Kebede, M., & Regassa, N. (2019). Women’s Access to Microfinance Services in Southern Ethiopia: Assessing the Promises, Impacts, Challenges and Gaps. In Economic Studies in Inequality, Social Exclusion and Well-Being (pp. 149–165).
As the banking system, credit and financial services are accessible by the fewer groups of the community who can afford the collateral requirement, governments in developing countries including Ethiopia started adopting subsidized credit institutions, Microfinance service. After explaining this scenario, the author noted that the attempt however failed due to their inability to reach poor farmers and inability to provide sustainable financial services. Microfinance service is defined as a small-scale financial service aimed at providing credit and saving service for groups of the society who don’t have access to the formal banking service, including individual entrepreneurs and small businesses. Ethiopia as a developing country has taken major reforms towards the expansion of micro credit service which started with the enactment of the 1996 proclamation. Though such action brought remarkable growth in terms of outreach and sustainability, women’s access to and control over Microfinance service in Ethiopia is still very low.
With an aim of examining the challenges, gaps, and opportunities of women’s participation in Microfinance, the study employed cross sectional survey design by applying qualitative and quantitative methods. Primary data was collected from households and key informants at Kebele, Woreda, Zone and Regional level.
According to the findings of this study, decision making whether to borrow money from the Microfinance and its administration are mostly made by discussion between the husband and wife. Only a few study participants reported that their husband alone made such a decision. Regarding the impact of Microcredit, women who used the services showed a dramatic change in their monthly income and financial sustainability. They manage to repay their debt on time. However, few women who borrowed money from the Credit service faced a challenge of inability to repay and opt for selling their property including land to repay the money. The main reason for this was, low rates of return or profits, using the loan for subsistence, husband’s extravagant habits and using the money for family healthcare and related issues. Moreover, untimely withdrawal of the savings for various household costs is the major challenge observed in the area.
The major challenge that the study found regarding access to Microfinance services is financial constraints which require six-month advance saving as a means for the credit service. However, women in the study area don’t have a source of income from which they can save for a consecutive six month period. The study also found that age has an impact on women’s access to credit services. Accordingly, younger women between the age of 18-25 found to be more active in accessing the services when compared with the other age groups. Family size is also negatively correlated with the Micro finance services. Accordingly, as family size increases, the likelihood of accessing credit services is decreasing. Moreover, women’s membership in the informal credit services like Iqub and Idir, negatively affected their membership in the Microcredits. This is due to the reason that Microcredit service is considered as substitution to the informal one.
Generally, the authors called for local and regional government intervention to expand the services and reach poor communities sufficiently. Moreover, lifting the barriers including the requirement for six-months advance saving and high interest rate are suggested for improvement.