Question 1

What is Saving and Micro Credit Programme?

Accepted Answer

Saving and Micro Credit Programme (SMCP) is the largest microfinance institution in Eritrea, providing accessible financial services to poor and low-income households, microenterprises, and rural communities. Operating under the Ministry of National Development, SMCP specializes in group lending through village banks and individual loans without requiring traditional collateral. As of 2018, the institution served over 71,680 active clients (55.7% women) through 702 village banks across all six regions of the country, with 267 staff members supporting its operations.

Question 2

When was Saving and Micro Credit Programme founded?

Accepted Answer

SMCP was established in July 1996 as a component of the Eritrean Community Development Fund (ECDF) project. The institution initially operated under the Ministry of Local Government for its first five years, providing financial services to help improve living standards in Eritrea's post-independence era. In 2002, SMCP transitioned to operate independently under the Ministry of National Development, marking a significant milestone in its evolution as a standalone microfinance institution dedicated to poverty reduction and economic empowerment.

Question 3

Where is Saving and Micro Credit Programme headquartered?

Accepted Answer

SMCP is headquartered in Asmara, Eritrea, located on Hiday Street, Dembe Sembel, Block A, ground floor (P.O. Box 8269). The main office can be reached at Tel: 291-1-151596 or 291-1-151588, with Fax: 291-1-151580. The institution maintains a strong presence in the capital city while coordinating its extensive network of regional branches throughout the country.

Question 4

Where does Saving and Micro Credit Programme operate?

Accepted Answer

SMCP operates throughout all six regions (zobas) of Eritrea, providing services to 65 out of 67 sub-regions. The institution has established a widespread presence, reaching 1,838 villages out of 2,606 total villages in the country (approximately 65% coverage). Regional branches are located in Massawa (Northern Red Sea), Keren (Anseba), Barentu (Gash-Barka), Teseney (Gash-Barka), Mendefera (Debub), and Asmara (Maekel). This extensive network enables SMCP to serve both rural areas and small towns, particularly reaching communities that lack access to traditional banking services.

Question 5

What services does Saving and Micro Credit Programme offer?

Accepted Answer

SMCP offers three main categories of loan products alongside savings services:

Group Loans include Micro Business Loans (MBL) and Small Seasonal Agricultural Loans (SSAL), ranging from 6,000 to 20,000 Nakfa with five loan cycles. These loans require no collateral, as solidarity group members act as guarantors for one another.

Individual Loans include Small Business Loans (SBL) ranging from 30,000 to 150,000 Nakfa over eight loan cycles, and Agricultural Loans for clients engaged in profit-generating businesses.

Instant Loans launched in 2017, are designed for government and private sector employees, allowing them to borrow up to six months' salary with repayment through payroll deductions.

All loans require a 10% savings deposit, with interest rates of 16% (declining method) for group and individual loans, and 7% (flat rate) for instant loans. SMCP also provides savings services, with village bank savings reaching 72.34 million Nakfa (USD 4.8 million) by 2006. The institution offers field services by visiting clients in their villages, eliminating the need for clients to travel to bank branches.

Question 6

What makes Saving and Micro Credit Programme unique?

Accepted Answer

SMCP's distinguishing feature is its collateral-free lending model, which makes financial services accessible to citizens who cannot provide traditional guarantees required by conventional banks. The institution pioneered the village bank approach in Eritrea, organizing clients into solidarity groups of 35-105 members who serve as mutual guarantors. SMCP specifically targets underserved populations, including rural residents, women-headed households, discharged defense force members, and those completing national service.

The institution demonstrated remarkable resilience by continuing operations during the 1998-2000 Eritrea-Ethiopia border conflict, becoming a case study in microfinance sustainability during crisis situations. SMCP's field-based service delivery model brings banking directly to remote villages, a critical service for populations living far from urban centers. Between 1996 and 2018, SMCP disbursed over 3.19 billion Eritrean Nakfa through 746 village banks, serving approximately 933,898 clients cumulatively.

Question 7

What type of financial institution is Saving and Micro Credit Programme?

Accepted Answer

SMCP is a microfinance institution (MFI) operating as a government-affiliated development finance organization under the Ministry of National Development. Unlike traditional commercial banks, SMCP focuses exclusively on providing small-scale financial services to economically disadvantaged populations who lack access to formal banking systems. The institution functions as a specialized poverty-reduction tool that combines social development objectives with sustainable financial practices.

SMCP follows the village banking methodology, which is characterized by group-based lending, mandatory savings components, peer monitoring, and progressive loan sizes. This positions SMCP within the category of community-based microfinance institutions that prioritize financial inclusion and grassroots economic development over commercial banking activities.

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About Saving and Micro Credit Programme in Eritrea