Micro Finance and Its Contribution to Enterprise Income in Urban Ethiopia: The Case of Debre Birhan and Asela Towns
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Date
1998-06
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Addis Ababa University
Abstract
The study was conducted in two market [Owns, namely, Debre Birhan and Assela with the
aim of identify ing the impact of microcredit on micro enterprise income.
According to the findings of the study, borrowers in Debre Birhan were able to increase
monthly enterprise income from 181.14 Birr per month before the loan to 252. 77 Birr per
month after the loan. Non- borrowers reported current monthly enterprise income of Birr
154. 77. Borrowers in Assela indicated an increase in enterprise income from Birr 139.32
p er month before the loan to Birr230 per month after the loan. The current enterprise
income of the non- borrowers was Birr 282.94 per month.
The regression result showed that income is affected by several factors . Among the many
factors, credit was significantly correlated to average microenterprise income in Debre
Birhan. Credit was not significantly correlated with income in the case of Assela. Enterprise
income was also affected by start-up capital, non-paid family workers, paid employees and
productive assets in Debre Birhan. The other variable which correlated to income was the
type of economic activity. Those who were engaged in service enterprises earned more
income than manufacturing in both towns.
As indicated credit was not Significantly correlated with income in the case of Assela. The
possible reasons for this result were: - a) Improper selection of borrowers; b) lvfisleading
information during the initiation of the project; c) Low business activity as compared to
Debre Birhan and d) Low level of credit provided to operators in Assela.
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Keywords
Micro Finance, Contribution to Enterprise