Challenges And Prospects Of Introducing Sustainable Microfinance Services In Afar Pastoral Population

Background: Afar regional state is one of the pastoral dominant livelihoods in the country. Likernany other pastoralists Afar region was also neglected from developmental activities and servicesrnlike microfinance institutions. The reason why such MFI did not exist in the region was notrnstudied before. This study explores challenges and prospects of introducing sustainablernmicrofinance services in the region focusing on the pastoral people.rnObjective: This study explores challenges and prospects of introducing sustainable microfinancernservices Afar pastoral population and the demand for the service.rnMethods: The study employed a mix of both quantitative and qualitative methodology employingrnsemi structured and in-depth interviews with 60 pastoralists from two markets in zone one ofrnAysa‟ita and Logia markets, 5 cooperative leaders from Aysa‟ita woreda, and 8 key informants.rnThe participants were selected from two markets (Logia and Aysaita) purposive sampling.rnFindings: Among the pastoralist sample, a substantial number of participants were found withrnhigh need for microfinance services at the same time with lack of awareness as how to diversifyrnincome generating activities. They show also a good habit of informal lending and borrowingrnwith good repayment culture aided by clan based court (mablo). With regard to saving they arernpoor in saving but they show a need of formal MFIs for saving, money transfer, and creditrnservices. NGO and government led cooperatives were not as such effective in their five yearsrnjourney. The region has some specific constraints which increase cost of providing microfinancernservices to the pastoral community: such as harsh climate, highly dispersed settlement, poorrninfrastructure and socio economic conditions and other constraints. Interest issue is the mostrnsensitive challenge observed from the study regarding failure of introducing MFI in the region.rnConclusion: form the study it was concluded that there are specific constraints which couldrnincrease cost of providing services to the pastoralists. However, there are also compromisingrnfactors which help sustainable microfinance service like good demand and culture of repaymentrnenforcement by the cultural court.rnRecommendation: Multi-faceted interventions on issues of income diversification and businessrnskill of pastoralists should be carried out so as to create awareness about business, and so as tornencourage need of the people for credit and saving services. Integration should be maintainedrnwith interventionists so as to cover operational costs and the product design should also copernwith beneficiaries‟ culture

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