School of Information Science

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Browsing School of Information Science by Author "Abayneh, Abraham"

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    Utilization of ICT in Microfinance Institutions in Ethiopia
    (Addis Ababa University, 2016-06-02) Abayneh, Abraham; Teferra, Dr. Solomon
    Microfinances are institutions established to give financial services to the rural poor communities of a country. Providing financial access to the rural poor incurs high operating cost and this usually compromises the financial sustainability of the institutions. Increasing outreach by minimizing operating costs is the main challenge facing Microfinance Institutions around the world which requires innovative operating methods. Nowadays, ICT is becoming a strategic tool in overcoming the challenges and is highly contributing to the MFIs in reaching the hard-to-reach communities by ensuring their financial sustainability. Therefore, ICT is playing a significant role in harnessing the performance of the institutions. Currently, there are 32 MFIs officially registered and operating in different parts of Ethiopia. Encouraging microfinance institutions is one of the strategic directions of the government of Ethiopia in its poverty alleviation program and literatures indicate that the MFIs are playing a significant role towards this through the provision of financial services to the rural poor. In order to enhance their significance, the operation of the institutions need to be supported by appropriate technology. The usage of ICT can help the MFIs in providing more convenient services, faster loan processing, improved quality of financial information, increased outreach reduction in operating costs etc. A study on the usage of ICT in Microfinance Institution helps the MFIs to see the significant role that ICT is playing in harnessing the performance of the institutions and this enables the MFIs managers to put a strategic direction on the adoption and usage of ICT. This study aims at assessing the level of ICT usage in the MFIs in Ethiopia, tries to identify the potential gaps and challenges and highlights the opportunities that technology can bring to the success of the Institutions. Mixed method approach was employed in conducting this study, which was primarily quantitative, but qualitative approach was also used for triangulation purposes. After making intensive assessment, the study found out that despite the endeavor the MFIs are showing towards the usage of ICT, the extent of usage is still minimal. The MFIs need to self-evaluate themselves and need to make a strategic change towards the usage of ICT. Furthermore, the government, donors and other stakeholders should encourage and support the MFIs in adopting and using the right ICT services. This study can be used as a benchmark for further studies on the subject.