The Informal and Semi-Formal Financial Sectors in Ethiopia: a Study of the Iqqub, Iddir, and Savings and Credit Co-operatives

"The basic purpose of this study is to generate empirical information on the informal and semi-formal financial sectors in Ethiopia with a view to improving our understanding of their economic importance. The study focuses on the iqqub and iddir in the urban and rural areas and on the savings and credit co-operatives. Two basic approaches were followed in generating the data required for this study. First, the relevant institutions (i.e. the iqqub, iddir and credit co-operatives) were studied. The study suggests that the iddir, unlike the insurance system, is very popular among the people. It is attractive because it is culturally appropriate, flexible, easily accessible and cost-effective. Unlike the insurance system, it is a non-profit-making institution based upon solidarity,friendship and mutual assistance among members. People from all types of socio-economic backgrounds participate in the iddir. The insurance system, on the other hand, is limited to high-income households seeking insurance policies for a definite purpose such as ensuring private houses or cars."