The Impact Of Micro-financing On Poverty Reduction A Case Study Of Oromiya Credit Saving Share Company (ocssco) In Eastern Wollega Zone Of Oromiya National Regional State Ethiopia

The prevalence of poverty has been a common phenomenon in Ethiopia. The prevailingrnoperation of the conventional financial institutions in Ethiopia is inefficient in providingrnfinancial services to the poor. The challenge Ethiopia is facing today is to reduce poverty andrnachieve sustained economic growth for healthy national development. One of the economicrnpolicies of the country is introduction of MFIs in the country. Currently, microfinancing isrnbeing practiced in the country as a tool to deliver financial services to the poor with thernobjective of attacking poverty.rnOCSSCO, one of the 22 licensed microfinance institutions in Ethiopia, was established inrnAugust 1997 in ORNS for this purpose. The objective of this study, therefore, is to find outrnwhether the delivery of financial services of the MFI has made changes on living standard ofrnthe clients. Primary data were collected through structured questionnaire from clients andrnnon-clients using simple random sampling method. Secondary data were gathered fromrndifferent MFIs’ reports and literatures. Both are quantitative and qualitative in nature.rnDescriptive analysis, dichotomous binary model and sensitivity analysis were applied in thernstudy.rnThe impacts are analyzed based on two approaches. First, the impacts are observed inrnassociation mainly with income, which in turn have effects on nutritional status, access torneducation and medical facilities, employment generation, savings and empowerment, amongrnothers. The finding indicates that the OCSSCO’s microfinancing scheme has made positiverncontribution to the clients in relation with observed variables. The impacts are also evaluatedrnbased on MFI’s outreach and sustainability having the conceptual framework that if bothrnoutreach and sustainability have been enhanced then the program intervention is judged tornhave a positive impact as it has created the financial market to the poor. The finding alsornindicates that in spite of improvement in outreach and sustainability, a number of respondentsrnare looking for the services. However, considering the sustainability of the MFI, the resultrnshows 100% loan repayment performance except the first year of establishment in the studyrnarea. Adequate advising, supervision and giving services on time are some of the factors thatrnhelp in loan repayment performance.rnThe overall objective of MFIs in Ethiopia is to increase the productive potential of the poorrnand poverty reduction. The study found out the importance of the program. The interventionrnhas enabled the clients to generate income that could be spent on better facilities, which couldrnimprove the living standard of clients. Therefore, strengthening the existing operation wouldrnbe appropriate socio-economic policy.rnKEY WORDS: Microfinance, Loan products, saving products, Impact assessement,rnOutreach, Sustainability, Poverty.

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