Role And Potential Of Iqqub In Ethiopia

This paper examined the role of 'Iqqub ' with in the community. The findings show thatrnpeople participate in ' Iqqub' for more than economic reasons. With in the paper tworntypes of ' Iqqub' are identified, the Traditional small scale and simple ' Iqqub's andrnEmerging large scale complex' Iqqub's. The operations, number of members theyrnincorporate, the cycle period and their fund allotment mechanisms of these two ' Iqqub'srndiffered widely. ' Iqqub' plays a dominant role in serving the financial needs ofrnhouseholds that are excluded from the formal sector due to bureaucratic workingrnprocesses and high collateral requirements. The paper also examined features ofrnemerging ' Iqqub' s, including safety, return, Liquidity, divisibility. The default rate asrnobserved in surveyed 'Iqqub's is very low, implying good collateral management andrnloan screening in these informal financial sectors. The paper also examined the potentialrnof 'Iqqub ' to be further enhanced to provide more services and accordingly, two potentialrnareas were identified, based on other country's experience: Linking 'lqqub' with thernformal sector and transforming it into village bank. This potential of 'Iqqub', ifrnutilized effectively, can solve the existing problem of ' Iqqub' and makes it morernattractive, however further research in this areas must be made

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