IMPACT ASSESSMENT OF SMALL CREDIT FINANCE TO POVERTY ALLEVIATION IN THE URBAN SOCIETY OF ETHIOPIA

Abstract

The main purpose of this study was to assess the impact of small credit finance to poverty alleviation in the urban society of Arada Sub city. It explores the benefits gained from using micro-financing as a mechanism to reduce poverty. The study was conducted in Addis Credit and Saving Institutes specifically in Arada Branch. The data gathering was done by using questionnaire as primary source of data. In addition, interview and other secondary data sources were used. Mixed approach was used and the researcher employed cross-sectional survey design. Descriptive statistical analysis and Propensity Score Matching (PSM) analysis technique was used with respondents coming from clients to test the differences of benefit from the credit scheme who were compared with those in the waiting lists. Purposive Sampling was used to recruit 384 respondents for this study. The findings of the study revealed that customers are getting advantage from the institute for the business startup and growth or expansion. However, close support system in financial management and utilization of the money they borrowed has gaps. The empowerment and psycho-social development of female clients have problems in the borrowing decision, spending of the loan money, and usage of the profit. Findings from new clients indicated that group formation and lack of entrepreneurship implementation is demanding. High interest and unwillingness to accept group responsibility are problems. Therefore, it is important to give training and support systems should be provided in order to strengthen usage of the credit and saving institutes for economic beneficence and development or positive change. The induction and orientation should be from getting loan up to the returning the money borrowed.