Abstract:
The Ethiopian microfinance sector is characterized by its rapid growth, an
aggressive drive to achieve scale, a broad geographic coverage, a dominance of
government backed Microfinance Institutions (MFIs), an emphasis on rural
households, the promotion of both credit and savings products, a strong focus on
sustainability and by the fact that the sector is Ethiopian owned and driven. The
main objective of the study is to assess the performance and challenges of micro
finance institutions. Relevant data for the study were collected from different
Microfinance Institutions currently operating in the country. The regional state
governments and many local NGOs are shareholders in many of the MFIs. The
three largest micro finance institutions account for 65% of the market share in
terms of borrowing clients, and 74% by loan provision. These are Amhara (ACSI),
Dedebit (DECSI) and Oromia (OCSSCO) Credit and Savings Institutions.
Microfinance institutions are decisive way outs from the vicious circle of poverty
particularly for the rural and urban poor in a country like Ethiopia where many
people live barely below the absolute poverty line
