Browsing by Author "Aredo, Dejene (PhD)"

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    Indigenous Institutions and Local Development Initiatives: Case Studies From Selected Gurage Areas of Ethiopia
    (Addis Ababa University, 1999-06) Assefa, Getinet; Aredo, Dejene (PhD)
    This paper attempts to investigate the raison d' etre and development implications of indigenous institutions. The meaning of institution and indigenous institutions is provided in the context of the available literature and the study area of the paper. The explanatory power of institutional theories has been assessed and attempt is made to give a theoretical explanation as the background to the existence of institutions that are based on the customs and traditions of local people. A model of institutional design is also developed in the context of the situation in the study area to show the place and relative contribution of indigenous institutions in promoting development at the local level. Based on a systematic examination and analysis of the various functions of fourteen different indigenous institutions identified in the study area, the paper shows that these institutions occupy a very important place in the development actors network as well as the state and private-sector actors. Not only are indigenous institutions important in performing their own distinct functions in their specific localities, but also they play a significant role in promoting development by acting as collaborators to and intervention points for other government and non-government organizations.
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    Loan Repayment and its Determinants in Small Scale Enterprises Financing in Ethiopia: Case of Private Borrowers Around Zeway Area
    (Addis Ababa University, 2002-06) Gebeyehu, Abreham; Aredo, Dejene (PhD)
    One of the most crucial and leading factors constraining Small Scale Enterprises (SSEs) development in developing countries like Ethiopia is limited access to financial capital and credit especially from the formal lending agents. This is because on the one hand, these enterprises couldn’t fulfill the bank’s lending requirements and on the other, the banking sector considers these enterprises as involving high credit risk. This study is conducted with the aim of identifying the major factors behind the loan default problem of SSEs with particular reference to Development Bank of Ethiopia (DBE). In an attempt to analyze the determinants of loan repayment status of borrowers and to identify the criteria employed to ration credit two equations-loan repayment and rationing equations were estimated using survey data. The estimation result employing tobit model reveals that having other source of income, education, work experience in related economic activity before the loan and engaging on economic activities other than agriculture are enhancing while loan diversion, being male borrower and giving extended loan repayment period are undermining factors of the loan recovery performance of projects. With regards to the loan rationing mechanism, it is found that borrowers who secured high value of collateral and those with relatively longer repayment period were favored although they tend to be more risky while those with higher equity share and extensive experience in related activity were disfavored. This leads to the conclusion that the bank’s rationing mechanism didn’t much with the repayment behavior of borrower. The result leads to the suggestion that, the bank’s rationing technology should be revised in such a way that Small Scale Entrepreneurs who have the managerial and entrepreneurship capacity but don’t have sufficient credit access due to stringent collateral requirement could make use of the financial resource of the country and thereby contribute towards the envisaged development target as well as the bank to get out of the loan default problem
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    Microfinance and Loan Repayment Performance: A Case Study of the Oromia Credit and Savings Share Company (OCSSCO) in Kuyu
    (Addis Ababa University, 2003-06) Abafita, Jemal; Aredo, Dejene (PhD)
    This study was conducted with the aim of analysing the factors that influence microfinance loan repayment, evaluating the loan rationing mechanism and also assessing the impact of the program on the livelihood of borrowers, using primary data collected through structured questionnaire. The estimation results of the descriptive statistics and the probit model show that education, income, loan supervision, suitability of repayment period, availability of other credit sources and livestock are important and significant factors that enhance the loan repayment performance, while loan diversion and loan size are found to significantly increase loan default. In addition female borrowers were found better in terms of loan repayment. According to these findings the institution is recommended to see into these factors with care and design a better lending strategy focusing on effective supervision, training and approval of appropriate loan size so as to minimize the loan default problem observed. Moreover, it should pay attention to expanding of its services so that more poor women join the program and benefit from it there by contributing to the improvement of the repayment performance. Regarding the loan rationing, borrowers who are literate, loan diverters, support more dependents and earn more income, were disfavored; while those who are older, male, apply for larger loan amounts, own livestock of higher value, perceive supervision as adequate and the repayment period as suitable were favored. There were some serious problems observed in the rationing mechanism the institution employed, i.e., borrowers who are good payers (like those who are literate) were rationed more while those who contribute to the default problem (like those who are male and who apply for larger loan amounts) were rationed less. The institution is particularly recommended to improve these problems observed in its rationing mechanism. The credit scheme was also found to have positive impact in improving the income, education, health and nutritional status of the borrowers as evidenced by the Wilcoxon test that compares the situations before and after participation in the credit scheme. Key Words: microfinance, loan repayment performance, loan diversion, loan rationing, impact, creditworthy
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    Spatial Integration of White Wheat Markets in Ethiopia: Along with Improvements in Transport Infrastructure
    (Addis Ababa University, 2006-07) Tamru, Seneshaw; Aredo, Dejene (PhD)
    This paper attempts to analyze the impact road infrastructure may have on the level and degree of grain market integration on selected Ethiopian markets. Using wholesale price series of six markets and based on monthly data from January 1996 to December 2005, which is disaggregated in the pre and post construction periods, one of the major staple food crops of the country, white wheat is analyzed. The other two major crops, teff and maize were also considered in the descriptive analysis. A threshold autoregressive (TAR) Model in the form of Error Correction Model is used to evaluate the level of integration and speed of adjustment towards equilibrium. The findings of the paper show that there is enough evidence to conclude that the deficit areas are isolated from Addis while the surplus areas were found to be well integrated in both periods. Some of the markets under consideration are found to be inefficient as smaller deviations than the threshold level from the long term equilibrium tend to be cleared (arbitraged) away; the results also show that the markets under consideration, could be clustered in to three market groups, that is the surplus areas including Addis, in one group and the two deficit areas each in other groups independently, isolated from Addis. The findings imply that any agricultural grain marketing policy should realize and be aimed at these three segregated groups, separately. The results suggest that geographic differences and distance are important factors affecting spatial markets integration between Addis and the regional markets. The results also propose, the requirement of government intervention mechanisms, such as availability of information (access to local media and telecommunications facilities), as key factors to improve spatial market integration between the markets. Moreover, as construction of roads alone hasn’t as such improved and produced a significant impact on the level of market integration, the results indicate the need for a coordinated effort of the other market enhancing instruments; market information and institutions and put forward a system of commodity exchange as a mechanism that can incorporate these instruments. Key words: Market integration, threshold level, Monte Carlo simulations, wheat, and construction of roads.
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    A Study on Rice Production in Sierra Leone: Investigating Constraints
    (Addis Ababa University, 2002-06) Bangura, Sheka; Aredo, Dejene (PhD)
    Rice is the staple food of Sierra Leone with no close substitute. The crop accounts for the largest share of the agricultural GDP of the country. However, its production has been declining over the past two decades. Sierra Leone was once an exporter of rice until 1953; thereafter importation assumed the main source of supplying the grain for domestic consumption as production could no longer meet local demand. Decline in the domestic production of the crop has had severed sosio-economic implications ranging from hiking consumer prices to balance of payment problems and debt burden. The country is reported with huge potential for increased agricultural productivity but the situation has rather been let to degenerate to a state where she has to depend on international market and aid for the supply of her staple food. The objective of this study is therefore to investigate the constraints underlying the decline in the crop’s production in Sierra Leone. The trends behind the decline are explored with the aim of explaining the factors that emerge therein. The tools employed for analyzing the problem involved a thorough descriptive statistical analysis, coefficients of protection analysis (using nominal protection coefficient), and a supply response analysis using a time series regression framework (for the period 1964-1998) within the context of the Nerlovian supply response approach. Major constraints found negatively impacting on output of the grain are such as price disincentives to farmers (though with low response); the coefficient of public investment is negative, suggesting inter alia that concentration of public expenditure on providing social infrastructure that are limited to urban areas serves to attract rural labour; there is problem of disproportionate attention on traditional upland farming system which is less productive compared to lowlands; the macroeconomic environment has not been conducive; market institutions were weak (a problem that is aggravated by infrastructural bottlenecks); modern farming implements and fertilizers were in low use; rice technological approach did not seem to be appropriate; these are some of the constraints highlighted among the lot in this study. Recommendations are made toward the findings.