Gebreselassie, Kidist (PhD)Geleta Dessalegn, Aziza2018-06-112023-11-182018-06-112023-11-182013-06http://etd.aau.edu.et/handle/12345678/271Since the 1970s there has been a strongly growing interest in considering micro financing as a viable strategy for the poor. Similarly speaking, Microfinance can be a critical element of an effective poverty reduction strategy especially for developing countries. More than ever after the success of the Grameen Bank, the system has been duplicated in the different parts of developing world. Ethiopia is also one of the countries where microfinance has been given due consideration as a safety net for the poor to help them overcome the adversities of poverty. The services provided by microfinance institutions is desired to enable the poor to smoothen their consumption, manage their risks better, build their assets gradually, develop their micro enterprises, enhance their income earning capacity, and enjoy an improved quality of life. Microfinance institutions, as mentioned above, are basically set up with the goal of poverty reduction. Subsequently, in order to investigate the above premises, this study has undertaken empirical evidence in Specialized Financial Promotion Institute taking a sample of 120 clients from four branches of Addis Ababa to discern its contribution towards poverty reduction. Consequently the objective of this study is to find out the impact of microfinance towards poverty with a particular reference to Specialized Financial Promotion Institute. With the above objectives in mind, the research work employed questionnaires, key informants; focus group discussions, and observations to obtain primary data. In addition, secondary sources of data have also been collected from different literature and SFPI annual progress report. In deed the research is both quantitative and qualitative by its nature. The contribution of Microfinance is analyzed based on income, living condition, asset accumulation, saving, decision making power, self-esteem, self-confidence, business management skills along with the strength and weakness of the institution among others. The finding indicates that SFPI scheme has made positive contribution to the clients in relation to observed variables. Nevertheless significantly higher number of the clients complained about the institutions high interest rate, too small loan size, repayment policy, problematic group dynamics. Therefore, as a pointer to future endeavors, the current services of SFPI need to amend the loan size and reduce the interest rate in order to resolve the issues at hand and to fit the financial problem of the poor in the sectorenMicrofinance Institutions, Microfinance, Microcredit, Poverty, Poverty ReductionThesis