Micro-finance and the Poor: The Case of Dedebit Credit and Saving Institution (DECSI) in Tigray
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Date
2000-06
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Abstract
Currently, provision of credit is one of the major strategies being used to alleviate
poverty in Ethiopia. As the Dedebit Credit and Savings Institution (DECSI) is
established for this purpose, the objective of this study is to evaluate the impact of DECSI
micro financing scheme to poverty reduction based on descriptive analysis, to investigate
the determinants of loan repayment performance based on a recursive model, to assess
the institutional viability of DECSI; and finally to investigate and collate the relevance
and applicability of the Grameen Bank model to the Ethiopian condition with particular
reference to DECSI in Tigray region. Primary data for the study was collected from a
sample of 25 I (! 05 from rural and I46 from urban) sample beneficiaries in Tigray
Region.
The results indicate that the credit scheme has made its own positive contribution (except
urban sample beneficiaries related to access to educational facilities) to the beneficiaries
in relation to income, access to educational facilities, medical facilities, household diet
and savings in particular and to poverty reduction in general.
According to the findings, sex, level of education and size of loan for rural, urban and the
whole sample cases, loan diversion rate in the case of urban and the whole sample cases,
timeliness of loan disbursement in the case of rural and the whole sample cases, income
;rom activities financed by the loan in the whole sample case and other sources of income
in the case of rural sample are found to be significant determinants for full loan
repayment performance as is expected. The study further found that dependency ratio
and loan supervision in the case of rural, loan supervision and other sources of income in
urban and the whole sample cases and size of loan in the whole sample case are
significant determinants for loan diversion as expected.
In connection with applicability of the Grameen Bank model, it is concluded that it is
difficult to directly apply the model in Ethiopia since the physical and socio-economic
conditions of the two countries are different. Therefore, there should be some
modification on the elements of the model namely; holding weekly meetings and
repayment of installments, taking the bank to the people because it demands high
administration cost due to the scattered nature of the dwellers in the country, particularly
the rural areas of Ethiopia.
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Keywords
Dedebit Credit, Micro-Finance