The Performance of Micro Finance Institutions in Ethiopia: A Case of Six Microfinance Institutions

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Addis Ababa University


Currently micro financing is one of the most powerful tools for combating poverty primarily by providing loan to the poor section of the society. The number of micro financing institutions serving the poor in Ethiopia has grown to over 27with in short period of time .The steady growth in the sector has created a competition for scarce funding among institutions. Hence, recent years have seen a growing push to measure performance of micro financing institutions in order to be able to compete and achieve their objectives. In light of this , the paper attempted to look at the performance of MFIs by taking six institutions as a case from Profitability and Sustainability; Asset and Liability management; and Efficiency and productivity perspectives Data for the study was from secondary sources and various ratios and indicators were used to measure the performance of the MFIs .Five years data from 2002 to 2006 were used to see the trend in performance The majority of MFIs passed both operational and financial self sufficiency and fewer still requires support to survive and sustain in the industry. Most MFIs are strong performers on return on asset .in connection with liquidity, most MFIs lack strong position to effect immediate obligations. large MFIs are more efficient and productive than small and medium ones. But small MFIs seem to reach the poorest section of the society. Finally ,the trend in performance of microfinance institutions during those years of operation was encouraging



A case of six microfinance institutions