Challenges and Prospects of Introducing Sustainable Microfinance Services in Afar Pastoral Population
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Date
2011-06
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A.A.U
Abstract
Background: Afar regional state is one of the pastoral dominant livelihoods in the country. Like any other pastoralists Afar region was also neglected from delopmental activities and services like microfinance institutions. The reason why such Mfi did not exist in the region was not studied befor.This study explores challenges and prospects of introducing sustainable microfinance services in the region focusing on the pastoral people.
Objective: This study explores challenges and prospects of introducing sustainable microfinance services Afar pastoral population and the demand for the service
Methods: The study employed a mix of both quantitative and qualitative methodology employing semi structured and in-depth interviews with 60 pastoralists from two markets in=one of Aysa and logia markets :5 coopemtive leders from Aysa ‘ita woreda, and 8 key informants: The participants were selected from two markets (Logia and Aysaita )purposive sampling.
Findings: Among the pastoralist sample, a substantial number of participants were found with high need for microfinance services at the same lime with lack of awareness as how t0 diversify income generating activities . They show also a good habit of informal lending and borrowing with good repayment cult lire aided by clan hosed court (mobile). With regard to saving they are poor
in saving but they show a need foreman MFLs for saving, money transfer and credit services. NGO and ~government led c cooperatives were not as such effective in their .five years journey. The region has some speciflc constraints which increase cost of providing micro finance services to the pastoral community such as harsh climate, highly dispersed settlement, poor infrastructure and social economic conditions and other constraints. Interest issue is the most sensitive challenge observed from the study regarding/allure of introducing MFI in the region.
Conclusion: form the study it was concluded that there are specific constraints which could increase cost of providing services to the pastoralists. However, there are also compromising factors which help sustainable microfinance service like good demand and culture of repayment enforcement by the cultural court.
Recommendation Multi-faceted: interventions on issues of in came diversification and business skill of pastoralists should be carried out so as to create awareness about business, and so as to encourage need
of the people for credit and saving services. Integration should be maintained with interventionists so as to cover operational costs and the product design should also cope with beneficiaries ‘culture.
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Prospects, Sustainable