In Ethiopia about half of the population (about 44 per cent) live in absolute poverty .rnAlthough the causes of poverty and the corresponding measures to be taken in reducingrnor alleviating poverty are diverse , the importan ce of providing microfinance services tornthe poor is becoming a major tool allover the less developed countries , includingrnEthiopiarnWhen properly designed . microfinace offers a variety of benefits to the poor people.rnForemost, microfinance initia tives can effectively address material poverty , physicalrndeprivation of goods and services through increased income , income diversification ,rnconsump tion smoothing. and reduced variability of income.rnIn Ethiopia the delivery of microfinance services has inc reased in a short period of time.rnThis study attempts to address the impact of microfinance services provided by DECSIrnon poor women and their househo lds. In the case study , there is a marked difference inrnthe loa n size between male and female clients of DECSI. The loan size of urban clientsrnwas also sign ificantly greater than rural clients in both men and women.rnThis study shows that directly or indirectly, microfinance services provided by DECS I arerncontributin g to the sustenance and improvemen t of the life of the poor women and theirrnhouseho lds although the impact v ar ies . General ly the study shows that microfinancerncontributes to Increase in income and diversified sources and reduced variability ofrnincome. It has also contributed to Increased consumption and improved living conditionrnin terms of house repairs and expansions and medical services . Another contribution ofrnthe microfinance services is capital accumulation in the form of increased saving . Finallyrnit con tributed to better position of women in terms im proved attitude and respect of theirrnspouses , increased selfconfidence and self-imagernOn the other hand , microfinance servic es have limited impact on entrepreneurialrndevelopment and microenterprising. in sustaining and improving microenterprisernprofitability , requiring beyond credit services by respective stakeholders. T he empirica lrnevidence also shows Implications for regulatory aspects of the microfinance servicesrnsuch as reviewing loan ceiling and repaymen t terms . It also indicated implications forrndive rsifying microfinace produc ts , reducing group sizes and considering lending onrnindividua l bases in widen ing microfinance services to the poor and poorer categories ofrnthe society in achieving poverty red uction and in the transition to poverty alleviation andrnsecuring de velopment in the country