Title: Impact of Microfinance in Addis Ababa: The Case of Gasha Microfinance Institution
Abstract: Microfinance is provision of small amounts of institutional loans to low income
people who could not access loans from formal sector finance. Major objective
of extending the loans is to alleviate poverty by creating jobs and incomes.
While reducing poverty, microfinance services are supposed to build asset bases
of their clients to manage and cope up with risks. Microfinance programmes are
also expected to empower women clients by improving their decision-making
roles and self-esteem, among others. However, whether microfinance
programmes are bringing about desired changes is debatable. In addition, some
argue that microfinance has been pushing the low income people further into
poverty. Although non-governmental organizations began delivering
mirofinance services in Ethiopia to rehabilitate people affected by recurrent
droughts and poverty, government commercialized it with proclamation. Pro
Pride was one of such non-governmental organizations that evolved into Gasha
Microfinance Institution following the promulgation of the proclamation. Gasha
Microfinance Institution is providing financial services through its four
branches in Addis Ababa and one branch in Debrezeit giving special emphasis
to women. Attempts were made in this study to assess impact of programmes of
the institution in terms of outreach, poverty reduction, managing risks, and
women's empowerment. For the study, the following hypotheses were
constructed: Gasha Microfinance Institutions extends financial services to the
poorest; microfinance services of Gasha MFI lead to reduction in poverty;
financial services of Gasha MFI improve clients’ capacity to manage and cope
up with risks; and participation of women in microfinance programmes
empowers them.
Quantitative and qualitative data were collected from the institution and the
clients for the study. Semi-structured interview, focus group discussion and case
study were used as tools to gather data from frequent, new and former clients. A
sample size of 80 (40 experienced and 40 pipeline clients) was selected for the
survey. Interview was also conducted with 30 former clients and 20 clients were
participated in two focus group discussions. T test, chi-square test, and
qualitative data summarizing method for microfinance impact assessment with
quantitative evidence were used to draw conclusions from the data.
Accordingly, the institution is extending loans to 'productive poor' which have
been selected by different criteria. Although the livelihood of clients of the
institution like selling dung for fuel indicate that they are nearly the poorest, the selection criteria and group formation have been excluding the extremely
poorest of the poor from receiving microfinance services. Qualitative data show
improvements in the livelihoods of clients, their savings, forming assets,
improvements in nutritional intake, reduced dependency on expensive financial
services, and to a very limited extent in capacity to manage risks and women’s
empowerment. The quasi experimental control group hypothesis testing methods
indicated that there are statistically significant differences in income, business
and consumption expenditures between clients and non-clients. However,
differences observed in monthly savings, asset building, nutritional intake,
women’s empowerment, ability to send children to school, and access to health
facilities between participants and non-participants were not statistically
significant.
Publication Year: 2006
Publication Date: 2006-02-01
Language: en
Type: dissertation
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Cited By Count: 4
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