Filling the breach: Microfinance

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