The impact of microfinance on women’s economic empowerment: a case study on omo microfinance in gimbo woreda, south nations nationalities and peoples region, Ethiopia

Abstract

In a subsistence agriculture and low income developing countries, microfinance provision to rural areas is taken as a mechanism to reduce poverty and to empower women economically. MFI have made important contributions to poor people particularly to women, by providing a financial service to those who are excluded from the formal financial sector. The study aims to assess the impact of microfinance on women economic empowerment with a case study of Omo Microfinance Institution in Gimbo woreda. By using multi-stage sampling method, the primary data was collected from a total of 200 rural women of which 115 of them are non-clients of Omo Microfinance Institution, which are used as control group. The control groups are future clients that are very similar to clients in their overall characteristics. The empirical analysis of this research was carried out both by descriptive statistics and regression analysis. The regression analysis part was used propensity score matching method of analysis. The estimated logistic regression result depict that women’s involvement in major decision making is significantly affected by age, women’s spouse level of education, number of family size, head of the house hold, being member of other MFI and amount of initial wealth. Women’s level of education, marital status and ecology were variables that are insignificant in affecting women’s economic empowerment. The propensity score matching estimation result reveals that OMFI has significant effect in increasing average yearly household income and personal cash saving of its client but it is insignificant in affecting positively women’s access and ownership and control over assets. Thus, the program intervention has been resulted a positive impact on women’s economic empowerment in the study area. Therefore, it is recommended that credit provision of OMFI should give priority in asset formation, access to resources, acquire asset and able to control over it.