The transformation of humanitarian organizations into financial institutions in 1997 was the beginning of operation of Micro Finance Institutions (MFIs) in Ethiopia. From then on, MFIs have showed remarkable progress in number, outreach, coverage and performance. Currently, 40 MFIs operating in the country serve close to 10 million clients nationwide while 15 more are in the making. Breaking the trend in the rest of the world, Ethiopia’s microfinance industry is born and raised in rural parts of the country. However, MFIs are currently conquering urban Ethiopia and providing credit especially for business establishments. Urbanites now make up close to 10Pct of the clientele of MFIs. The four pioneer MFIs, whose capital is way larger than most small and mid sized banks, are planning to mold themselves into conventional banks. On the other hand, the rest are pushing up their credit limits in order to capture the attention of the large segment of the unbanked population. Although most MFIs in Ethiopia have reached maturity and success, they are not immune from problems. EBR’s Ashenafi Endale reports.