The Effect of Micro Finance Institution on Poverty Reduction in Jimma City

Abstract

The aim of this thesis was to assess the effect of MFI’s service on poverty reduction in Jimma city. To this end, two sets of quantitative data on (MFIs services& poverty reduction) were collected simultaneously through closed ended standardized survey instruments and poverty reduction indicator’s survey instrument. Data was collected from 390 respondents, who were randomly sampled from 15000 Oromia credit and saving share company’s (OCSSCO) active clients in Jimma city. The two sets of quantitative data were analyzed using descriptive (Mean &St. deviation) and inferential (a Pearson r correlation and a linear regression) statistics through SPSS version 20. The first major finding of this study revealed that, the level of service delivery inOromia Credit and Saving Share Company (OCSSCO) is low which signifies that active clients of MFI (OCSSCO) in Jimma city are not satisfied by the service delivery of the company. Despite of this, however, clients’ perception is positive towards the contribution of OCSSCO in reducing poverty in the study area. The other major finding of this study revealed that MFI’s service is strongly correlated and has a significant effect on poverty reduction. Moreover, this study also identified that, saving service of MFI has relatively high significant effect on poverty reduction; microcredit and training are the next. However, insurance service of MFI has no significant effect on poverty reduction in the study area. Finally, the researcher strongly recommends that MFIs office leaders and their experts found in Jima city to conduct survey on their own service delivery, study it, and create an action plan for further improvement of their service. The researcher also recommends that, MFI’s office leaders and experts in Jimma city should become search for the variables that more support their poverty reduction campaign and they need to study it and plan for further strategies to fight against poverty.