Abstract:
Currently micro financing has become one of the most powerful development tools for combating
poverty primarily by providing loan to the poor section of the society. The study was aimed to
assess the factors (institutional, clientele, economic, legislative and regulatory framework)
affecting the performance of microfinance institution in Jimma town, Ethiopia. The study was
adopted descriptive and inferential research design. The study was targeted 8 employees
working with Ishet microfinance institution in Jimma town and 127 sample borrowers were
selected from the 190 total borrowers served by these selected microfinance institution and the
interviews was included the managers. Samples of respondents were drawn using stratified
random sampling. Both quantitative and qualitative approaches were used for data collection
and analysis in the study. Data collected through interview questionnaire was analyzed using
SPSS. The findings were apparent that most of the employees working with microfinance
institution have not adequate skill, trainees on technology, not provide good service and training
to clients. The study found that microfinance institution charge higher interest rates than
commercial banks and low women participation. The study recommended that microfinance
institution should continuously inform their employees on technology; minimize lack of
technology and other financial matters. Microfinance institution should ensure that there was no
huge disparity between the interest rates they charge and those ones charged by other lending
institutions. Microfinance institutions should insure in Implementation of different methods to
improve women's participation in micro credit and saving services.
