Review of Microfinance and Women’s Empowerment in Ethiopia

Kabeta, T. (2017) ‘Review of Microfinance and Women’s Empowerment in Ethiopia’, American Journal of Finance, 2(6), pp. 1–27.

The paper started by outlining  the beginning and development of microfinances  services in developing countries including Ethiopia. Over the past four decades, African countries have achieved socio-economic development because of microfinance management and their governance . Microfinance  creates opportunities  for  the poor to access financial credits which have long been denied by formal financial institutions. The merits of microfinances were  discussed in relation to rural women’s  economic empowerment.  Microfinance provides economic benefits to women’s  families and  enhances their self confidence about  income generating activities. Nevertheless, women’s economic empowerment through microfinance is still constrained by several challenges. Thus, the aim of the study was to identify  constraints to women’s access to microfinances and outline possible solutions.

The study provided facts about microfinances in Ethiopia. Although microfinances  are about small loans they make a significant contribution in the development of the financial sector. According to the study, there are 32 microfinance institutions with a mobilizing capacity of saving deposits of around 13 billion Birr. Of these the lion’s share is taken up by Amhara, Dedebit, Oromia, Omo and Addis Credit and Savings Institutes.  r They have 93.6% of the savings and 90% of the credit in the country. 

This  seminar paper is a desk review whereby the researcher used previous studies conducted on women’s economic empowerment through microfinance. It found that  women face  various constraints regarding economic empowerment which include backward attitudes towards women, their low level of education , lack of business know-how, lack of monitoring women’s cooperation activities by the government, dependency of the family on women, lack of interest to work in a group (cooperation), women’s dependency on men’s income, lack of confidence and inferiority. The study also identifies high interest rates, lack of collateral, little  access to microfinance institutions, lack of infrastructure, low level of training about the use of microfinance, and work burdens as bottlenecks for women’s economic empowerment.  However, the Ethiopian micro financial institutions are succeeding in improving the lives of poor women. poor households are transformed from  a survival way of life into a planned one as they start to afford better nutrition, housing, health, and education. Finally, the study recommended that the interest rate should be reduced, they should diversify their services to poor women and  train recipients  about microfinance benefits.