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Impact Assessment of
Microfinance in Amhara
Region of Ethiopia
Getaneh Gobezie
Amhara Credit & Saving Institution (ACSI)
([email protected])
“International Conference on Rural Finance
Research: Moving Results into Policies”
19-21 March 2007
FAO Headquarters, Rome Italy
Objectives of the Study
 To
better understand the if and how
– Micro-finance services, strengthen
businesses
– improve the welfare of
microentrepreneurs and their
households, communities
 To
Improve Impact
Impact Assessment:
Approaches
Assessing the impact -- three methodological Challenges:
 1) the problem of counterfactual, which has to do with
evaluating what the welfare levels would be if the antipoverty programme did not exist ("with-out project"
situation); (Attribution Problem)
 2) the fungibility of money; the cash could be used for onlending, for immediate consumption needs, to repay loans
as well as to invest in an income generating activity;
 3) the selectivity problem; thus the effect of say the antipoverty programme may be over (under) estimated if
programme participants are more (less) able, due to certain
unobservable benefits compared to eligible nonparticipants
Approaches….
Fungibility:
 The Household Economic Portfolio Model (Chen & Dunn,
1996)
--Household as a Single Economic Unit
--Microenterprise, part of the larger household economy
--loan funds can be allocated to any activity in the HH
(production, consumption, and investment activities)
Attribution:
 qualitative method, see chain of events (cause-effect)
Self-selection bias
 comparison groups --Mature clients, incoming clients
Approaches….
“Quantitative” and “Qualitative” studies
Quantitative (690 clients):
 mature clients (>60 months) and new clients (<12
months)
Qualitative: from individual and group interviewing
Resulting information is then triangulated
Of the 179 area offices, 15 were selected (based on
criteria including the percentage of women clients,
accessibility of the communities, food security and
rural and peri-urban areas)
Enterprise stability
or growth
•increase in
enterprise revenue;
•increase in
enterprise fixed
assets,
•increase emp’t.
•improvements in
transactional r/ships
Improvements in
House-hold welfare
•increase in hh
income;
•diversification in
sources of hh
income;
•increase in hh
assets (housing,
fixed assets, etc)
•increased epend. on
educ
•Increase expend. on
food,
•an increase in HH
effectiveness in
coping with shocks.
Empowerment of
Individual clients
•Increase ability to
negotiate with others
•Increase in control
resources/income
•increased selfesteem, respect
•increase in personal
savings
•proactive behavior,
confidnce about future
Preliminary Findings
Profit Making:
Net profit, one product cycle (8 months)
 Mature clients 'net' profit (average Br. 1930); new
clients Br 1560; (significant)
 monthly net profit of mature client is about Br.
241, compared to the Minimum Wage (set by
Trade Unions) of Br.250/month
 70% acquired skill to calculate loss and profit
Welfare Conditions between Matured and Incoming Clients
Description
Choices
Clients (Mature Vs. Incoming)
>=5 year
food shortage over the
past 12 months?
<=1 year
Have Faced food
shortages
49
14.16%
72
20.87%
Have Not Faced food
shortages
297
85.84%
273
79.13%
346
345
183
53.67%
158
46.33%
339
340
Total
any one in house-hold
managed to see a
doctor last year?
Managed to see a
doctor
Proportion of school
age children
going to school
Going to School
248
77.1%
174
68.2%
Not going to school
74
22.8%
82
31.8%
322
256
Made improvements
166
47.98%
86
24.93%
Have Not Made
improvements
180
52.02%
259
75.07%
346
345
Total
Total
housing
improvements
worth Br.100
last two years
Total
Preliminary Findings…..
Consumption Smoothing
''loan taken for 'microenterprise' used for consumption
smoothing in 128 cases out of the 689 clients (mature and
new)
Expenditure include:
 purchase of food for the household,
 purchase of cloth for household members,
 giving money for spouse or other household members,
 making reserves for loan repayment or other emergencies,
 pay loans taken from other sources,
 purchase or renew houses,
 cover costs for wedding parties or related expenses,
 cover school or medical expenses, etc
Preliminary Findings…..
Empowerment
 qualitative tool show that clients have increased self
esteem and self confidence (54 of 60) since joining the
programme, better able to negotiate with husband, etc
But ‘’social capital” now reduced in some areras
 in some Muslim areas, getting involved in microfinance or
banking services is still considered ‘Haram’ (forbidden
activity), and the local religious leaders advise that those
who are going to such services should be isolated from the
rest of ‘true believers’, as they are ‘violating rules’
 empowerment at household/enterprise/individual level
DOESN’T Translate into empowerment at community
level
Preliminary Findings…..
Some Verbatim
 I used to lead a life which is no better than a death
 I just used to live an “empty life”
 My life was just watching day and night as they go
 I don’t like to talk about the “dark age”, there is nothing to tell
 Now I and my children eat enough, I wear “white clothes” ….like any other
people”
 Now people are listening to what I say, and I am asked for some consultancy
(in business, etc)
 Now I can contribute to social activities, I cannot be isolated
 Now I am invited to ceremonies, I go there and I sit on a ‘big chair’
 Now my daughter is sought for marriage
 My dream is for my daughter NEVER TO DO what I am doing now, but to get
better educated like you interviewer!!
 We were praying for God, and there we have this MFI
Challenges for Microfinance
Growth
Client’s Business absorptive capacity
 Agricultural Extension, Low coverage
 Business Devt. Service, Low coverage
Poor market infrastructure (Road, Mkt Info…)
Cultural problems
 Cultural Bias (non-traditional activities frowned at
 Limited Income Perspective
 “Backward-Bending Labour Supply Curve?”
The Woman Issue (Skill, Time Poverty….)
Growth in Aerage Loan Size Br/yr (1998-2006)
1200
1000
800
600
400
200
0
1
2
3
4
5
6
7
8
9
Recommendations
Govt., Donors, NGO, Other Stakeholder
 Rural infrastructure (roads, markets, etc)
 BDS service (Agric. Technology, small scale
industries, etc)
 Women (skill, labour saving technologies….)
 Cultural transformation -- Entrepreneurship
Service Provider
 MFI Capacity to Diversifying methodology
 Awareness (on microfinance, market economy, etc)
Thank You