Microfinance Essay

CHAPTER ONE

INTRODUCTION

1.1. Background of the study

Microfinance was emerged in 19th century when money lenders were informally performing the role of today’s formal financial institutions. Over the past two decades, various development approaches have been devised by policymakers, international development agencies, non-governmental organizations, and others aimed at poverty reduction in developing countries. Microfinance become one of the strategy which become popular since the early 1990s, it provide financial services in the form of savings and credit opportunities to the working poor (Johnson and Rogaly, 1997). In many developing countries, MFIs have become an increasingly important component of strategies for promoting micro and small

Accordingly growth oriented sectors are selected for Maximum government support and the rest non selected sectors were get Minimum support. Some of the growth oriented sectors are manufacturing sector; including, Metal & engineering, textile and garment, leather products, wood work products, agro processing and handicraft products. Construction sectors; including, contractor, building material production, cobble stone production traditional way of mining extraction. Urban agriculture; including, cattle fattening, honey production, forestry, poultry farm, animal food preparation. Trade sector; including, domestic product whole sale and retail trade and Service sector; including, solid waste collection and recycling, maintenance service. (Konjit Debela,

Specific objective of the study

 To examine income condition of beneficiaries who are organized in micro and small scale enterprise at household and enterprise level.

 To examine asset holding of the beneficiaries.

 To compare the living status of beneficiaries before and after the provision of finance at household level.

1.4. Research Question

The research was conducted based on the following major questions that need to be addressed in the study.

1. How microfinance increase the income level of MSE operators in Akaki kalitty?

2. What welfare difference has micro-financing brought on the beneficiaries who are organized in MSE in Akaki Kality?

3. Does microfinance service help to increase expenditure for basic needs and saving?

1.5. Significance of the study

The findings of the study are useful for microfinance institutions, policy makers, academicians and also for public. Microfinance intuitions use the findings of the research to improve and expand their service, policy makers use the findings of the research to influence implementation of different policy, and also academicians use for further study and as well as to giver answer for academic