Microfinancing and poverty reduction in Ethiopia
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2007
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Abstract
Following the success of the Grameen Bank in Bangladesh, the importance of microfinancing for poverty reduction has gained momentum in the policy agenda of several countries. Despite the fact that results are inconclusive, a bulk of the literature indicates that microfinance could help the poor in many respects such as serving as a buffer against shocks and could work as an instrument of consumption smoothing. It could also help households to increase their income and assets; help them to increase consumption expenditure and develop savings habits. This study was conducted with the objective of investigating the impact of ACSI in Ethiopia taking a sample of 500 households from five different zones in the Amhara Region. Using descriptive statistics (such as Chi-Square, Paired T-test and ANOVA) and econometric analysis (Logistic Regression), the study has found out that the poor have smoothed their income in the study area. However, there was fungibility in the sense that clients were using the loan for unintended purposes. It was also observed that clients lack technical skills to engage in more profitable business activities. This may indicate that financial services alone could not be sufficient enough to raise the living conditions of the poor. Therefore, the current services of ACSI need to focus on business training skills apart from loan provision to help the poor move beyond day-to-day survival and plan for their future. In short, it is important that ACSI facilitates or directly involves in providing 'credit-plus' services to its clients.
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Keywords
IMPACT, MICROFINANCE, POVERTY REDUCTION, ACSI, POVERTY, ETHIOPIA, MICROCREDIT, FINANCIAL POLICY, FINANCIAL SERVICES, INCOME, LIVING CONDITIONS, ECONOMIC BEHAVIOUR, TRAINING, QUALITY OF WORKING LIFE