Constraints of Rural Women to Utilize Microfinance Institutions: the case of Members of Microfinance Institutions in Rural Districts of Dire Dawa Administration, Ethiopia

Abstract

In countries like Ethiopia where the per capita income is 370 USD (which is below regional average of USD 1,257) and more than 30% of the people live under poverty, the significance of microfinance institutions is unquestionable. It becomes more important when it has been given to rural women who do not have access to various resources. In spite of the contribution of microfinance institutions to members, there have been also constraints that challenged them from effective utilization of the services given by these institutions. Thus, the study was conducted in order to find out the major constraints that members faced to utilize the services of microfinance institutions in rural part of Dire Dawa Administrative Region, Ethiopia. Two districts (Halo Busa and Hula Hulul) were selected randomly. From these districts, 48 members of microfinance institutions were chosen purposefully. Focus group discussion and interview schedule were employed to collect the data. The data were analyzed qualitatively. The result of study showed that insufficient loan amount, lack of training and follow up, unavailability of nearby market, high cost of inputs and animal diseases were the major constraints of members. Thus, the study concluded that the microfinance institutions have to pay attention to the loan size that it should be sufficient to run a business sustainably. Training should also be properly given and clients have to be followed so that they can engage in businesses that they can run easily and make profit out of them.

Key words: Rural women, Microfinance institutions, Dire Dawa, Constraint