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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/2068

Advisors: Beyene Tadesse (PhD)
Copyright: Feb-2006
Date Added: 2-May-2012
Publisher: AAU
Abstract: Microfinance is provision of small amounts of institutional loans to low income people who could not access loans from formal sector finance. Major objective of extending the loans is to alleviate poverty by creating jobs and incomes. While reducing poverty, microfinance services are supposed to build asset bases of their clients to manage and cope up with risks. Microfinance programmes are also expected to empower women clients by improving their decision-making roles and self-esteem, among others. However, whether microfinance programmes are bringing about desired changes is debatable. In addition, some argue that microfinance has been pushing the low income people further into poverty. Although non-governmental organizations began delivering mirofinance services in Ethiopia to rehabilitate people affected by recurrent droughts and poverty, government commercialized it with proclamation. Pro Pride was one of such non-governmental organizations that evolved into Gasha Microfinance Institution following the promulgation of the proclamation. Gasha Microfinance Institution is providing financial services through its four branches in Addis Ababa and one branch in Debrezeit giving special emphasis to women. Attempts were made in this study to assess impact of programmes of the institution in terms of outreach, poverty reduction, managing risks, and women's empowerment. For the study, the following hypotheses were constructed: Gasha Microfinance Institutions extends financial services to the poorest; microfinance services of Gasha MFI lead to reduction in poverty; financial services of Gasha MFI improve clients’ capacity to manage and cope up with risks; and participation of women in microfinance programmes empowers them. Quantitative and qualitative data were collected from the institution and the clients for the study. Semi-structured interview, focus group discussion and case study were used as tools to gather data from frequent, new and former clients. A sample size of 80 (40 experienced and 40 pipeline clients) was selected for the survey. Interview was also conducted with 30 former clients and 20 clients were participated in two focus group discussions. T test, chi-square test, and qualitative data summarizing method for microfinance impact assessment with quantitative evidence were used to draw conclusions from the data. Accordingly, the institution is extending loans to 'productive poor' which have been selected by different criteria. Although the livelihood of clients of the institution like selling dung for fuel indicate that they are nearly the poorest, the ix selection criteria and group formation have been excluding the extremely poorest of the poor from receiving microfinance services. Qualitative data show improvements in the livelihoods of clients, their savings, forming assets, improvements in nutritional intake, reduced dependency on expensive financial services, and to a very limited extent in capacity to manage risks and women’s empowerment. The quasi experimental control group hypothesis testing methods indicated that there are statistically significant differences in income, business and consumption expenditures between clients and non-clients. However, differences observed in monthly savings, asset building, nutritional intake, women’s empowerment, ability to send children to school, and access to health facilities between participants and non-participants were not statistically significant.
URI: http://hdl.handle.net/123456789/2068
Appears in:Thesis - Regional and Local Development

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