To qualify for the SMEFP credit facility lease financing window, one of the criteria set was training on leasing overview and environmental and social management system. Accordingly, EP has trained 76 of Addis Capital Lease Financing SC’s Management, Operational and Technical staff. The training took place at the Intercontinental Addis on December 13 & 14 and December 17 & 18. The training was aimed at providing the basics of lease financing by relating the international experience with the local context. This helped Addis Capital Staff to get acquainted with the international best practice of lease financing practices and further highlighted the need for specialised training. Following the training, Addis Capital will be certified and will qualify to be part of the SMEFP facility program provided that its ESMS document is fully completed and approved by its Board.
In addition, EP has provided basic SME lending training for participants from four MFIs during the two weeks from Dec 17-21 and Dec 24-28, 2018. Participating Financial Institutions are expected to fulfil certain criteria in order to be certified by EP to access the SMEFP credit facility. Among the primary conditions for certification of PFIs include putting in place an appropriate SME working capital loan product and having staff trained in basics of SME lending. Accordingly, EP has delivered 5 days basic SME training for participants from PEACE and SFPI from Dec 17-21 and to selected staff from Aggar and Harbu from Dec 24-28, 2018. This training is designed to enhance participants’ knowledge and skill in processing loans for small and medium-sized enterprises (SMEs) using an upgraded excel based SME loan appraisal tool.
The tool adopts a cash flow based lending method where the lending decision will primarily be based on the cash flow strengthens of the business instead of adopting the traditional collateral based lending where SMEs face hard time to provide acceptable physical collateral. The tool is used to capture and analyze both qualitative as well as quantitative information and help in making the proper credit decision. In total over 60 staff members from the four MFIs were trained over the two weeks’ time. The training equipped the participants with a basic understanding of the SME sector and appraisal of SME loans. Topics covered include an overview of SME sector and financing needs, cash flow based loan appraisal system using automated excel tool, an overview of the environmental and social management system (ESMS), credit monitoring and problem loan management, and basics of lease financing.
Similarly, a six-day training on cash flow based SME lending methodology was delivered to 28 staff representing selected pilot branches from Lion International Bank S.co and Addis International Bank S.co from 17th to 22nd December 2018. The purpose of the training was to equip banks with a cash flow based appraisal system and help them serve the SME market better. This training is also part of the requirement to certify banks to participate in the SME finance project. This training in addition to TA provided to help banks develop SME business plan, SME operating procedure, and undertake a mini-market survey qualify the second batch of four banks for certification. Accordingly, the second batches of four banks, Abay Bank, Lion International Bank, Addis International Bank and Oromia International Bank have been certified to participate in SMEFP. On a related note, Enat Bank, which was part of the first batch banks to receive training, is scaling-up their SMEFP activities by delivering training to additional branches. Through two consecutive pieces of training held at their headquarter in the week of 10th of December, 40 branches of the bank have been trained on the SME lending methodology.