Effect of Micro-finance on Women’s Economic Empowerment: A Case-Study of Omo-microfinance Institution, Lemo District, Hadiya Zone, Southern Ethiopia

Abstract

Micro-finance institutions have made significant contributions to the livelihoods of many people through the provision of financial and supporting services to the poor, especially women in rural environments. Thus, it is understood that micro-financing, as a development strategy, empowers women who were hitherto marginalized, and as such, were restricted from participating in the social, economic and political activities of their societies. This study examined the effect of micro-financing service on women’s economic empowerment in lemo district, hadiya zone, southern Ethiopia. Data was collected from a total of 156 rural women. The empirical analysis of the study was conducted using both descriptive statistics and binomial logit regression analysis. The results of the study indicate that the micro-financing scheme has a positive impact on women’s economic empowerment as measured by the increased participation of women in household decision-making. micro-financing program has had a positive impact on the living conditions of its clients. Compared to the Incoming clients and non-clients, matured clients of micro-financing have improved their household incomes, asset possession levels, and savings habit; thereby positively affecting their ability to fully participate in household decision-making. However, the impact of improvement of the above three variables; income, asset possession and savings habit, does not significantly affect the variable “decision making on household large sales”, which was used as an indicator of women’s economic empowerment in the regression analysis. The implication of the findings is that giving women access to resources does not always mean empowering them economically, unless they can also exercise full control, and make important decisions, over their resources. Thus, beyond financial support, the contribution of micro-finance services to women’s economic empowerment should be enhanced through a combination of more effective support services of MFIs or linkages should be made with services provided by other agencies like the Woreda Women’s Affaire’ Office and other gender-focused organizations.

Keywords: micro-finance, women, binomial logistic regression, Ethiopia.

DOI: 10.7176/JESD/10-13-03

Publication date:July 31^st 2020