The Impact of Microfinance on Poverty Reduction: The case of Selected Clients of Oromia Credit and Savings Share Company (OCSSCO) in Gindeberet Woreda, Western Shoa Zone of Oromia Region, Ethiopia.

Abstract

Microfinance has become very important in global poverty reduction debates. The popular assumption is that, enabling poor households access to credit helps households begin micro entrepreneurship which would enable them improve their incomes and eventually escape from poverty. The major causes of low economic growth and high incidence of poverty, in Ethiopia, includes lack of income, assets, employment opportunities, education, health and etc. To reverse the economic decline and poverty situation in the country, the Ethiopian government has taken policy measure such as structural adjustment program (SAP), agricultural development led to industrialization (ADLI), and poverty reduction strategy paper (PRSP), etc. Currently, increasing the poor access to micro finance services is accepted as one of the tool to attack poverty. This study assesses the impact of microfinance on poverty reduction the case of selected clients of Oromia credit and savings share company (OCSSCO) in Gindeberet woreda, Western Shoa Zone of Oromia Region, Ethiopia. The study used both primary and secondary data. Primary data were collected through structured questionnaire from active and new (incoming) clients. Secondary data were collected from different books, unpublished yearly or quarterly reports journal of articles, CSA reports and other relevant official reports. A total of 242 samples were selected using two stage sampling technique. Descriptive and inferential statictics of chi-square test of independence were applied in the study. The impacts were analyzed based on the variables such as income, nutritional status, medical facilities, access to education, saving, women empowerment, and employment creations. The findings indicated that OCSSCO credit program has made a positive impact on households’ income, nutritional status, medical facilities and employment creations. However, the finding didn’t show the impact of OCSSCO on households’ access to education and women empowerement.