The Impact Of Microfinance In Ethiopia The Case Of Decsi In Ganta-afeshum Woreda Of Eastern Tigray

In recent ,·cars the growth and expansion of micro finance programs and increas ing attention tornmicro l·inance as a poverty reduction strategy have given rise to a number of questions . Whatrnimpacts occur at the household, enterprise/farm and individual levels? Are the impacts posi tivern,)r negati,/' 00 the impacts vary among different sub-groups of cl ients') These questions werernaddressed in this cross sectional impact assessment survey of OECSl"s microtinancing scheme inrnTigra'·. The tindings have implications for understanding the context in ,,·hich microtinancernprograms operate and the impact of microfinances on the clients' welfare and business stabilitvrnin Eth iopia and e lsewhere. The main objective of the assessment is to determi ne the nature,rne"tent and distri but ion of impacts from pal1icipation in OECS[" s micro financing scheme. thernsecondary objectives are to better understand the general environment of the country on whichrnthe microfinance institutions are operating and to understand the role of microfinancing servicesrnon the household economy.rnThe o,·erall impact assessment includes the co llection of survey data tl'om frequent cl ients of thernprogram and a new clients comparison in the study area (Ganta-Afeshum Woreda of EasternrnTigray),the evaluation is driven by a set of impact hypotheses which were derived from thernUSAIO' s A!MS project conceptual fi'amework with some modifications to consider the situationrnof the study area. The survey data are supplemented by qualitative information tl-om focusrngroups. The surve,· included a total of 216 respondents of which 109 are freque nt clientsrn(experiment groups) and !07 were new clients (control groups), A two stage sample selectionrnapproach 'oIS used: I) two settlement areas (urban and rural areas) were selected in the firstrnsta~e . 2) COlllrol and experiment groups were randomly selected from both the rural and urbanrnsettlement areas in the second stage.rnThe surveY reveals that both the frequent and new clients are similar in most of the individualrnCln,i household characteri stics. With regard to the impact result. the survey result suggests that.rnOECSI's ll1icrotinancing scheme appears to have a positive impact on the cl ients overallrnhousehold income, sources of household income, acquisition of key ho usehold assets, housingrnimprm·emcnt. access to education, and access to health facilities. However. the survey tindingsrndid not strong!'· evidenced regarding some of the impact variables such as womenrnVIrnempowerment. food security, and coping with difficulties, Besides, the magnitude and type ofrnimpact varies among different groups of the surve" respondents, That is the impact of thernprogram is better in the urban program areas than in the rural program areas except for clientsrnempom:nnent. which the rural clients have shown better involvement in the household andrnbusiness dec ision making acti vities and participation in any associations or gro ups in therncommunity,rnO,'erall , microfinance makes a difference. The use of financial servIces by low incomernhouseholds is associ ated with improvement with the value of the impact variables. However.rnthere is much variability in the nature and magnitude of the impact. which is mainly due to thernintluence of the macro environment. financial products and telms of the institution (DECSI).rnregulatory environment of the country, and other social and economic factors. Therefore, to bringrnabout sustainable development and to reduce poverty in the country. more practical and soundrnpolicy should be formulated in order to improve the impact magnitude of the micro financernindustry. Moreover. all development stakeholders should work together with the microfinancernprograms. since it is only through working together that we can tackle the developmentrnchallenges of Ethiopia

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