The Roles, Opportunities and Challenges of Self Help Group Approach in Local Economic Development
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Date
2008-06
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Addis Ababa University
Abstract
This paper explores the roles, opportunities and challenges of the self help group (SHG)
approach to local economic development. As this SHG approach to local development is a
new venture in the country, the study draws on case study research of 16 randomly selected
SHGs in Jimma town. The study has further contacted purposefully selected government
institutions, micro finance institution, implementing non-governmental organizations (NGO)
and individual members from the selected SHGs.
The findings demonstrate that the SHG approach to local economic development has
contributed to improvements in the living condition of the target population, mainly through
employment creation, awareness raising, and linking with other LED actors. The SHG
approach introduced regular saving, regular meeting and discussion, bookkeeping, internal
lending, mutual support systems and links the SHG/CLA to development partners in the area.
The approach encompasses the social, economic and political empowerment process by
organizing the local people into their own institutions. The inclusion of health, child rights,
women participation and education into its economic development agenda makes it important
in the process of poverty reduction and local development.
It is a pro-poor approach because it exclusively focuses on the organization and capacity
building of the marginalized women. As a result, destitute and marginalized women, who
were not able to employ in any formal private andlor public enterprises have opened their
own and their family businesses.
The approach also installs democratic leadership style, equal participation and equal
opportunity to all of the members. The approach can also be applied to other community
groups at a lager scale for greater impact. Hence, NGOs and local governments can adapt the
approach for its positive contribution to local development and empowerment of the destitute
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Keywords
Local Economic Development