Field and river

20th International Conference of Ethiopian Studies (ICES20)
Mekelle University, Ethiopia

"Regional and Global Ethiopia - Interconnections and Identities"
1-5 October, 2018

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THE ROLE OF MICROFINANCE INSTITUTIONS IN POVERTY REDUCTION AMONG THE RURAL POOR IN ETHIOPIA: IN THE CASE OF OMO MICRO FINANCE INSTITUTION IN GURAGE ZONE [Abstract ID: 0308-09]

TOLLERA Tesema, Dept of Admin. and Public Management, MPMP, Addis Ababa University, Ethiopia

There has been a strongly growing interest in considering micro financing as a viable strategy for the poor and after the success of the different MFIs, the system has been duplicated in the different parts of developing world. Ethiopia is also one of the countries where microfinance has been given due consideration as a safety net for the poor to help them overcome the adversities of poverty. Microfinance institutions are basically set up with the goal of poverty reduction. This study has undertaken empirical evidence in Omo Microfinance Institution taking a sample of 120 clients from Qebena woreda, Gurage Zone, South Region nation and nationalities to discern the MFI contribution towards poverty reduction. The main objective of the study was to find out the impact of microfinance towards poverty with a particular reference to Omo Microfinance Institution based on income, living condition, asset accumulation, saving, decision making power, self-confidence, business management skills along with the strength and weakness of the institution among others. The study employed both quantitative and qualitative methods such as questionnaires, key informants; focus group discussions, and observations to obtain primary data and secondary sources of data. The findings showed that OMFI scheme has made positive contribution to the clients in relation to observed variables. Nevertheless significantly higher number of the clients complained about the institutions high interest rate, too small loan size, repayment policy, problematic group dynamics. Conclusion and recommendation based on findings are presented.