Addis Ababa University Libraries Electronic Thesis and Dissertations: AAU-ETD! >
Institute of Regional and Local Development >
Thesis - Regional and Local Development >
Please use this identifier to cite or link to this item:
|Title: ||THE CASE OF OMO MICRO FINANCE INSTITATION, (OMFI) SIDAMA MICROFINANCE INSTITUTION, (SMFI) AND ADDIS CREDIT AND SAVING INSTITUTION (AdCSI)|
|Authors: ||SANI, MUBAREK|
|Advisors: ||Dr. wolday Amha|
|Copyright: ||2006 |
|Date Added: ||21-Apr-2008 |
|Publisher: ||Addis Ababa University|
|Abstract: ||In recent years the growth and expansion of microfinance programs and increasing
attention to microfinance as a poverty reduction strategy has given rise to a number of
questions. What is the interrelationship between scalingup outreach and financial
sustainability of MFIs? Are outreach and financial sustainability positively related or
is there direct trade off between the two? What are the factors that are necessary for
strong outreach and financial viability? The case of three institutions namely, OMFI
and SMFI operating in the Southern Regions and AdCSI, in Addis Ababa were used to
respond to the above questions. The main objective of the study is to asses the
relationship between outreach and financial sustainability and draws conclusions and
make recommendations for improving the financial sustainability of the MFIs.
The study used both quantitative and qualitative methods to obtain information on
outreach and financial performance of the three sample MFIs. Primary data were
collected through semi structured questionnaires and observation of the researcher.
Focus group discussions were held with the clients of the sample MFIs.
Detailed discussions were held with employees and executives of MFIs. Secondary
data were mainly collected from audited financial statements. Finally, adjustments to
financial data were made and the performances of the MFI were measured by taking
The results of the study revealed that the three sample MFIs have achieved extensive
outreach. The volume of saving as well as the gross loan portfolio has grown
significantly. The participation of women in three sample MFIs was also encouraging.
All sample MFIs under study have not achieving the level of financial selfsustainability.
However, the trends of their financial performance demonstrate that
there is a good and steady progress towards reaching operational self-sufficiency in
the three MFIs. Both AdCSI and OMFI already achieved operational self-Sufficiency.
The results of operation demonstrate that with the increase of outreach, operational
self-Sufficiency has increased. Institutional capacity was identified as the driving
force to attain outreach and sustainability in the sample MFIs.
Over all, the outreach and financial sustainability of the sample MFIs has grown
significantly. However all sample MFIs did not achieve financial self-sufficiency.
The main constraints in improving outreach and financial sustainability of MFIs in
Ethiopia are: - Lack of experienced and competent board of directors, lack of
customer responsive lending mechanism and service design, shortage of commercial
loanable fund for future expansion, Lack of trained manpower and efficient legal
system to enforce contracts and low interest rate are identified in this study. In order
to improve, outreach and financial sustainability of microfinance industry, the
importance of designing client centered financial service provision, the need to have
competent board of directors and management body is emphasized. Furthermore, the
importance of having human resource development strategy, presence of reliable
management information system, putting in place an efficient legal system to enforce
contracts and adjustment to lending interest rate has been recommended. It is only a
financially viable MFI that delivers flexible financial services to the poor that have
significantly contributed to poverty reduction. Moreover, all development stakeholders
should work together with the microfinance programs, since it is only through working
together that we can tackle the development challenges of Ethiopia.|
|Description: ||A Thesis submitted to the school of graduate studies of Addis Ababa University in partial fulfillment of the requirements for the degree of Master of Arts in Regional and Local Development Studies (RLDS)|
|Appears in:||Thesis - Regional and Local Development|
Items in the AAUL Digital Library are protected by copyright, with all rights reserved, unless otherwise indicated.