An Assessment of the commercialization Performances of Microfinance Institutions in Ethiopia: Achievements, Challenges and Implications: The case of Selected MFIs
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Date
2014
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Addis Ababa University
Abstract
Microfinance is one of the most powerful tools for combating poverty primarily by
providing financial services to the excluded segments of the society so as to run their
businesses, build assets, smooth consumption, and manage risks. As, micro finance
industry as a whole is challenged by the need to reach the excluded segments/poor and
at the same time being financially self-sufficient/sustainable, this study has designed to
assess commercialization performances of . MFIs in Ethiopia along with related
challenges and implications, at least to indicate the current position of Ethiopian
micro finance industry for researchers, practitioners and policy makers.
The study used both secondary and primary data collected from selected MFIs and key
stakeholders such as NBE and AEMFI With regards to data analysis, the study
categorizes the sample MFIs based on affiliations and scale, and made descriptive and
trend analysis, and in-depth comparative analysis through One Way ANOVA and
Kruskal-Wallis test, and Applied Pearson Correlation Coefficients on key performance
indicators.
As per the study findings, Ethiopian Microfinance Institutions have shown continuous
improvements in the commercialization performances through time though there are
limitations. Here, government-backed and large MFIs peer groups have proved to be
efficient, profitability and sustainability. As a result of better efficiency and scale of
operations, these groups also charge low interest rates and beller breadth of outreach.
With respect to the depth of outreach. however the means differences were not
significant, NGO-backed and small MFIs seem to reach the poorest section of the society.
Nonetheless, the study has also proved that the level of mission drift as a result of
commercialization of micro finance operations and administration is not significant. Key Words: Microfinance, Commercialization. sustainability and outreach
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Keywords
Microfinance, Commercialization, sustainability and outreach