The Role of Microfinance in Financial Inclusion in Addis Ababa City
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Date
0024-02-19
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Publisher
AAU
Abstract
Determining the role of microfinance institutions in financial inclusion in Addis Ababa was
the study's goal. Apart from utilizing simple random and purposeful sample techniques, the
study employed both explanatory and descriptive research methodologies. The study's
primary data were gathered through questionnaires and interviews. Secondary data was
also gathered from desk reviews of selected microfinance institutions in Addis Ababa, and
both descriptive and inferential statistics were utilized to analyze it. Out of the 384 survey
questionnaires that were obtained from randomly selected microfinance institutions
customers, only 312 were completely filled out, sent back, and utilized in the study. The
Consultative Group to Assist the Poor produced the most extensively used performance
metrics, which were used to evaluate the microfinance institutions' performances. The
study's conclusions showed that the microfinance institutions in Addis Ababa had been in
operation for more than eight years, were categorized as mature, and had a sizable gross
loan portfolio that exceeded 50 million Ethiopian Birr—but a limited number of active
borrowers. The study's regression analysis revealed that group lending, saving
mobilization, and small business lending all had a positive and significant impact on
financial inclusion. The majority of microfinance institutions in Addis Ababa offer group
loans, it would be beneficial for them to keep up this practice in order to attract more clients
and lower operating costs per borrower.