Micro-Financing And Poverty Case Study
The major objective of microfinance is to help the poor in order to generate income by themselves and to reduce the poverty level of the country. It serves as one of the strategies in reducing poverty. Ethiopia is one of the poorest countries in the world. Plans to reduce poverty are central to the government’s development agenda, and many policies, goals and objectives are focused on targeting the poor. Microfinance is considered by the government to be one of the important tools in fighting poverty. It also serves as a tool for achieving the millennium development goal, which is reducing the world poor by half in 2015.
To assess whether micro-financing is effective in poverty reduction, level …show more content…
One can save money after securing an amount for consumption. Saving is also one of the indicators which can show improvement in life. People with better saving habit have better economic capacity and be able to withstand risks. Microfinance also promotes how to increase personal income the habit of saving. One of the objectives of microfinance intervention is to raise the saving habit of the poor. In this regard, to assesses the objectives of micro-financing, saving of micro and small scale operators in Akaki kality were collected and presented as follows.
The government of Ethiopia has been trying to make microfinance accessible to the community by establishing them in most of the regions and city administration. MFIs were trying to introduce the different saving modalities and trying to mobilize saving from MSEs operators with MSED implementing actors. As per the report of MFIs, in the four year of GTP implantation, a total of birr 2 billion has been collected from MSEs and the community. (FeMSEDA, 2014).
Table.7. Amount of saving in the five productive sectors
Major productive sectors Years Amount in Birr. 2001 2002 2003 2004 2005 …show more content…
Out of the total respondents 51 (35.2%) of MSE operators have saving account before they organized in microenterprise program. While the remaining 94 (64.2%) of the operators reported that they hadn’t save before their participation in microenterprise program. In this regard majority of them didn’t have saving accounts; as they reported that they don’t save money due to low level of income due to lack of income source. Even if some of them had income source but their income served for hand to mouse and for other consumption.
The positive impact is more pronounced after their participation in MS program. As the table revealed that majority 130(89.7%) of the operators reported that they do have saving account after they start MS. However 15(10.3%) of them don’t have saving habit. As can be seen in the figure saving rate increased from 35.2% to 89.7%.
Only few (6.9%) of respondents have only compulsory saving. Whereas (77.2%) has voluntary saving and the rest (6.9%) has both compulsory and voluntary saving. About 85.5% of the respondents reflected that their main source of saving is business financed by the