Evaluation of Microfinance Institutions in Ethiopia from the Perspective of Sustainability and Outreach

抄録

Ethiopia is a developing country, the second most populous in Africa with an estimated population of more than 94 million. The Ethiopian economy is based on agriculture, and poverty reduction has been the overriding development agenda. The coverage of formal financial services estimated to be less than 10 percent, nevertheless banks consider the poor “un-bankable”. It has been assumed that Microfinance Institutions (MFIs) have reached the poor on a sustainable basis. Considering the situation, this study aims at evaluating the outreach level of Ethiopian MFIs and its sustainability. In order to achieve the planned research objectives, quantitative as well as qualitative research methods are used. The target of this research is MFIs currently operating in the country. The 14 samples of the study were selected from operating 34 MFIs by using purposive sampling technique to include all categories. Data were collected through questionnaires, whereas, secondary data from annual reports and other documents. The analysis indicated that the breadth and the depth of outreach of Ethiopian MFIs are in an increasing trend. The increase in the amount of voluntary savings was remarkable, and its ratio to the compulsory savings was 482.51 percent from 2005 to 2014. With regards to depth of outreach, 54.73 percent of women and relatively insignificant number of crop producing farmers have been covered by microfinance services. The Operational Self-sufficiency Ratio and Financial Self-sufficiency Ratio of Ethiopian Microfinance Institutions’ are in increasing trends because of the enhancements in generating more revenue. Outreach trend is promising, though they have challenges to address the disadvantaged group of the society. The sustainability indicators suggested that the increase of operational sustainability and financial sustainability ratios are due to the increase in revenue and the contribution of donors and/subsidization. It is also advisable to improve its sustainability by increasing the efficiency.