History

The history of cooperative banks has been traced back to the financial exclusion faced by many communities in the 19th century. With the industrial revolution, the emerging financial services sector was primarily focused on wealthy individuals and large enterprises in urban areas. The rural population, particularly farmers, small businesses, and the communities they supported, were excluded from financial services. Thus, cooperative banks were originally set up to correct this market failure and to overcome the associated problems of asymmetric information in favor of borrowers.

In respect of Ethiopia, the country has a very low financial service coverage as mainstream financial institutions are heavily tilted towards the urban centers with good physical infrastructure, leaving the rural areas underserved. Traditionally, ‘Equbs’ and ‘Idirs’ are informal institutions that are deeply ingrained in the life communities and have also been serving financial needs of the rural society to some extent. Reluctance and low capacity of the formal financial institutions in the country to serve rural community, a demand-supply gap prevailed in financial market especially in rural areas, coupled with farmers’ awareness to be organized into cooperatives and the increasing need to finance cooperatives called for establishment of a cooperative bank. Furthermore, finance appeared to be the critical bottleneck to sustain the cooperative institutions and ultimately the farmers. It was all these glitches that initiated the inception and establishment of Cooperative Bank of Oromia.

Haile Gebre Lube, regarded as the founding father (proponent) of Ethiopia’s cooperatives, brought the idea of founding the bank for he believed that the best way to fight poverty is through cooperation. Formally establishing a project office in 2002, the bank’s formation was realized with majority of shareholders being the cooperative societies. The bank then is commercially licensed in October 2004 and commenced operations in March 2005. As there is no legal provisions that allow establishment of a cooperative bank in the country, the bank was registered in accordance with article 304 of the commercial code of Ethiopia.

The Bank has broad ownership base and diversified ownership structure. It comprises Cooperatives and Non-Cooperative members. Cooperative member includes Primary Cooperatives, Cooperative Unions and Cooperatives Federation whereas, non-Cooperative members includes Organizations, Associations and individuals.

Currently, the Coopbank is among the leading private banks in Ethiopia with a total asset of more than ETB 55 Billion. The bank has more than 420 branch networks, 6.4 million accountholders, and has created a job opportunity for about 8,000 individuals.