,162,567
Purpose
7 Loan(Gov. *
Term Ln Prod
8: Housing Loan 345,178,919 691,230,808 1,067,409,435 1,598,077,351 2,382,801,671 6,084,698,184
8 (Gov.Emplo) *
Term Ln Prod
9: ABIL
365,349,748 1,074,745,270 2,262,401,886 3,862,406,594 6,254,286,603 13,819,190,101
(Graduated
9 Farmers) *
Term Ln Prod
10: Company's 254,631,789 287,957,428 318,028,126 344,616,462 367,521,550 1,572,755,355
10 Staff Loan *

18,669,837,742 28,975,903,998 40,832,043,307 55,992,381,406 79,756,850,687 224,227,017,140

  Total
Overall growth
  in portfolio 84.1% 55.2% 40.9% 37.1% 42.4%  

70
Yearly Compulsory saving Projection
Compulsory Savings Projection

S/ Projections for Year 1 Year 2 Year 3 Year 4 Year 5 5 YEAR

N Compulsory Savings

FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 TOTAL

Term Ln Prod 1: Rural 1,109,119,01

1 833,081,527 1,383,620,078 1,563,792,277 1,750,122,085 6,639,734,978
Group Based Loans * 0

Term Ln Prod 2: Urban

2 73,346,925 104,676,515 141,029,034 168,322,965 198,434,339 685,809,778
Group Based Loans *

Term Ln Prod 3: Urban

3 325,083,530 659,460,193 1,141,905,887 1,863,212,354 2,692,900,644 6,682,562,607
Enterprises (UMSEs) *

Term Ln Prod 4: Rural

4 378,460,781 825,736,977 1,490,863,113 2,527,648,619 3,708,210,798 8,930,920,289
Enterprise (RMSEs) *

Term Ln Prod 5: Business

5 44,082,634 75,536,067 122,548,500 153,826,500 195,928,000 591,921,701
Loan *

Term Ln Prod 6: WEDP

6 7,581,827 16,205,164 30,275,000 45,122,000 63,488,000 162,671,991
loan *

Term Ln Prod 7: General

7 56,830,436 98,129,593 154,030,790 216,105,080 300,912,452 826,008,351
Purpose Loan(Gov. *

Term Ln Prod 8: Housing

8 22,327,985 50,011,403 87,175,429 143,519,761 230,551,362 533,585,939
Loan (Gov.Emplo) *

Term Ln Prod 9: ABIL

9 28,935,864 85,439,919 181,991,387 323,080,668 516,279,273 1,135,727,112
(Graduated Farmers) *

1,769,731,50 3,024,314,84 26,188,942,74

  Total 4,733,439,217 7,004,630,224 9,656,826,954
8 1 5

Voluntary Saving Projection

Voluntary Savings Year 1 Year 2 Year 3 Year 4 Year 5 5 YEAR

Projection Section
S/
N FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 TOTAL
Source 1: Term
  Borrowers            
Term Ln Prod 1:
Rural Group Based
1 Loans 1,008,813,177 1,442,621,733 1,831,038,454 2,014,166,966 2,215,609,707 8,512,250,037
Term Ln Prod 2:
Urban Group Based
2 Loans 265,539,600 452,557,800 630,061,200 738,703,800 869,076,000 2,955,938,400
Term Ln Prod 3:
Urban Enterprises
3 (UMSEs) 549,352,800 769,089,600 1,153,656,000 1,788,199,200 2,861,136,000 7,121,433,600
Term Ln Prod 4: 10,234,339,20
4 Rural Enterprise 705,931,200 1,058,918,400 1,641,340,800 2,626,192,800 4,201,956,000 0

71
 (RMSEs)
Term Ln Prod 5:
5 Business Loan 290,412,000 406,566,000 569,160,000 796,878,000 1,115,586,000 3,178,602,000
Term Ln Prod 6:
6 WEDP loan 125,496,000 200,772,000 321,300,000 514,080,000 822,528,000 1,984,176,000
Term Ln Prod 7:
General Purpose
7 Loan(Gov. 18,822,240 29,646,000 44,470,080 66,707,280 100,062,000 259,707,600
Term Ln Prod 8:
Housing Loan
8 (Gov.Emplo) 6,322,320 11,381,040 18,208,800 29,134,080 46,614,960 111,661,200
Term Ln Prod 9: ABIL
9 (Graduated Farmers) 180,306,000 432,745,200 1,038,560,400 1,854,532,800 2,991,168,000 6,497,312,400
Term Ln Prod 10:
10 Company's Staff Loan 5,533,920 6,638,760 7,967,160 9,561,240 11,472,840 41,173,920
40,896,594,35
  Source 1: Sub Total 3,156,529,257 4,810,936,533 7,255,762,894 10,438,156,166 15,235,209,507 7
Source 2: Non-Term
  Borrowers            
Segment 1: NLB 78,541,420,64
1 Individuals 3,299,454,809 11,747,129,837 14,898,201,026 20,033,563,588 28,563,071,387 7
Segment 2: 61,054,967,06
2 Organizations 1,869,691,058 10,003,314,782 12,686,621,891 16,089,704,114 20,405,635,220 6
Segment 3: Local
3 Orgas.Idi 329,945,481 1,035,510,260 1,166,838,880 1,479,833,835 1,876,787,119 5,888,915,575

4 Segment 4: Coin Box 36,133,300 36,133,300 36,133,300 40,715,907 48,673,591 197,789,398

145,683,092,6
  Sources 2: Sub Total 5,535,224,648 22,822,088,180 28,787,795,097 37,643,817,444 50,894,167,317 86
186,579,687,0
  Grand Total 8,691,753,905 27,633,024,713 36,043,557,991 48,081,973,609 66,129,376,824 43
Long Term Contractual
Voluntary Savings

1 Time Deposit * 6,585,848 6,585,848 6,585,848 6,585,848 6,585,848 32,929,240

2 Handhura Saving * 4,024,311 12,630,011 39,638,386 124,402,236 390,427,508 571,122,452

3 Sorema Saving * 189,768 595,574 1,869,166 5,866,244 18,410,787 26,931,539

4 Sabata Ayoo Saving * 5,696,381 17,877,682 56,107,826 176,090,393 552,647,086 808,419,368

Total Long Term
  Contractual Savings 16,496,308 37,689,116 104,201,226 312,944,721 968,071,228 1,439,402,599

  Total Voluntary Savings 8,708,250,213 27,670,713,829 36,147,759,217 48,394,918,330 67,097,448,052 188,019,089,641

Percent growth in Vol.

  Saving deposits 21.1% 217.9% 33.2% 36.1% 42.5%  

Total Saving Projection ( Vol. & Com) & Loan to Deposit Ratio

Projected Projected Projected total

Projected Remar
Year Disbursement compulsory deposit LDR
Voluntary Saving ks
(Birr) Saving mobilization
  Baseli
2019/20 8,325,763,560     ne
  year

72
2020/21 16,739,445,678.00 1,769,731,508.00  
8,708,250,213.00 10,477,981,721.00 159.76

2021/22 24,234,058,332.00 3,024,314,841.00  

27,670,713,829.00 30,695,028,670.00 78.95

2022/23 33,078,579,503.00 4,733,439,217.00  

36,147,759,217.00 40,881,198,434.00 80.91

2023/24 45,095,291,404.00 7,004,630,224.00  

48,394,918,330.00 55,399,548,554.00 81.40

2024/25 63,218,396,035.00 9,656,826,954.00  

67,097,448,052.00 76,754,275,006.00 82.36

Micro Credit Life Insurance

Year 1 Year 2 Year 3 Year 4 Year 5 5 YEAR
S/
Credit Insurance Projections
N
FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 TOTAL
Premium allocated to
             
reserve
Term Ln Prod 1: Rural
1
Group Based Loans 34,099,401 48,276,706 62,909,481 73,551,246 84,367,698 303,204,531
Term Ln Prod 2: Urban
2
Group Based Loans 3,381,996 4,955,982 6,921,618 8,490,166 10,174,627 33,924,388
Term Ln Prod 3: Urban
3
Enterprises (UMSEs) - - - - - -
Term Ln Prod 4: Rural
4
Enterprise (RMSEs) - - - - - -
Term Ln Prod 5: Business
5
Loan - - - - - -

6 Term Ln Prod 6: WEDP loan

- - - - - -
Term Ln Prod 7: General
7
Purpose Loan(Gov. - - - - - -
Term Ln Prod 8: Housing
8
Loan (Gov.Emplo) - - - - - -
Term Ln Prod 9: ABIL
9
(Graduated Farmers) - - - - - -
Term Ln Prod 10:
10
Company's Staff Loan - - - - - -
Total Premium allocated to
11
reserve 37,481,396 53,232,688 69,831,098 82,041,412 94,542,324 337,128,919
  Payouts on Insurance            

Term Ln Prod 1: Rural

1 (178,789,075
Group Based Loans (7,656,845) (37,273,400) (36,495,348) (45,110,453) (52,253,029)
)
Term Ln Prod 2: Urban
2
Group Based Loans (407,684) (3,732,274) (3,854,244) (5,072,893) (6,157,810) (19,224,904)
Term Ln Prod 3: Urban
3
Enterprises (UMSEs) - - - - - -
Term Ln Prod 4: Rural
4
Enterprise (RMSEs) - - - - - -
Term Ln Prod 5: Business
5
Loan - - - - - -
6 Term Ln Prod 6: WEDP loan

73
 - - - - - -
Term Ln Prod 7: General
7
Purpose Loan(Gov. - - - - - -
Term Ln Prod 8: Housing
8
Loan (Gov.Emplo) - - - - - -
Term Ln Prod 9: ABIL
9
(Graduated Farmers) - - - - - -
Term Ln Prod 10:
10
Company's Staff Loan - - - - - -

  Total Payouts on Insurance (198,013,979

(8,064,529) (41,005,674) (40,349,591) (50,183,346) (58,410,839)
)

  Insurance Reserve Balance

29,416,867 41,643,881 71,125,389 102,983,454 139,114,940 384,284,532

Staffs Projections

Year 1 Year 2 Year 3 Year 4 Year 5

S/N Program-level Staffing
FY20/21 FY21/22 FY22/23 FY23/24 FY24/25

  Job description and number [Output]          

1 Customer Relations 1,309 1,555 2,111 2,557 3,129
2 Branch Manager (392) 451 510 569 628 687
3 Branch Auditors (175) 185 195 205 215 225
4 Branch Finance Officers (392) 451 510 569 628 687
5 Branch Main Cashiers (392) 451 510 569 628 687
6 Branch Assistant Cashier (67) 67 77 87 87 107
7 Senior Customer Service Officers (3 355 362 369 376 383
8 Intermediate Customer Service Offic 150 153 156 159 162
9 Junior Customer Service Officers (8 94 104 114 124 134
10 Customer Service Officers (704) 739 774 809 844 879
11 Credit Analysit & Portfolio Mag't ( 110 115 120 125 130
12 Guards (906) 1,024 1,142 1,260 1,378 1,496
13 Janitors (392) 451 510 569 628 687
    5,837 6,517 7,507 8,377 9,393

Prgramme level staffs Annual Salary & Be benefits per person

Prgramme level staffs Year 1 Year 2 Year 3 Year 4 Year 5 5 YEAR
Annual Salary & Be
S/ benefits per person FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 TOTAL
N [Output]

74
 1 Customer Relations 176,785,092 184,639,037 242,285,168 311,970,994 377,306,386 1,292,986,677

2 Branch Manager (392) 93,850,897 106,836,325 119,821,753 132,807,181 145,792,609 599,108,765

3 Branch Auditors (175) 34,453,090 36,993,410 38,898,650 40,803,890 42,709,130 193,858,170

Branch Finance Officers

4 (392) 78,423,142 89,273,950 100,124,758 110,975,566 121,826,374 500,623,790

Branch Main Cashiers

5 (392) 68,803,182 78,322,950 87,842,718 97,362,486 106,882,254 439,213,590

Branch Assistant Cashier

6 (67) 5,726,892 6,225,502 7,080,262 7,436,412 8,433,632 34,902,700

Senior Customer Service

7 Officers (3 61,216,025 62,534,524 63,751,600 64,968,676 66,185,752 318,656,577

Intermediate Customer
8 Service Office 20,140,032 20,579,328 20,849,664 21,255,168 21,626,880 104,451,072

Junior Customer Service

9 Officers (8 11,244,424 12,519,784 13,582,584 14,751,664 16,345,864 68,444,320

Customer Sservice
10 Officers (704) 66,012,054 69,523,744 72,765,304 76,547,124 79,788,684 364,636,910

Credit Analysit &

11 Portfolio Mag't ( 22,067,550 23,166,700 24,181,300 25,195,900 26,125,950 120,737,400

12 Guards (906) 62,116,380 69,635,340 77,154,300 84,673,260 92,192,220 385,771,500

13 Janitors (392) 22,438,045 25,542,625 28,647,205 31,751,785 34,856,365 143,236,025

1,020,500,1 1,140,072,1
  Total 723,276,805 785,793,219 896,985,266 06 00 4,566,627,496

Zonal and head office staffs’ required

Total number of head office
employees * 624.0 624.0 624.0 624.0 624.0
Executive Managing Director (1) 1.0 1.0 1.0 1.0 1.0
Deputy Managing Directors (3) 3.0 3.0 3.0 3.0 3.0
HQ - Directors (17) 17.0 17.0 17.0 17.0 17.0
HQ - Team Leaders (21) 21.0 21.0 21.0 21.0 21.0
HQ - Senior Officers (38) 38.0 38.0 38.0 38.0 38.0
HQ - Intermediate Officers (26) 26.0 26.0 26.0 26.0 26.0
HQ - Junior Officers (3) 3.0 3.0 3.0 3.0 3.0
HQ - Officers (13) 13.0 13.0 13.0 13.0 13.0
HQ - Drivers (6) 6.0 6.0 6.0 6.0 6.0
HQ - Clerks (7) 7.0 7.0 7.0 7.0 7.0
2.0 2.0 2.0 2.0 2.0
HQ - Chief Security Guards (2) 25.0 25.0 25.0 25.0 25.0
HQ - Guards (Outsourced - 25) 33.0 33.0 33.0 33.0 33.0
HQ - Janitors (Outsourced - 33) 21.0 21.0 21.0 21.0 21.0
ZO - Zonal Managers (21) 109.0 109.0 109.0 109.0 109.0
ZO - Department Managers (109) 32.0 32.0 32.0 32.0 32.0
ZO - Senior officers (32) 40.0 40.0 40.0 40.0 40.0

75
 ZO - Interm. Officers (40) 50.0 50.0 50.0 50.0 50.0
ZO - Officers (50) 11.0 11.0 11.0 11.0 11.0
ZO - Junior Officers (11) 70.0 70.0 70.0 70.0 70.0
ZO - -Data Encoders (70) 19.0 19.0 19.0 19.0 19.0
ZO - Secretary (19) 4.0 4.0 4.0 4.0 4.0
ZO - Mechanics (4) 19.0 19.0 19.0 19.0 19.0
ZO - Drivers (19) 35.0 35.0 35.0 35.0 35.0
ZO - Guards (35) 19.0 19.0 19.0 19.0 19.0
ZO - Janitors (19)

Zonal and head office staffs’ monthly salary & Benefits

Note: The following are the "per staffperson" figures

Monthly salary and benefits [Output]
(nominal) for
Executive Managing Director (1) 70,947 70,947 70,947 70,947 70,947

Deputy Managing Directors (3) 55,269 55,269 55,269 55,269 55,269

HQ - Directors (17) 44,901 44,901 44,901 44,901 44,901

HQ - Team Leaders (21) 31,321 31,321 31,321 31,321 31,321

HQ - Senior Officers (38) 24,675 24,675 24,675 24,675 24,675

HQ - Intermediate Officers (26) 21,110 21,110 21,110 21,110 21,110

HQ - Junior Officers (3) 18,273 18,273 18,273 18,273 18,273

HQ - Officers (13) 12,431 12,431 12,431 12,431 12,431

HQ - Drivers (6) 8,086 8,086 8,086 8,086 8,086

HQ - Clerks (7) 6,349 6,349 6,349 6,349 6,349

HQ - Chief Security Guards (2) 5,354 5,354 5,354 5,354 5,354

HQ - Guards (Outsourced - 25) 4,500 4,500 4,500 4,500 4,500

HQ - Janitors (Outsourced - 33) 4,000 4,000 4,000 4,000 4,000

ZO - Zonal Managers (21) 31,429 31,429 31,429 31,429 31,429

ZO - Department Managers (109) 21,744 21,744 21,744 21,744 21,744

ZO - Senior officers (32) 21,109 21,109 21,109 21,109 21,109

ZO - Interm. Officers (40) 18,234 18,234 18,234 18,234 18,234

ZO - Officers (50) 16,244 16,244 16,244 16,244 16,244

ZO - Junior Officers (11) 13,674 13,674 13,674 13,674 13,674

ZO - -Data Encoders (70) 10,039 10,039 10,039 10,039 10,039

ZO - Secretary (19) 8,006 8,006 8,006 8,006 8,006

ZO - Mechanics (4) 12,541 12,541 12,541 12,541 12,541

76
ZO - Drivers (19) 7,855 7,855 7,855 7,855 7,855

ZO - Guards (35) 5,258 5,258 5,258 5,258 5,258

ZO - Janitors (19) 4,331 4,331 4,331 4,331 4,331

125,124,6 125,124,6 125,124,6 125,124,6 125,124,6 625,623,0
Total Head Office salary and expenses * 00 00 00 00 00 00

77