GAMBELLA UNIVERSITY

SCHOOL OF GRADUATE STUDIES

MICROFINANCE AND WOMEN’S EMPOWERMENT IN GAMBELLA

REGION

BY

DAVID BUAY LUAL

ADVISER: GETAHUN FENTA KEBEDE (PhD)

NOVEMBER 2019

GAMBELLA UNIVERSITY

GAMBELLA, ETHIOPIA

i
 “Microfinance and Women’s Empowerment in Gambella Region”.

By

David Buay Lual

A Thesis Submitted to School of Graduate Studies of Gambella University in Partial

Fulfillment for the Requirement of Degree of Master of Business Administration

Adviser: Getahun Fenta Kebede (PhD)

November 2019

Gambella University
Gambella, Ethiopia

ii
 CERTIFICATION

The undersigned certifies that he has read and hereby recommend this thesis titled “Microfinance

and Women’s Empowerment in Gambella Region” for acceptance by the Gambella University in

partial fulfilment of the requirements for the degree of Master of Business Administration of the

Gambella University.

Dr. Getahun Fenta Kebede

(Adviser)

Date: November 20th, 2019

iii
 COPYRIGHT
No part of this thesis may be reproduced, stored in any retrieval system, or transmitted in any

form by any means electronically, photocopying, recording or otherwise without prior

permission of the author or Gambella University in that behalf.

iv
 DECLARATION

I, David Buay Lual Jaak, do hereby declare that the thesis entitled “Microfinance and

Women’s Empowerment in Ethiopia: A case of Gambella Town” is my own original work,

and that it has not been submitted for similar degree in any other University.

...........................................................
Signature

......................................................
Date

v
 ACKNOWLEDGEMENT

I am pleased take this opportunity to give all my thanks to the special people who in one
reason or another brought positive change to the accomplishment of my thesis. Thanks to my
family and friends for their support, it was very easy to manage all the difficulties occurred
during the period of writing, editing and structuring my thesis. I am highly indebted to the
Gambella University in collaboration with Green Research and Development Institute Post
Graduate management especially my adviser Dr. Getahun Fenta for his guidance and
constant supervision as well as for providing necessary information regarding this thesis and
also for his support in completing my research.
However, it would not have been possible without the kind support and help of many
individuals like Mr. James Tung Kong who dedicated his time to assist in data collection. Mr.
Zerihun Debebe the Monitoring, Evaluation Accountability and Learning Officer from
Danish Refugee Council for supporting me in SPSS data entry and analysis practice for this
thesis to its legible process. I would like to extend my sincere thanks to all of them for their
maximum co-operation they showed me. I would like to express my gratitude towards my
wives, children, mother, other relatives, and members of Financial Institutions for their kind
co-operation and encouragement that helped me in completion of this research.
Finally, and most importantly, I would like to thank the Almighty God for the divine
intervention that comforted me through many difficulties since I started my life and
particularly during this study.

Key words: Microfinance, women empowerment, poverty reduction, outreach

Gambella Ethiopia

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ABSTRACT

The position of women in Gambella traditionally has been low compared to men, women
are poorer, and suffer from traditions and customary laws. Thus, empowerment of women is
one of the main issues in Gambella town and in the Woredas. The objective of this study
was to analyze the effect of Microfinance institutions in women empowerment in Gambella
Town. The research questions were as follows: what are the outreach strategies used by
MFI on poor women, what are the challenges faced by poor women in microfinance
programs on poverty reduction, and do microfinance institutions contribute positively or
negatively to women empowerment. The study was conducted in Gambella town with the
specific focus on women who obtain loans for their Micro and small enterprises operation
from GMFI. The researcher attempted to identify a few key indicators of women
empowerment such as control of household decisions, household’s relations, participation,
loans and their uses. Indeed, the study involved 301 respondents who were interviewed,
these include one (1) Microfinance Institution’s head, 30 women entrepreneurs’ KIs, 40
women entrepreneurs during FGD, and 230 women entrepreneurs who filled the
questionnaires. To achieve the desired results, a questionnaire, interviews guides and field
observations were used for data collection. The Statistical Package for Social Sciences
version 20 (SPSS) and content analysis were used for data analysis. The findings revealed
that there was a high relationship between incomes earned and improved socio economic,
improved family relationship and leadership potential. Micro financing from GMFI has
yielded positive impacts on women’s economic empowerment that contributed
substantially to the improvement of their average monthly household income, saving habit,
access to and control over assets, improvement of households’ livings through income
generated from loan-financed activities, improved diversification of their sources of income
by practicing income-generating activities such as mini shops and small boutiques activities
which are useful indicators of decision making on use of loan in descriptive statistics. The
study recommends that women’s micro and small-scale entrepreneurs who are keen on
enhancing their innovativeness should seek entrepreneurial courses and further education in
business in order to master the management of their enterprises and to strengthen the
outreach program.
Key words: Microfinance, women empowerment, poverty reduction, outreach.

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 TABLE OF CONTENTS
CERTIFICATION ................................................................................................................... iii

COPYRIGHT ........................................................................................................................... iv

DECLARATION ...................................................................................................................... v

ACKNOWLEDGEMENT ....................................................................................................... vi

ABSTRACT ............................................................................................................................ vii

LIST OF TABLES ................................................................................................................... xi

LIST OF FIGURES ................................................................................................................ xii

ACRONYMS/ABBREVIATIONS ........................................................................................ xiii

CHAPTER ONE ....................................................................................................................... 1

1. Introduction ................................................................................................................... 1
1.1. Background of the Study ...................................................................................... 1
1.2. Statement of the Problem ...................................................................................... 4
1.3. Objectives of Study ............................................................................................... 6
1.4. Research Questions ............................................................................................... 6
1.5. Significance and Scope of the Study .................................................................... 6
1.6. Limitation of the Study ......................................................................................... 6
1.7. Definitions of Terms ............................................................................................. 7
1.8. Organization of the Thesis .................................................................................... 8

CHAPTER TWO ...................................................................................................................... 9

2. Review of Literature ..................................................................................................... 9

2.1. Concepts and Definitions of Terms .......................................................................... 9

2.2. Theoretical Review ................................................................................................. 12

2.3. Targeting Women ................................................................................................... 13

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 2.4. Paradigms of Microfinance Institutions towards Women Empowerment .............. 14

2.5. Gender Based Microfinance Delivery .................................................................... 17

2.6. Empirical Literature ................................................................................................ 18

CHAPTER THREE................................................................................................................. 21

3. Research Methodology ............................................................................................... 21

3.1. Introduction ............................................................................................................. 21

3.2. Description of the Study Area................................................................................. 21

3.3. Research Design and Approach .............................................................................. 22

3.4. Sources and Tools of Data ...................................................................................... 23

3.5. Validity ................................................................................................................... 24

3.6. Reliability................................................................................................................ 24

3.7. Sample Size and Sampling Techniques .................................................................. 24

3.8. Data Analysis and Presentation .............................................................................. 25

CHAPTER FOUR ................................................................................................................... 27

4. Results and Discussion ............................................................................................... 27

4.1. Microfinance Outreach ....................................................................................... 27
4.2. Challenges of Microfinance Services on Poverty Reduction ............................. 31
4.3. Effects of Microfinance on Women Empowerment ........................................... 36

CHAPTER FIVE..................................................................................................................... 45

5. Summary, Conclusion, and Recommendation ............................................................ 45

5.1. Summary ............................................................................................................. 45
5.2. Conclusion .......................................................................................................... 48
5.3. Recommendations ............................................................................................... 50

REFERENCES........................................................................................................................ 51

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APPENDICE ........................................................................................................................... 54

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 LIST OF TABLES

Table 4.1. Membership of Microfinance Institution ....................................................... 27

Figure 4.1. Amount of Loan Borrowed ........................................................................... 28
Table 4.2. Monthly earning of the respondents in 2016, 2017 and 2018 ........................ 28
Table 4.3. Use of loan ..................................................................................................... 29
Table 4.4. Problem related to loan repayment ................................................................ 30
Table 4.5. Status of Interest rate in relation to need for credit ........................................ 30
Table 4.6. Income spent by women without husband’s permission before and after
access to MFS ................................................................................................................. 32
Table 4.7. Respondents’ freedom to buy clothes without husbands’ permission ........... 32
Table 4.8. Reduction of Divorce Rate between husbands and wives before and after
accessing microfinance service ....................................................................................... 33
Table 4.9. Respondent’s rate on living standard before and after access to microfinance
services ............................................................................................................................ 34
Table 4.10. Awareness of the husbands on the work problem ....................................... 34
Table 4.11. Enhancement of women’s wellbeing ........................................................... 35
Table 4.12. Paired Samples Statistics ............................................................................. 36
Table 4.13. Marital status of the respondents ................................................................. 38
Table 4.14. Responsibility of daily shopping ................................................................. 39
Table 4.15. Increment of Self-esteem and Self-Confidence ........................................... 40
Table 4.16. Women’s decision making power in household before and after accessing
microfinance services...................................................................................................... 40
Table 4.17. Improvement of the knowledge on the job .................................................. 41
Table 4.18. Women’s engagement in leadership and communal organization before
and after accessing microfinance services ...................................................................... 41
Table 4.19. Respondent’s attitude regarding household responsibility .......................... 42

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 LIST OF FIGURES
Figure 3.1. Map of Gambella Town .........................................Error! Bookmark not defined.

Figure 4.1. Amount of Loan Borrowed ................................................................................... 28

Figure 4.2. Work conflict between husband and wife ........................................................... 31

Figure 4.3. Age of the Respondents ....................................................................................... 37

Figure 4.4. Level of Education of the Respondents ................................................................ 39

Figure 4.5. Husbands’ feeling and awareness creation on women business .......................... 43

Figure 4.6. Knowledge and Skills on Financial Documents Preparation ............................. .44

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 ACRONYMS/ABBREVIATIONS
AEMFI - Association of Ethiopian Microfinance Institutions

CSA - Central Statistical Authority

CSD- Centre for help Development

DECSI - Debit Credit and Saving Institution

EO- Entrepreneurial Orientation

EPRDF - Ethiopian People's Revolutionary Democratic Front

FGD- Focus Group Discussion

GMFI- Gambella Microfinance Institution

KIs- Key Informants

MFI - Microfinance Institutions

MFS- Microfinance Services

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 CHAPTER ONE
1. Introduction
1.1. Background of the Study
Microfinance is usually understood to entail the provision of financial services to micro
entrepreneurs and small businesses that lack access to banking and related services due
to the high transaction costs associated with serving these client categories. The
evolution of microfinance is from Bangladesh since the late 1970s and has been very
successful project. In the case of Ethiopia since that time proclamation, which provides
for the establishment of microfinance Institutions, was issued in July 1996. Since then,
various Microfinance institutions have legally been registered and started delivering
microfinance services (Wolday, 2000).
Microfinance is a powerful tool to self-empower in Particular the poor people especially
women worldwide and in developing countries. Microfinance activities can give them a
means to climb out of poverty (Sara Noreen, 2011). Working women contribute to
national income of the country and maintain a sustainable livelihood of the families and
communities, throughout the world. As they face many socio- cultural attitude, legal
barriers, lack of education and personal difficulties. Traditionally, women have been
marginalized. They are rarely financially independent and often they are more
vulnerable members of society.
According to the World Bank’s gender statistics database, women have higher
unemployment rate than men in virtually every country. In general, women also make
up the majority of the lower paid, unorganized informal sector of most economics. This
situation justifies the giving of priority and increasing women’s access to financial
services on the ground that women are relatively more disadvantaged than men are.
Ethiopians’ women who constitute about 50% of the population and who consists the
majority of the unemployed segment of the population are the most affected by poverty.
Since the majority of Ethiopian women live in areas where basic social services such as
health, education and other infrastructures are non-existent, disease, malnutrition, and
illiteracy is seriously affecting their life and the life of their children (Tesfay, 2003).
However, there is a consensus that in order for women to play a meaningful role in
economic development, they must be empowered both at the economic and social level.
One way of economical empowering of women is to make credit easily accessible to
them to finance their small and micro enterprises.

1
Small-scale businesses make a significant contribution by way of supporting poor
women to earn income and basic goods and services for consumption and investment.
However, this contribution is not fully recognized or understood, and it is little
researched. There are insufficient evidences, which provide a broader understanding of
women’s experience as business owners, their entrepreneurial orientation, and the
motivational factors in starting up, managing and growing their enterprises (ILO, 2012).
This research was designed to raise the specific question as to what are the outreach
strategies used by MFI on poor women, do microfinance programs help to reduce
poverty, and do microfinance institutions contribute positively to women empowerment
(what motivate them and the status of their entrepreneurial orientation which consists of
risk taking, innovativeness and pro activeness behaviors) are unanswered (ILO, 2012).
This particular study aimed to provide reasons as to why some women chose to become
entrepreneurs by examining their socio economic and decision-making capacity in their
household levels. The study also identified the effect of Microfinance services in
women empowerment.
Demographic factors such as age, level of education, marital status and the likes are also
considered to be assessed. According to Lumpkin and Dess (1996), it is useful to
explore levels of EO when assessing a business’s management perspective. For
example, Lumpkin and Dess (1996) found that personality orientations play a role, in
the emergence of entrepreneurs and entrepreneurial managers. In addition, Covin and
Slevin (1989), found a connection between and among EO and personality,
entrepreneurial embedment and other contextual factors suggesting that entrepreneurial
characteristics of the women making decisions play a role in e.g. management of risk.
A series of working paper by the support of International Labour Organization (ILO)
and other studies focused on women entrepreneurs such as International Labour Office-
Addis Ababa (2002), Getaneh (2006), Mulu (2009), Desta (2010) and others have
focused on major towns of Ethiopia. Moreover, men have contacts with alters having
high income than women, therefore, women have no ease access to and control of
financial services at household levels. This leads to differential resources access
between two sexes; i.e., men might obtain more financial and material support than
women (Getahun, 2015). To reach out the poor and make microenterprise programs
successful, planners and agents of microenterprise programs should give priority to the
preferences and network patterns of the poor (Getahun Fenta, 2015).

2
However, lack of adequate information on these women is problematic in the
understanding of their successful entrepreneurial process, making it difficult to plan and
implement policies and strategies to assist them. In this regard, support institutions in
Gambella Town are constrained by lack of disaggregated data and information that
would serve as a basis to plan appropriate interventions. In line with this, some studies
were conducted on women entrepreneurs in Ethiopia, but very few of them have
focused on women owned micro and small enterprises in Gambella Region (Daniel and
Getachew, 2013).
It has been well documented that an increase in women resources or better approach for
credit facilities results in increased well-being of the family especially children (Kabeer,
2001). This study therefore seeks to assess the contribution of microfinance to the socio-
economic empowerment of women in Gambella town.

3
 1.2. Statement of the Problem
According to the World Bank’s gender statistics database, women have higher
unemployment rate than men in virtually every country. In general, women also make
up the majority of the lower paid, unorganized informal sector of most economics. This
situation justifies the giving of priority and increasing women’s access to financial
services on the ground that women are relatively more disadvantaged than men are.
Ethiopians’ women who constitute about 50% of the population and who consists the
majority of the unemployed segment of the population are the most affected by poverty.
Since the majority of Ethiopian women live in areas where basic social services such as
health, education and other infrastructures are non-existent, disease, malnutrition, and
illiteracy is seriously affecting their life and the life of their children (Tesfay, 2003).
However, there is a consensus that in order for women to play a meaningful role in
economic development, they must be empowered both at the economic and social level.
One way of economical empowering of women is to make credit easily accessible to
them to finance their small and micro enterprises.
In Gambella, small-scale businesses make a significant contribution by way of
supporting poor women to earn income and basic goods and services for consumption
and investment. However, this contribution is not fully recognized or understood, and it
is little researched in Gambella region. There are insufficient evidences, which provide
a broader understanding of women’s experience as business owners, their
entrepreneurial orientation, and the motivational factors in starting up, managing and
growing their enterprises (ILO, 2012).
This research was designed to raise the specific question as to what are the outreach
strategies used by MFI on poor women, what are the challenges faced by poor women
in microfinance programs on poverty reduction, and do microfinance institutions
contribute positively or negatively to women empowerment (what motivate them and
the status of their entrepreneurial orientation which consists of risk taking,
innovativeness and pro activeness behaviors) are unanswered (ILO, 2012).
A series of working paper by the support of International Labour Organization (ILO)
and other studies focused on women entrepreneurs such as International Labour Office-
Addis Ababa (2002), Getaneh (2006), Mulu (2009), Desta (2010) and others have
focused on major towns of Ethiopia.
Moreover, men have contacts with alters having high income than women, therefore,
women have no ease access to and control of financial services at household levels. This
4
leads to differential resources access between two sexes; i.e., men might obtain more
financial and material support than women (Getahun, 2015). To reach out the poor and
make microenterprise programs successful, planners and agents of microenterprise
programs should give priority to the preferences and network patterns of the poor
(Getahun Fenta, 2015).
However, lack of adequate information on these women for the access and importance
of microfinance services in Gambella region is problematic in the understanding of their
successful entrepreneurial process, making it difficult to plan and implement policies
and strategies to assist them. In this regard, support institutions in Gambella Town are
constrained by lack of disaggregated data and information that would serve as a basis to
plan appropriate interventions. In line with this, some studies were conducted on
women entrepreneurs in Ethiopia, but very few of them have focused on women owned
micro and small enterprises in Gambella Region (Daniel and Getachew, 2013).
However, this particular study aimed to provide reasons as to why some women chose
to become entrepreneurs by examining their socio economic and decision-making
capacity in their household levels. The study also identified the effect of Microfinance
services in women empowerment.
Therefore, this research would make the basis for further studies who have interest on
women empowerment and poverty reduction in Gambella region to enhance the level of
the outreach strategy on poor women for free access to and control in financial services
at household levels, and to actively participated in socio-economics and community
decision making.

5
 1.3. Objectives of Study

1.3.1. General objective

The general objective of the study was to analyze the effect of Microfinance
services on women empowerment in Gambella Town.

1.3.2. Specific Objectives

The Specific objectives of the study were to:

i. Assess the outreach of microfinance institutions to the poor women in Gambella

town
ii. Examine the challenges of microfinance institutions in poverty reduction among
poor women in Gambella town
iii. Analyze the effect of the contribution of microfinance institutions on women
empowerment in Gambella town
1.4. Research Questions
The research questions of the study were as follows:

i. What are the outreach strategies used by MFI on poor women?

ii. What are the challenges faced by poor women in microfinance programs on
poverty reduction?
iii. Do microfinance institutions contribute positively or negatively to women
empowerment?
1.5. Significance and Scope of the Study
The outcome of this study would help the government, policy makers and financial
intermediaries on the contribution of microfinance towards women empowerment in
Gambella in particular and Ethiopia in general. Besides, the study might be useful to
advocates of women empowerment who could rely on it to make a case for more
credit facilities for women to improve their businesses. Furthermore, the study might
help other stakeholders particularly Gambella Microfinance Institution in reviewing
their lending policies towards women in order to achieve greater efficiency and offer
value added financial services.
1.6. Limitation of the Study
The research work was limited to women owned micro and small enterprises who have
access to microfinance services in Gambella town. Hence, generalization of some facts
and findings of the study were limited to the specific institution considered in the

6
undertaking. The reason for choosing Gambella MFI was because there were many
women owned micro and small enterprises accessing Microfinance services for their
business operation and survival. A large sample size made up of different microfinance
institutions from within and outside Gambella town could have allowed for better
generalizations of the findings. Nevertheless, this study could serve as benchmark in the
town for making further studies.
1.7. Definitions of Terms

Innovation: Innovation, in most cases, has been wrongly used interchangeably with the
word “invention”. However, these are two different things. While invention refers to
creation of something new, innovation is the actual putting of the new thing into the
marketplace. According to Mutlu & Er (2003), invention is the first step in the long
process of bringing a good idea to widespread and effective use; and invention cannot
be termed as innovation unless it has been put in the market or any other effective use.
Innovation is both the process of introducing something new and useful, and the new
thing itself. It is a concept of very general application, and there is a wide range of
approaches to conceptualizing innovation in the scholarly literature (Fagerberg
&Verpagen, 2004).
Financial Services and MSE: According to pecking order theory, the firms prioritize
their sources of funding starting from internal finance, debt and then equity. That is to
say there is a tendency of the firms to go to loan option after they have exploited own
internal savings or have none. Myers and Majluf, (2004) argued that, this is because
there exists information asymmetry between managers of the firms or enterprises
(insiders) and investors (outsiders).
Empowerment: A management practice of sharing information, rewards, and power
with employees so that they can take initiative and make the decision to solve the
problems and improve the services and performance. Empowerment is based on the
idea that giving employees skills, resources, authority, opportunity, motivation, as well
as holding them responsible and accountable for outcomes of their actions, would
contribute to their competence and satisfaction (Fagerberg,2004).
Bank Loans and Development: The positive role of banks in economic development
was articulated by Schumpeter (1912), who contended that well-functioning banks spur
technological development by identifying and funding those entrepreneurs with the best
chance of successfully implementing innovative products and production processes.

7
Microfinance Services: Microfinance is the provision of relevant and affordable
financial services to poor households that do not have access to the services offered by
“traditional” financial institutions (Khandker, 1998). Microfinance is primarily
concerned with credit and savings, although in recent times, allied services such as
insurances, leasing, payment transfers and remittances are being introduced to the mix
of services. Demand for microfinance services usually comes from micro entrepreneurs.
(Khandker, 1998).
1.8. Organization of the Thesis

This chapter is organized into five chapters: chapter one is about the introduction,
chapter two is literature review, chapter three is research methodology, chapter four is
result and discussion, and chapter five is summary, conclusion, and recommendations.

8
 CHAPTER TWO

2. Review of Literature
2.1. Concepts and Definitions of Terms
The term empowerment is used to refer to self-reliance and self-respect in order to
enable each person reach his/her God given potential (Cheston & Kuhn, 2002: 12).
They also state that empowerment is about change, choice and power. Which
individuals also consider empowerment as process of change or groups with little or no
power gain the power and ability to make choices that affect their lives.
Empowerment is also defined as a process through which women are able to transform
their self-perceptions-equivalent to alchemy of visibly transforming gender roles.
Empowerment generally involves change at three broad levels: within the household,
within the community, and at a broader institutional or policy-making level (Zafar,
2002:63). Empowerment is usually associated with women because not only they have
been historically disadvantaged in access to material resources like credit, property and
money, but they have also been excluded from social resources like education or inside
knowledge of some businesses (Zafar, 2002).
Access to resources does not by itself translate into empowerment or equality unless
women acquire the ability to use the resources to meet their goals. For resources to
empower women, they must be able to use them for the purposes of their choice. The
effective use of resources requires agency, which is, the process of decision-making,
negotiation and manipulation (Kabeer, 2005).
Women who have been excluded from decision making for most of their lives often lack
this sense of agency that allows them to define goals and act effectively to achieve
them. Movements, which seek the empowerment of women as group increase
opportunities available to individual women, and economic empowerment, can increase
women’s status in their families and societies. The lack of empowerment, on the other
hand, eventually slows down economic and political development, just as the lack of
progress in meeting people’s basic needs will limit empowerment because poverty itself
is disempowering (Skarlatos, 2004).
What is Microfinance
Microfinance is a form of financial services for entrepreneurs and small businesses
lacking access to banking and related services. The two main mechanisms for the
delivery of financial services to such clients are: (1) relationship-based banking for

9
individual entrepreneurs and small businesses; and (2) group-based models, where
several entrepreneurs come together to apply for loans and other services as a group.
Microfinance is a broad category of services, which includes microcredit. Microcredit is
provision of credit services to poor clients. Micro credit is one of the aspects of
microfinance and the two are often confused. Critics may attack microcredit while
referring to it indiscriminately as either 'microcredit' or 'microfinance'. Due to the broad
range of microfinance services, it is difficult to assess impact, and very few studies have
tried to assess its full impact. Proponents often claim that microfinance lifts people out
of poverty, but the evidence is mixed. What it does do, however, is to enhance financial
inclusion.
Traditionally, banks have not provided financial services, such as loans, to clients with
little or no cash income. Banks incur substantial costs to manage a client account,
regardless of how small the sums of money involved are. For example, although the
total gross revenue from delivering one hundred loans worth birr1, 000 each will not
differ greatly from the revenue that results from delivering one loan ofbirr100, 000, it
takes nearly a hundred times as much work and cost to manage a hundred loans as it
does to manage one (Marguerite Robinson,2001).
Poverty is usually defined in relation to the capacity to meet basic reeds. However, in
terms of a dynamic approach meeting one’s needs today do not guarantee that they will
be met tomorrow. Vulnerability refers to the basic uncertainty, which surrounds the
capacity of poor people to meet their needs on a regular and assured basis. Owing to a
wider variety of risks and shocks, the poor appear to be more vulnerable than the rest of
the society (Kabeer, 2005).
In addition to being economic phenomena, poverty and vulnerability are also social
incident reflecting who people are. Dominant cultural norms and values in most parts of
the world stress male responsibility for protecting and providing for household member
sand treat women as their life-long dependents. Men are given authority with the
household and control over resources. On the other hand, women are assigned
subordinate status within their households and the society. The risks faced by women
increase with their increasing dependence on men. Generally, women are more
vulnerable to poverty due to their economic, social, cultural status, caste, ethnic and
religious values (Kabeer, 2005).
The empowerment of women is essential for achieving the goals of sustainable
development centered on human beings (Malhotra et.al, 2000). It also requires

10
appropriate public polices to ensure that women enjoy all human rights and fundamental
freedoms and participate fully and equally in all spheres of public life including
decision-making. Public policies to promote women’s economic potential and
independence and their full and equal participation in development are also essential for
women empowerment. Measures are also needed to ensure women equal access to
education and to training and retraining.
Empowerment is essentially a bottom-up process rather than something that can be
formulated as a top-down strategy (Cheston & Kuhn 2002). It then follows that the
empowerment of women rests on women themselves rather than development agencies.
The empowerment of women involves women themselves setting the agenda and
managing pace of change (Carolyn, 2003). Empowerment comes from within, i.e.,
women empower themselves. Other parties such as development cooperation agencies
or NGO can, however, play an important role in facilitating capacity building and
networking.
Appropriate external support can be important to foster the process of empowerment. In
this regard, development agencies can support women’s empowerment by funding
women’s organizations that work towards addressing the causes of gender subordination
by promoting women’s participation in political systems and by facilitating dialogue
between those in positions of power and organizations with women’s empowerment
goal (Carolyn, 2003). Development activities have become closely associated with the
promotion of women’s empowerment, such as micro credit, political participation and
reproductive health and much innovative work has been done in these areas. However,
there are limits on the extent to which such activities are by themselves empowering
(Cheston and Kuhn, 2002).
Empowerment approaches are utilized in a variety of development initiatives in addition
to micro credit programs, democratization programs and leadership training programs.
However, question has to be raised as to what constitutes empowerment and when is the
program empowering and when it is not. For example, increased decision-making
power at individual level and greater access to economic resources of women does not
necessarily translate into greater representation on power of women with in political
institutions (Cheston and Kuhn, 2002).
Furthermore, empowerment in one area cannot be sustained without attention to other
facets (Cheston and Kuhn, 2002). For example, reproductive and sexual rights cannot be
fully exercised where women lack independent economic resources. The promotion of

11
empowerment also requires addressing organizational structures and processes in
addition to policy frameworks. Empowerment is demonstrated by the quality of
people’s participation in the decisions and processes affecting their lives. For
participation to promote empowerment, it needs to be more than a process of
consultation over decisions already made elsewhere. Strategies to support women’s
empowerment should encourage women’s participation at all stages of projects
including evaluation (Cheston and Kuhn, 2002). According to Le QV, Raven PV
(2015), microfinance has helped many women in their businesses, but has a limited
effect on empowering women, creating upward mobility and contributing to long-term
economic growth. In Indian context, microfinance was found to have a positive
influence on women’s social capital and normative influence, facilitating women’s
collective empowerment. Pitt M, Khandker S and Cartwright J (2003) found that
participation in microcredit programs help women to have access to financial and
economic resources, significant role in household decision making, have greater social
networks, have greater communication in general and knowledge about family planning
and parenting concerns and have greater freedom of mobility.
Microfinance and Microcredit
In literature, the terms microcredit and microfinance are often used interchangeably, but
it is important to highlight the difference between them because both terms are often
confused. Microcredit refers to small loans, whereas microfinance is appropriate where
NGOs and MFIs supplement the loans with other financial services (savings, insurance,
etc.). Therefore, microcredit is a component of microfinance in that it involves
providing credit to the poor, but microfinance also involves additional non-credit
financial services such as savings, and payment services (Okiocredit, 2005).
❖ Microfinance is a form of financial services for entrepreneurs and small
businesses lacking access to banking and related services.
❖ Microcredit is provision of credit services to poor clients.
2.2. Theoretical Review
Microcredit has come a long way. Professor Yunus, Managing Director of Grameen
Bank, promoted it in 1970 in Jobra, a village in Chittagong of Bangladesh, and it has
Spread all over the world. The strength of microcredit lies in its ability to organize idle
women into a productive workforce with their proven creditworthiness. It is believed
that 25 million people worldwide are now using microcredit to undertake income-
generating or self-employment activities; of these, 90% are women. Microcredit has not

12
only made women more productive, it has also empowered them. As a result, women
are now integrated into socio-economic activities, contributing to family income and
decision making and exercising more control over their fertility, which allows them to
take better care of their children (Marguerite Robinson, 2001). Microfinance was
necessary that all programs pass two key tests:
❖ Show that people can be relied on to repay their loans and
❖ Show that it is possible to provide financial services to poor people, which are
done through market-based enterprises without subsidy.
In the 1974’s a new wave of microfinance initiative introduced many innovations into
the sector. Many pioneering enterprises began experimenting with loaning to the poor
and underserved in the same year. Beginning in the 1980s a new approach came to
work on the assumption that more market-based solutions were required still focusing
on income expansion and poverty reduction but searching for cost-effective alternatives
(Ledger wood 1999). Local Non-Governmental organizations also began to look for a
more long-term approach, and at the same time, Prof. Mohammed Yunus of Bangladesh
who won the 2006 Nobel peace prize led the first lending scheme for landless people.
From 1980 onwards, the field of microfinance has grown substantially and most
recently, some NGOs have started transforming into formal financial institutions that
recognize the need of savings services to clients and to access market-funding sources
than rely on donor funds (Harper 2003).
2.3. Targeting Women
International aid donors, governments, scholars, and other development experts have
paid much attention to microfinance as a strategy capable of reaching women and
involving them in the development process. The microfinance industry has made great
strides toward identifying barriers to women’s access to financial services and
developing ways to overcome those barriers. A 2001 survey by the Special Unit on
Microfinance of the United Nations Capital Development Fund (SUM/UNCDF) of 29
microfinance institutions revealed that approximately 60 percent of these institutions’
clients’ were women. Six of the 29 focused entirely on women. Among the remaining
23 mixed-sex programs, 52 percent of clients were women. The study also showed,
however, that those programs offering only individual loans or relatively high minimum
loan amounts tended to have lower percentages of women clients. These findings
affirm the importance of designing appropriate products for women. Commercial banks

13
often focus on men and formal businesses, neglecting the women who make up a large
and growing segment of the informal economy (Daley-Harris 2007).
Microfinance on the other hand often targets women, in some cases exclusively. Female
clients represent eighty-five percent of the poorest microfinance clients reached.
Therefore, targeting women borrowers makes sense from a public policy standpoint.
The business case for focusing on female clients is substantial, as women, clients
register higher repayment rates. They also contribute larger portions of their income to
household consumption than their male counterparts do. There is thus a strong business
and public policy case for targeting female borrowers. Women are generally responsible
for childrearing (including education, health, and nutrition) and they often have fewer
economic opportunities than men do. In virtually every country, women have a higher
unemployment rate than men and make up the majority of the informal sector of most
economies. Moreover, the female population faces cultural barriers that often restrict
them to the home, making it difficult for them to access financial services.
Women also have more roles that are traditional in the economy and may be less able to
operate a business outside their homes. Furthermore, women often have
disproportionally large household obligations. Children of women microfinance
borrowers also reap the benefits, as there is an increased likelihood of full-time school
enrolment and lower dropout rates. Studies show that new incomes generated from
microenterprises are often first invested in children’s education, particularly benefiting
girls. Households of microfinance clients appear to have better health practices and
nutrition than other households. Positive environmental impact is also achievable as
microfinance programmes may support green jobs and renewable energy systems
(Daley-Harris S. 2007). Academics and practitioners have been inspired to address the
problems of gender discrimination and it is today accepted that gender, such as class,
race, and ethnicity, is a source of inequality (Lopez-Claros & Zahidi 2005:1). The term
refers to the unequal structural relationship between the sexes, linked to the state, the
economy, and to other macro- and micro-processes and institutions.
2.4. Paradigms of Microfinance Institutions towards Women
Empowerment
Support for targeting women in microfinance programs comes from organizations of
widely differing perspectives. Mayoux (2005) identifies three contrasting paradigms
with different underlying aims and understandings and different policy prescriptions and
priorities in relation to microfinance and gender policy. The three paradigms, namely

14
the feminist empowerment, poverty reduction and financial sustainability, also have
different emphasis in the way they perceive the inter-linkages between microfinance
and women empowerment.
2.4.1. Feminist Empowerment Paradigm
With a focus on gender awareness and feminist organization, microfinance is promoted
in light of a wider strategy for women’s economic and socio-political empowerment. In
this regard, microfinance must be part of a sectional strategy for change that identifies
opportunities and constraints within industries, which can raise the prospects for
women, when addressed. In addition, microfinance should be based on participatory
principles to build up incremental knowledge of industries and enable women to
develop their strategies for change (Cheston & Kuhn, 2002).
2.4.2. Poverty Reduction Paradigm
Many NGO integrated poverty-targeted community development programs touch this
paradigm. The main focus of such programs is the development of sustainable
livelihoods, community development and social service provision like literacy, health
care and infrastructure. The programs typically target the poorest of the poor. The
strategies target women because of higher levels of female poverty and women’s
responsibility for household well-being. The assumption is that increasing women’s
access to microfinance will enable them to make greater contribution to household
income, which is believed to translate into well-being for women and result in changes
gender inequality (Kabeer N, 2001).
2.4.3. Financial Sustainability Paradigm
The financial self-sustainability paradigm (also referred to as the financial systems
approach or sustainability approach) underlies the models of microfinance promoted
since the mid-1990s by most donor agencies and the Best Practice guidelines promoted
in publications by USAID, World Bank, UNDP and CGAP.
The ultimate aim is large programs that are profitable and fully self-supporting in
competition with other private sector banking institutions and able to raise funds from
international financial markets rather than relying on funds from development agencies.
The main target group, despite claims to reach the poorest, is the ‘bankable poor': small
entrepreneurs and farmers. This emphasis on financial sustainability is seen as necessary
to create institutions that reach significant numbers of poor people in the context of
declining aid budgets and opposition to welfare and redistribution in macro-economic
policy.
15
Policy discussions have focused particularly on setting of interest rates to cover costs,
separation of micro-finance from other interventions to enable separate accounting and
programme expansion to increase outreach and economies of scale, reduction of
transaction costs and ways of using groups to decrease costs of delivery. Recent
guidelines for CGAP funding and best practice focus on production of a ‘financial
sustainability index’ which charts progress of programmes in covering costs from
incomes. Within this paradigm, gender lobbies have been able to argue for targeting
women on the grounds of high female repayment rates and the need to stimulate
women’s economic activity as a hitherto underutilized resource for economic growth.
They have had some success in ensuring that considerations of female targeting are
integrated into conditions of micro-finance delivery and programme evaluation.
Alongside this focus on female targeting, the term ‘empowerment' is frequently used in
promotional literature. Definitions of empowerment are in individualist terms with the
ultimate aim being the expansion of individual choice or capacity for Self-reliance. It is
assumed that increasing women’s access to micro-finance services will in itself lead to
individual economic empowerment through enabling women's decisions about savings
and credit use, enabling women to set up micro-enterprise, increasing incomes under
their control. It is then assumed that this increased economic empowerment will lead to
increased well-being of women and to social and political empowerment.
These paradigms do not correspond systematically to any one organizational model of
micro-finance. Micro-finance providers with the same organizational form e.g. village
bank, Grameen model or cooperative model may have very different gender policies
and/or emphases and strategies for poverty alleviation. The three paradigms represent
different ‘discourses’ each with its own relatively consistent internal logic in relating
aims to policies, based on different underlying understandings of development. They are
not only different, but also often seen as ‘incompatible discourses’ in uneasy tension
and with continually contested degrees of dominance. In many programmes and donor
agencies there is considerable disagreement, lack of communication and/or personal
animosity and promoted by different stakeholders within organizations between staff
involved in micro-finance (generally firm followers of financial self-sustainability),
staff concerned with human development (generally with more sympathy for the
poverty alleviation paradigm and emphasizing participation and integrated
development) gender lobbies (generally incorporating at least some elements of the
feminist empowerment paradigm).What is of concern in current debates is the way in
16
which the use of apparently similar terminology of empowerment, participation and
sustainability conceals radical differences in policy priorities. Although women’s
empowerment may be a stated aim in the rhetoric of official gender policy and program
promotion, in practice it becomes subsumed in and marginalized by concerns of
financial sustainability and/or poverty alleviation (Kabeer N, 2001).
2.5. Gender Based Microfinance Delivery
Women’s access to financial resources has been substantially increasing over the years.
However, their ability to benefit from the access in is limited by the gender related
disadvantages (Skarlatos, 2004). In addition, despite their growing capacities, some
microfinance institutions provide a decreasing percentage of loans to women. The loan
size provided to women also appears to be smaller in comparison to men although both
participate in the same program and belong to the same community. In addition to
women’s poverty levels, social discrimination against women results in smaller loan
sizes in comparison to men. Furthermore, there are only a limited number of women in
the leadership of microfinance institutions, which might be one reason for the biased
loan access. However, regardless of the odds, microfinance programs still have the
potential to transform power relations and empower the poor.
Although microfinance does not address all the impediments to women’s empowerment,
it can contribute to their empowerment if properly implemented (Kabeer, 2005). The
goal of empowerment can be achieved through microfinance programs that are broad
based, gender focused and financially sustainable. A gender-based policy involves more
than just targeting women. Creating gender- based policy involves a process through
which an institution reexamines all of the underling structures and assumptions about
gender roles, rights and responsibilities that have historically discriminated against
women as borrowers and employees. It is also important for microfinance institutions to
set guidelines pertaining to employee recruitment, promotion, roles and responsibilities.
In this regard, the formulation and enforcement of the guidelines is expected to bring
about positive social changes. Furthermore, involving women as both staff and
borrowers has the potential for increased levels of economic empowerment and
financial stability that will benefit the individual omen, their families and communities
(Mayoux 2002).
The following are some general considerations that should be made when designing
programs with the aim of creating gender based strategy (Vyas, 2002). Microfinance
program with a focus on gender must have an idea, founded on solid research and

17
reliable information of the financial senses that will be most beneficial to women
clients. Agencies also need to develop approaches that provide opportunities for women
to decide for themselves about their needs and interests and how positive change can be
achieved. Promoting empowerment also requires some fundamental changes within
agencies in reviewing their structures and procedures to increase their accountability to
the women whose empowerment they aim to support.
Generally, it is essential that empowerment strategies be designed to enable women to
gain greater access to information, access and control over resources and the ability to
make decisions themselves. (Kabeer, 2005) In order to enhance women’s access to
credit, the establishment of new and strengthening of existing micro credit mechanisms
and micro-finance institutions needs to be undertaken to enhance the outreach of credit
(Cheston and Kuhn, 2002). In addition, other supportive measures should be undertaken
to ensure adequate flow of funds. The promotion of women’s political participation is
an important approach to supporting their empowerment
2.6. Empirical Literature
2.6.1. Microfinance Development and Women’s Participation in Ethiopia
Up until the early 1990s, the sources of finance for rural and urban poor and micro and
small enterprise operators in Ethiopia were confined only to informal sources of finance
like moneylenders, friends and relatives (Itana et al, 2004). He further noted that,
starting in the mid-1990s, following the drought of 1984/85, some Non-Government
Organizations (NGOs) introduced the idea of saving and credit among poor people as a
strategy for rehabilitation and development. Later on, special government programs
operated mainly in collaboration with international financial institutions appeared.
However, both types of programs were operated in a scattered manner and lacked
sustainability until the substantial measures taken to liberalize the financial sector, the
promulgation of proclamation No.40/96 is most commonly cited. The proclamation
provides the framework to create, expand and develop microfinance programs. Micro
financing is viewed as a means to alleviate poverty through pumping capital to
subsistence agriculture and micro enterprises. Empirical evidences gathered in diverse
contexts suggest the prevalence of both negative and positive impacts of micro-finance
on women economic conditions. A study conducted by Amin et al (2008), goes to argue
that targeted credit can be used as a mechanism for enhancing poorer women's existing
socioeconomic conditions and thereby altering the relations between gender and class,
to the benefit of the weaker parties. The authors attempted to explore the relationship

18
between poor women's participation in micro-credit programmes and their
empowerment by using empirical data from rural Bangladesh. This has been done by
examining quantitative data collected from a representative sample consisting of female
borrowers and non-borrowers from each of five NGO program areas, and the other
sample consisting of non-borrowers from counterpart non-program areas with no
significant presence of any NGO program.
The results show that (Amin et al 2008) the NGO credit members are ahead of the non-
members in all three indices of empowerment, irrespective of nonmembers' residence in
programme areas or non- programme areas. Moreover, the non-members within NGO
programme areas show a higher level of empowerment on the autonomy and authority
indices than do the nonmembers within the comparison areas. The results further
indicate that education, house type, yearly income, etc., tend to be positively associated
with autonomy and authority indices. Also positively associated are duration of NGO
membership and non-agricultural occupations. The implications of all these findings are
that NGO credit programmes in rural Bangladesh are not only likely to bring about
rapid economic improvement in the situation of women but also hasten their
empowerment.
Following the Agricultural Development Led Industrialization (ADLI) strategy of the
EPRDF government, rural finance has been considered as an important tool for
agricultural and food security (Belay, 2001). Consistent with its ADLI policy, the
government had to reconsider the operational modality of microfinance to facilitate a
very significant improvement in service delivery and outreach. Consequently, the
government came up with Proclamation No.40 in June 1996. The central elements of the
proclamation seem to be outreach and sustainability. That is, if properly implemented,
the proclamation has the potential to facilitate significant outreach, and the flourishing
of several sustainable Micro-finance institutions (Meklit MFI et al, 2005).
The importance of the micro and small enterprises sector in Ethiopia, particularly for the
low-income, poor and women groups, is evident from their relatively large presence,
share of employment and small capital requirement. These are sufficient reasons for
governments and other stakeholders in development to be interested in micro and small
enterprises (Gebrehiwot and Wolday, 2001). In line with the development of micro-
finance institutions, the Government of Ethiopia set up participatory rules and policies,
which gave space for women productivity? Padma (2003) noted that, government has
formulated and issued the Ethiopian Women’s Policy to speed up the economic and

19
social advancement of women. This policy gives special emphasis to rural women by
‘facilitating the necessary conditions whereby they can have access to basic services and
to ways and means of lightening their workload’. Consequently, all development
programs at national and regional levels should be able to integrate gender concerns in
their plans and programs to ensure that women participate, contribute, benefit, become
recognized, and obtain technological support. As of July 2018, GMFI is in operations
with:
➢ Active clients: 12,043
➢ Total loan: Birr 755,000
➢ Loan repaid back: Birr 189,640.
To meet unsatisfied demand for financial services, a variety of Microfinance
Institutions (MFIs) has emerged over time in Ethiopia. According to GMFI
documentation, it is shown that GMFI program has had a Positive impact on the
poor women in enhancing their economics, social and political position at
household level and in the community.

20
 CHAPTER THREE
3. Research Methodology
3.1. Introduction
Research methodology refers to a systematic way of studying and solving the research
problem. Kothari (2004) argues that, it does not only refer to research methods but also
the logic behind the methods we use in the context of our research study and explain why
a particular technique and not using others so that research results are capable of being
evaluated either by a researcher himself or by others using similar methods. In this
chapter the methodology is formed by Research design, sample design, data collection
design and data analysis. This section on research methodology describes the research
design, area of the study, population of the study, the sample and sampling procedures it
also discusses data collection methods employed in answering the research questions,
data analysis and data credibility.
3.2. Description of the Study Area
The Gambella Regional State is located in the southwestern part of the country bordered
by South Sudan in the west, Oromia Regional State in the north, Southern Nations and
Nationalities Regional State in the east. The administrative town of the region, Gambella,
is at 762 kilometers from Addis Ababa. The geographical location of the region is 7◦-
8◦17’ N latitude and 33◦-35◦ 2’ E longitude. The region has three administrative zones,
namely Nuer, Anywa, and Mejenger zones with the 14 Woredas including Gambella
town.
Based on the 2007 Census conducted by the Central Statistical Agency of Ethiopia
(CSA), the Gambella Region has total population of 306,916, consisting of 159,679 men
and 147,237 women; urban inhabitants number 77,878 or 25.37% of the population. With
an estimated area of 25,802.01 square kilometers, this region has an estimated density of
9.57 people per square kilometer. For the entire Region 65,445 households were counted
which results in an average for the Region of 4.6 persons to a household, with urban
households having on average 3.9 and rural households 5.0 people. The main ethnicities
of the region are the Nuer (46.65%), the Anuak (21.17%), Amhara (8.42%), Kafficho
(5%), Oromo (4.83%), Kambaata (1.44%), Mejenger (4%), Shakacho (2.27%), Tigrean
(1.32%) and other ethnic groups predominantly from southern Ethiopia 4.9%. 70% of the
region's population are Protestant, 16.8% Orthodox Christian, 3.8% practice traditional
religions, 4.9% Muslim, 3.4% Catholic, and others constitute 1.1%. The main ethnicities

21
of the region are the Nuer (40%), the Anuak (27%), Amhara (8%), Oromo (6%),
Mejenger (5.8%), Kafficho (4.1%), Mocha (2%), Tigrean (1.6%), and other ethnic groups
5.5%. Amharic is the working language of the region. 44% of the region's population is
Protestant, 24.1% Orthodox Christian, 10.3% practice traditional religions, 5.1% Muslim,
3.2% Catholic, and others constitute 12.7%.

Figure 3.1. Map of Gambella Town

3.3. Research Design and Approach
The study used both quantitative and qualitative methods (Mixed Approach). To obtain
accurate quantitative information, questionnaires were developed for 368 respondents.
Qualitative method was employed for deeply root studies that attempted to interpret
social reality (Roger and Nall, 2003). Qualitative analysis was employed to study
gender issues, behaviour and perception of the respondents to provide an appropriate
understanding of the social reality.
Feminists have used qualitative research methods in order to make women’s diverse
voices and experiences heard (Jane and Lewis, 2003).
In accordance with the above, this study mainly focused on mixed research approach
with the view of assessing the extent of empowerment of women resulting from the
intervention of microfinance and also identifying the challenges and problems faced by

22
the clients in the undertaking. In this regard, focus group discussion, in-depth interview
with key informants, and questionnaires methods were administered for this thesis.
3.4. Sources and Tools of Data
As indicated above, both Primary and secondary data were collected. The study based
primarily on a survey research; hence, the researcher relied mainly on primary data. The
questionnaires were distributed to women who have access to GMFI services for 3 years
and above because it had to be difficult to manage and to cover all the total number of
GMFI clients who access microfinance services and to measure the level of
empowerment for those under 2 years could not easily be known. Therefore, the
researcher chose to compare level of income of those clients of 3 years and above from
the previous income they get before receiving services and after getting services from
GMFI. FGDs were administered, in depth interviews were conducted with Women
owned MSEs and GMFI Head. This study used secondary data from the annual
financial reports of GMFI, and other documentary materials in the branch.
The tools being used for data collection include questionnaires, focus group discussion
and observation. Primary data were collected from women engaged in MSEs and
branch managers using above-mentioned tools whereas secondary data were collected
from documentary materials, financial reports and leaflet in GMFI.
1.1.1. Questionnaires: 297 questionnaires were used for data collection that allowed
large number of respondents to gather their views on loan, use of loan, decision making
power at household, participation in communal forum, expenses without husband’s
permission, knowledge of business, knowledge on financial documentation, term of
service and duration of loan and interest charged on loan. Out of 297 questionnaires
administered, only 230 were received from respondents and 67 were not captured in the
study.
1.1.2. Focus Group Discussions: 5 focus group discussions in all 5 Kebelles of
Gambella town, were arranged as 8 individuals per group for a diverse population that
comprised men, women, boys and girls which allowed for a dialogue among
participants and stimulates them to openly express their views, opinions and ideas on
the issues raised.
1.1.3. In-depth Interview: is a qualitative research technique that allowed for a person
to Person discussion. Such discussion provided the opportunity to have a deeper
understanding of one’s beliefs, feelings, and behaviors on important issues. Since the
interviews were usually unstructured, they allowed for inducing the interviewee to talk

23
intensely about the topic at hand. Thirty-one (31) Key Informants comprising of thirty
(30) women who have access to GMFI services and one (1) GMFI Head were
interviewed and their responses were recorded including audio and pictures.
1.1.4. Observation: was used to watch, or listen to what people do, behavior, practices
or experience in the community. Accordingly, in-depth interview was used in addition
to focus group discussion in order to obtain more information from the Key Informants
or respondents. This method provided more accurate information as the respondents had
been more open to discuss issues during one to one interview as compared to group
discussions.
3.5. Validity
Validity is the ability of a tool to measure what it is intended to measure. Validity refers
to the degree to which a study actually measures what it purports to measure (Claire and
Craig, 2000). Nachmais et al, (1996) talks of three kinds of validity, namely, content
validity, empirical validity and construct validity. Specifically, the study validity was
determined by making sure that all the questions asked in the questionnaires fully
addressed the research objectives and hypotheses. The use of stratified random sampling
and the pre-testing of the questionnaires to respondents, to whom the questionnaires were
targeted, aimed at enhancing validity and reaching a valid conclusion in the study. As a
result, the researcher through measuring what the study set out to measure in order to
reach a credible and believable conclusion that is right and free of bias (systematic error)
approved validity.
3.6. Reliability
Reliability refers to the extent to which a measuring instrument contains variable errors
that appears inconsistently from the observation to observation during any one
measurement attempt or that vary each time a given unit is measured by the same
instrument. (Nachmai et al. 1996). He further continues to look at it as the ratio of the true
score variance to the total variance in the scores as measured Common methods of testing
reliability include test-retest method, parallel-forms technique and split- half method. This
study used split-half method, where correlation coefficient was adjusted using the
Spearman-Brown prophecy.
3.7. Sample Size and Sampling Techniques
Since the focus of this study was to explore the effect of microfinance on the socio-
economic empowerment of women, only women who have access to Gambella
Microfinance Institution services and operate their businesses for three (3) years and

24
above are considered due to time and financial constraints. Hence, a sample that is
representative of the population was considered for this study.
The study employed both the probability and non-probability sampling methods. In
Probability sampling the participant in the program were identified and questioned
regarding the benefit they obtained from the program in terms of questions set to them.
Simple random sampling, which is one of the probability sampling methods, was used
in this study. A total sample of 368 women owned MSEs was selected from 5 Kebelles
of Gambella town where MFI provides micro financial services.
The non-probability sampling method adopted was the purposive sampling. The choice
of purposive sampling method was motivated by the fact that it aids the study to focus
only on women clients of Gambella Microfinance Institution program who are
beneficiary for three years and above with the assumption that after that period the
financial services should had had an impact on their lives.
Determining the sample size is necessary for this study just as it is in others because it is
impossible to have the entire population as research respondents.
The total number of GMFI clients is 12,042, and the number of women owned Small and
Micro Enterprises for three (3) years and above is 4,700. Therefore, the researcher only
selected 368 out of 4700 participants in Micro finance program of Gambella MFI in
Gambella town. In terms of the numbers selected above, the sample size n and margin of
error E are given by

Where n = sample size

N = Population
e = level of precision (0.05)
n= 4700/1+4700(0.0025)
n = 368
Therefore, a simple random sampling technique was then adopted to select the Sample
size of 368 respondents.
3.8. Data Analysis and Presentation
The empirical analysis of the study was done using descriptive statistics. The results are
presented using tables, bars and pie charts. The Statistical Package for Social Sciences
(SPSS) tool was used to process the data set. Descriptive statistics like measures of
dispersion, mean, standard deviation, and variance were employed in this analysis.
25
Moreover, ratios, percentages, tables and maps were also used. Paired t-statistics was
used to measure the effect of microfinance services on women empowerment by
comparing the average income of respondents from the first year of joining microfinance
services and the third year of running the business (2016, 2017 and 2018). This data was
gathered from Gambella Microfinance Institution in Gambella town. The analysis mainly
focusses only measuring the average income in 2016 to that of 2018, which cover 3
years’ period for those who access microfinance service for 3 years’ term. The Monthly
income of respondents is then analyzed using a paired t-test (as the data are matched pairs
of pre- and post-Monthly income for each respondent).

26
 CHAPTER FOUR
4. Results and Discussion
4.1. Microfinance Outreach
Outreach refer to financial services provision to a large portion of the society, termed
breadth of outreach, and to the poorest of the poor, also called depth of outreach. The
best measurement of outreach is straightforward, that is the number of clients or
accounts that are active at a given point in time. The number of active clients includes
borrowers, depositors, and other clients who are currently accessing any financial
services. In order to measure outreach, we need to look in to different dimensions. The
first is simply the number of persons now served that were previously denied access to
formal financial services. Usually these persons will be the poor because they cannot
provide the collateral required for accessing formal loans, are perceived as being too
risky to serve, and impose high transaction costs on financial institutions because of the
small size of their financial activities and transactions.
4.1.1. Membership and Availability of Saving Accounts of the
Respondents in GMFI
The table below illustrated the women’s membership status and availability of
saving accounts with GMFI.

Table 4.1. Membership of Microfinance Institution

Membership Frequency Percent Valid Cumulative Percent
Percent

Valid Yes 230 100.0 100.0 100.0

Source: (Field Data_ July 2018_Gambella)

Table 4.1 above showed that all respondents have membership with GMFI and indicated
their commitment to keep faith with their respective interventions for reasons that, these
microfinance products have helped them to expand their businesses. This means that a
majority of women sees the MFIs favourable and it has a contribution to economically
empowerment, hence inspired to continue being members.
MFI had helped women clients to meet certain social responsibilities in the family.
However, those who wanted to back out stated reasons such as inaccessibility of expected
amount for loan from MFI for low income families.

27
 4.1.2. Amount of Loan Borrowed
The figure below showed the amount of loan taken from GMFI by women. The finding
indicated that those taken loan of 1,000-5,000 make up 11.74%, those taken loan of
6,000-10,000 make up 29.13%, and those taken loan of 11,000-15,000 make up 52.61%
whereas those taken loan of 16,000-20,000 make up 6.52%. Since those who have access
to Gambella microfinance loan of more than 16,000 are few in number, it is shown that,
higher percentage of women clients in GMFI have no free access to the expected amount
of loan they intend to borrow and subsequently it has an implication in the expansion of
their businesses. This is true that, the cost of the purchase of items or materials from
market rise that in turn affect women who have not accumulated much money in their
Monthly savings since the amount of Monthly income is determined by the amount of
loan taken from microfinance services and the types of services or goods delivered.

Figure 4.1. Amount of Loan Borrowed

4.1.3. Monthly Earning of Respondents (2016, 2017 &2018)
The table below illustrated the amount of income of the respondents in different years of
services from 2016-2018.
Table 4.2. Monthly earning of the respondents in 2016, 2017 and 2018.
Monthly earning in 2016 (First year) Frequency Percentage
<5000 227 98.7
5000-10,000 3 1.3
Total 230 100
Monthly earning in 2017 (Second year) Frequency Percentage

28
<5000 111 48.3
5000-10,000 116 50.4
10,000-15,000 3 1.3
Total 230 100
Monthly earning in 2018 (Third year) Frequency Percentage
<5000 24 10.4
5000-10,000 115 50.0
10,000-15,000 88 38.3
>15,000 3 1.3
Total 230 100

The table above illustrated the average Monthly Earning of Women engaged in MSE who
are accessing loan from GMFI. As the results of access to Credit, the monthly income of
the respondents had been increased significantly as shown in table 4.2. The study
therefore indicated that, most of respondents before access to credit, the monthly income
falls below birr 1000 and most of the matured clients were relatively in the high-income
level range when compared with the other category of respondents for the years 2016,
2017 and 2018. This information was collected from the respondents, saving account
books, and GMFI documentation.
4.1.4. Use of Loan taken from GMFI
Table 4.4 illustrated the use of loan from Gambella Microfinance Institution
Table 4.3. Use of loan
Use of Loan Frequency Percent
Expanded business 24 10.4
Expanded business and
Valid Building 206 89.6

Total 230 100.0

Source: (Field Data_ July 2018_Gambella)

The table above illustrated the intended use of the amount of loan women taken from
GMFI. The finding indicated that, all women who are married use the loan to expand
their businesses and buildings whereas those who are not married/single use the loan only
to expand their businesses.

29
Therefore, the study indicated that, unmarried women or girls have low participation and
access to microfinance loan since they comprise 10.4% (24) of the population of the
GMFI clients.
4.1.5. Problem related to loan repayment with GMFI
The table below illustrated the problem related to loan repayment (I do not have problem
related to loan repayment term).
Table 4.4. Problem related to loan repayment
Loan Repayment Problems Frequency Percent

Agree 53 23.0

Strongly agree 177 77.0

Disagree 0 0

Total 230 100.0

Source: (Field Data_ July 2018_Gambella)

The table above stated the problems related to loan repayment. The finding showed that
all women (23% answered with agree and 77% answered with strongly agree) who have
access to Gambella Microfinance Loan have no problem with Loan Repayment at the
specified period of time because the interest rate charged per loan is small compared to
the income obtained from the businesses.
4.1.6. Status of interest rate in relation to need for credit
The table below illustrated the interest rate charged in relation to credit needed by
respondent (The status of interest rate charged on my loan is normal).
Table 4.5. Status of Interest rate in relation to need for credit
Status of Interest Rate Frequency Percent

Agree 32 13.9

Strongly agree 198 86.1

Disagree 0 0

Total 230 100.0

(Field Data_ July 2018_Gambella)

The table above explained the interest rate charged in relation to credit needed by
respondent. The finding indicated that 100% of the respondents have no problem with the

30
interest rate charged against the amount of loan from branch. Respondents also explained
that the interest rate charged doesn’t discourage their participation in taking loan
(answered with 13.9% agreed and 86.1% strongly agreed).
4.2. Challenges of Microfinance Services on Poverty Reduction
Here, we define poverty as an income (or more broadly welfare) level below a socially
acceptable minimum, and microfinance as one of a range of innovative financial
arrangements designed to attract the poor as either borrowers or savers. The
characteristics of the respondents considered in this study were obtained from 230
individuals included in present study. The majority of the participants were above the age
of 30. The respondents, whose educational level ranged from primary to diploma level,
mostly learned about the existence and function of the microfinance institution from
friends and relatives. The respondents’ profile composed of all women who have access
to microfinance services for 3 years and above who have membership with GMFI, with
decision-making power, socio-economic and political participation in the community,
savings and other expenses. Furthermore, it was observed that the participants differ in
their marital status, i.e., consisting of single and married.
4.2.1. Work conflict between husband and wife
The figure below illustrated the work conflict between husband and wife and the finding
indicated that, out of 230, those who are single have responded with “no” meaning that
they have no idea about the work conflict because they have no husbands and 207 women
responded with “not” meaning that they have not experienced work related conflict with
their husbands.

Figure 4.2. Work conflict between husband and wife

31
 4.2.2. Income spent by woman without husband’s permission
before and after MFS
Table 4.6. Income spent by women without husband’s permission before and after
access to MFS

Income Spent Yes No

Income spent by wives

without husbands
2.17 97.83
knowledge before MSE
program
Income spent by wives
without husbands
100 100
knowledge after MSE
program
Source: (Field Data_ July 2018_Gambella)
The table above illustrated the responsibility of women prior to decision making on the
expense without permission from her husband. The indicator showed that 97.87% of the
respondents had no decision making power for the expense without their husbands’
knowledge before they engaged in MSE since the husbands were the only sources of
income whereas only 2.17% were allowed to make decision on expenses without
husband’s knowledge. Therefore, all women (100%) after engaged in MSEs, expressed
their full freedom of financial expenditure without husband’s permission.
4.2.3. Respondent’s freedom to buy clothes without
husband’s permission
The table below showed the comparison of respondents’ freedom to buy clothes for
herself and children without husbands’ permission before and after engaged in MSE.
Table 4.7. Respondents’ freedom to buy clothes without husbands’ permission

Respondent’s freedom Situation before MSE Situation after MSE

Personal cloth 100%

25%

Children cloth 100%

30%

Source: (Field Data_ July 2018_Gambella)

The indicators on the table above showed that, the situation of women before engaged in
microfinance services was worse (25%-30% answered with no), their husbands were
depriving them from buying clothes without consulting them whereas after engaged in
microfinance services, their relationship with husbands improved (100% answered with

32
yes) and have started enjoying the freedom of buying clothes without asking permission
from the husbands. 100% stated that they are all free to buy cloths without informing the
husband and no problem encountered on that compared to when women have no access to
microfinance services.
4.2.4. Reduction of Divorce Rate between Husbands and
Wives before and after accessing microfinance services
The table below explained the percentage and frequency of divorce rate of women from
their husbands.
Table 4.8. Reduction of Divorce Rate between husbands and wives before
and after accessing microfinance service
Reduction of divorce rate Before MFS (%) After MFS (%)

Disagree 87 0.0

Neutral 9.1 9.1

Agree 3.9 15.2

Strongly agree 0.0 75.7

Total 100 100.0

Source: (Field Data_ July 2018_Gambella)

Table above explained the reduction of divorce rate between husbands and wives before
and after microfinance services. The finding revealed that 87% of the respondents (with
disagreed) explained that, before they engaged in MFS there were frequent divorce cases
between husbands and wives due to financial crises at household level and 9.1%
respondents from single/not married ladies responded (with neutral) showing that they
have no idea about the divorce issue. However, after microfinance services, 91.1% (with
agree and strongly agree) of the respondents appreciated the total reduction of the divorce
rate of women from their husbands after women started generating income to their
families whereas 9.1% (with neutral) of those who were single had no experience on the
issue of divorce. This finding concluded that the rate of divorce of women from their
husbands reduced after women engaged in MSE where they access microfinance services
from GMFI.

33
 4.2.5. Respondent’s rate on living standard before and after
access to microfinance services
The table below showed the percentage of the respondents on their status on the living
standard after access to microfinance services.
Table 4.9. Respondent’s rate on living standard before and after access
to microfinance services
Rate of living standard Before MFS After MFS
Strongly agree 3 171
Agree 27 30
Neutral 200 21
Total 230 230
Source: (Field Data_ July 2018_Gambella)

Respondents explained that, before engaged in MFS, their living standards with husbands
was not smooth, there were lot of violence happening at housed levels, but after engaged
in MFS, their living standard improved and out of 230 respondents, 171 responded as
strongly agreed, 30 agreed and 21 neutrals. Those under neutral response are because the
mount of loan they took from GMFI is not as much as they required operating their
enterprises.
4.2.6. Awareness on the work problem
The table below illustrated the awareness of the husband on the work problems.
Table 4.10. Awareness of the husbands on the work problem
Awareness on job Frequency Percent

Yes 206 89.6

None 24 10.4

Total 230 100.0

(Field Data_ July 2018_Gambella)

The table above indicated that, women engaged in MSE explained that they have no
problem with their husbands regarding their businesses including those who are not
married/single. They also mentioned that, no work problems they had ever encountered
and 206 (89.6%) answered with yes whereas 24 girls/single (10.4%) answered with none
meaning that they have no husbands who create awareness to them.

34
 4.2.7. Enhancement of women’s wellbeing before and after
microfinance
The table below illustrated the enhancement of women’s wellbeing.
Table 4.11. Enhancement of women’s wellbeing

Enhancement of wellbeing Before MFS After MFS

Agree 89.57 13.9

Strongly agree 10.43 86.1

Total 100 100

Source: (Field Data_ July 2018_Gambella)

The table above illustrated the women’s wellbeing at household level before and after
accessing microfinance services. The researcher was interesting to understand whether
the wellbeing of women before accessing microfinance services was nearly same as
after accessing microfinance services. The finding indicated that, before microfinance
services the wellbeing of women was not necessarily improved (answered with 89.57%
agree and 10.43% strongly agree) whereas after women access the microfinance
services their wellbeing improved (answered with 13.9% agree and 86.1% strongly
agreed). This indicated that the wellbeing of women is improved after engaged in MFS.
Before women had no access to MFS it was not easy to pay school fees for children,
presence of only one or two meal a day but after engaged in MFS women become
confident to generate income which enabled them to cater children school fees,
balanced diet/food for household, medication, transportation, clothing, and expanding
their businesses.
4.2.8. Paired Samples T-Test on the Amount of Incomes in the
Years of 2016, 2017 and 2018
The t-test: a t-test was applied to set up whether there were any important differences
between the means of the indicators used to capture the economic impacts of MFIs and
that of the main study variable determining the impact of MFI on empowering women.
This was to scrutinize the significant relationship and existence of these indicators and
the major variables.

35
Table 4.12. Paired Samples Statistics
Paired Samples Statistics to measure Mean and Standard Deviation

Mean N Std. Deviation Std. Error Mean

Monthly earning in 2016 1.01 230 .114 .007

Pair 1
Monthly earning in 2017 1.53 230 .526 .035

Monthly earning in 2016 1.01 230 .114 .007

Pair 2
Monthly earning in 2018 2.30 230 .670 .044

Monthly earning in 2017 1.53 230 .526 .035

Pair 3
Monthly earning in 2018 2.30 230 .670 .044

Source: (Researcher’s Field data_2018)

From the table 4.12 above, it is clearly indicated that there is very great different
income of the respondents from year to year. The average income of the
respondents in 2016 has great different from that of 2017 whereas the amount of
income of the respondents in 2017 is less than that of 2018. Since the purpose of
paired t-test is to measure the effect of microfinance on women empowerment
before and after the microfinance services among the respondents who served for
3 years, it is important to compare the income of the respondents in 2016 (before)
and that of 2018 (after). This is finally concluded that, the amount of income of
the respondents before and after accessing microfinance services in Gambella
microfinance institution has significant contribution on women empowerment in
Gambella.

4.3. Effects of Microfinance on Women Empowerment

Empowering women is a vital tool for alleviating poverty. Empowered women contribute
to the health and productivity of whole families and communities and to improved
prospects for the next generation. During Interview with the Head of GMFI, he explained
that, GMFI consists of 12,042 beneficiaries who are accessing loan from the branch. For
an individual to take loan from the branch he/she should have membership status and
open account from the branch. To apply for loan, an individual has to have Kebelle ID,
Account book from branch, guarantee from recognized government or an NGO institution

36
and he/she must have money being saved from the branch. The purpose of given out loan
is to empower women and youth to generate income to their families and to reduce
poverty in the region. It is also indicated that 85% of women taking loan return it back on
time. Only 15% of the total delay but repay it back after some period. If an individual
failed to repay back loan as needed, the GMFI filed the case to Kebelle leaders to resolve
the issue, if the client failed pay back the money, then the Kebelle leaders forward the
case to court where the client should adhere with the rules of law regarding loan and
repayment terms and condition through justice.
4.3.1. Age of the Respondents
The figure below showed the age category of women owned micro and small
enterprises that are accessing loan from Gambella Microfinance. It can be observed that
the importance of age of the respondents for the research is that the researcher sought to
identify how the age categories differences affected women empowerment. According
to the findings, the majority of women accessing microfinance services range from age
30-39 (56.96%) followed by those aged from 18-29 (26.09%) and the lowest are those
women aged from 40-49 (16.96%). It was therefore clear that the women ‘s involvement
in microfinance was more prevalent amongst 30th older women who had more family
responsibilities which increase with the average age of children and decreased at elderly
age. This can be explained by the truth that financial responsibilities increase as the age
increase due to such factors as school going children and the need to income generating
streams.

Figure 4.3. Age of the Respondents

37
 4.3.2. Marital Status of the Respondents
The table below indicated the percent of the marital status of women engaged in GMFI
services.
Table 4.13. Marital status of the respondents
Marital Status Frequency Percent Valid Percent Cumulative Percent

Married 206 89.6 89.6 89.6

Valid
Single 24 10.4 10.4 100.0
Total 230 100.0 100.0
Source: (Field Data_ July 2018_Gambella)
In the table above, it can be observed that the marital status of the respondents was
significant for the research study because the researcher is seeking to identify how
marriage affected financial decision making among empowered women. In most cases at
household level, women have no freedom to have decision making or engagement in
communal meetings, they have been facing denial of opportunity or services in the
community because they have been termed as dependents by their husbands at household
levels. The result shown that out of 230 respondents, 206 (89.6 %) who have access to
microfinance services were married and 24 (10.4%) were single. The distribution
revealed a fair representation of the distribution of women in Gambella town who
answered the questions in the research study.
4.3.3. Level of Education of the Respondents
The figure below showed the educational level of women owned MSE who have access
to loan from GMFI. The finding showed that 23.5% are under Primary School, 45.7%
are under Secondary School, and 30.9% earned Diploma. Therefore, the finding
indicated that the majority of women accessing loan from GMFI are those under
Secondary School level. The level of education reached showed that the respondents
were educated enough to be aware of the concerns relating to microfinance institutions
which were relevant to the research study and therefore their responses were reliable.
In other hand, women who have access microfinance services and at their educational
best, enabled them to have clear knowledge on financial expenses at their household
level.

38
Figure 4.4. Level of Education of the Respondents
4.3.4. Responsibility of the Daily Shopping
The table below stated the responsibility of the daily shopping between husband and wife.
Table 4.14. Responsibility of daily shopping
Responsibility of daily shopping Frequency Percent

Self 227 98.7

Valid Both 3 1.3

Total 230 100.0

Source: (Field Data_ July 2018_Gambella)
The table above illustrated whether woman engaged in MSE is the only one carrying out
daily shopping or the husband also support her in executing the business operation. The
researcher was interesting to know whether administering the business at home is a
woman’s role or shared responsibility between a husband and his wife. The finding
indicated that women owning MSE run 98.7% daily shopping whereas husband only run
1.3% of daily shopping. However, the indicator showed that women have full
responsibilities to run their businesses with minimum support from husband, but
husbands have low opinion to support their wives in daily shopping for the work seemed
to be a woman’s role.

39
 4.3.5. Increment of Respondents’ Self-esteem and Self-
confidence after engaging in MSE activities
The table below described the increment of respondents’ self-esteems and self-confidence
after engaging in MSE activities.
Table 4.15. Increment of Self-esteem and Self-Confidence

Increment of self-esteem Frequency Percent

Agree 44 19.1
Strongly agree 186 80.9
Total 230 100.0
Source: (Field Data_ July 2018_Gambella)
Respondents explained that, their self-esteems and self-confidence were low before
accessing microfinance services since they were living as dependent from their husbands
while they were treating women as subordinates, but after engaged in MSE activities their
husbands improved the living situations and they considered women as important in
household decision making. For that reason, women increased in self-esteem and self-
confidence after engaged in MFS because their husbands valued their importance at
household level.
4.3.6. Women’s Decision making power in household before
and after accessing microfinance services
Table 4.16. Women’s decision making power in household before and
after accessing microfinance services
Decision making power Before MFS (%) After MFS (%)

Strongly disagree 78.3 0.18

Disagree 13.0 0.25
Agree 6.5 26.96
Strongly agree 2.2 72.61
Total 100 100.0
Source: (Field Data_ July 2018_Gambella)
The figure below showed the comparison on women’s household decision-making
power before and after accessing microfinance services. The finding indicated that
91.3% (78.3% + 13.0%) women were not involving in household decision making
but after engaged in microfinance, their participation is highly improved in
household decision making power only 0.43% still having no active involvement
in household decision making power provided that the household decision making

40
power is vested on husband. This study shown that, women had no or had slightly
decision making power before engaged in MFS and after engaged, their decision
making power improved.

4.3.7. Improvement of the knowledge on the job

The table below illustrated the respondent’s improved knowledge on the job.
Table 4.17. Improvement of the knowledge on the job

Knowledge improvement Frequency

Yes 230

No 0

Total 230

Source: (Field Data_ July 2018_Gambella)

Respondents explained that, their knowledge on how to run the job is increased because
they become independents rather than dependent and the capability to run business is
improved. However, lack of capacity building on financial narratives, book keeping and
other financial documentations was seen a big gap for their proper execution of their
MSEs. In my analysis, women only have knowledge on how to manage their businesses
but they lack proper knowledge on financial management.
4.3.8. Women’s engagement in leadership and community
organizations before and after accessing microfinance
services
The table below explained the women engagement in community leadership and
participation in communal organizations.
Table 4.18. Women’s engagement in leadership and communal
organization before and after accessing microfinance services
Engagement in communal forum Before MFS After MFS
(%) (%)
Strongly disagree 71.7 1.3
Disagree 17.4 1.3
Agree 8.7 19.6
Strongly agree 2.2 77.8
Total 100 100.0

Source: (Field Data_ July 2018_Gambella)

41
The table above presented the comparison on the role of women in community leadership
and active participation in communal organization before and after accessing
microfinance services where different views and opinions are shared for decision-making.
The finding revealed that before accessing microfinance services 89.1% women were not
allowed to participate in communal organization for decision making whereas only 10.9%
were able to participate in communal decision making. After access to microfinance
services, 97.4% women actively participate in community leadership and organizations
where they share their ideas, opinions and concerns for decision making whereas only
2.6% of the women expressed their neglect in participating in community leadership and
organization where women interact with other structures such as men, youth and entire
regional leadership.
4.3.9. Respondent’s attitude on shared household
responsibility after microfinance
The table below explained the women’s attitude regarding their husbands’ roles and
responsibilities in the households.
Table 4.19. Respondent’s attitude regarding household responsibility
Attitude on household responsibility Frequency Percent

Strongly disagree 170 73.9

Disagree 3 1.3

Neutral 57 24.8

Total 230 100.0

Source: (Field Data_ July 2018_Gambella)

The table above illustrated the attitude of women regarding household shared
responsibility after engaged in MFS. The researcher was interested to understand whether
husband and wife have shared responsibility at household level which could allow
woman’s flexibility to work freely at home. The respondents stated that, before engaged
in MFS, there was no equal power sharing in term of decision making at household
levels, but after engaged in MFS, 75.2% of the respondents explained that men and
women are exercising nearly equal power sharing at household level in term of income
generation and decision making whereas 24.8% of the respondents (singles) explained
their neutrality or lack of knowledge whether husbands dominate wives in exercising the
responsibility. Women who are single run their activities per household alone without

42
sharing ideas with other people whereas those who are married have shared
responsibilities with their husbands.
The respondents explained that the active participation of women in household decision
making after they started earning income doesn’t mean that the men’s responsibility at
household level diminished. Men still heading households but sharing ideas, opinions,
and concerns for decision-making has become a shared responsibility for both husband
and wife. However, women’s capability to generate income at household level is playing
crucial role for her husband to share ideas, concerns and plan for future.
4.3.10. Feeling of the husband and his awareness creation on
woman’s business
The figure below illustrated the feeling of husbands on women business and their active
roles in creating awareness on how their wives could execute their business in a proper
manner. The finding showed that out of 230 women, 200 appreciated the support from
their husbands (173 strongly agreed, 27 agreed), 27 of the respondents explained that they
are singles and only their relatives support them on how to administer their businesses,
and 3 women expressed their grievance that their husbands neither encourage them nor
creating awareness on the proper mean of running businesses.

Figure 4.5. Husbands’ feeling and awareness creation on women business

43
 4.3.11. Women’s knowledge and skills on financial
preparation
The figure below illustrated the knowledge and skills inquired by women owned MSEs
through different means. The findings indicated that, all women engaged in MSE
(answered with 227 strongly disagree and 3 disagree) who are accessing loan from GMFI
did never inquire capacity development in the institution or government in term of
financial narration, proper documentation, business administration, business
communication, procurement and marketing strategy. Because of this, women lack
adequate knowledge that they could easily run their business although they are
empowered financially. To build the capacity of women in business skills is part of
women empowerment that could enabled them to administer their businesses easily, to
make decision about business and to plan for uncertainty in the future. The indicator
clearly showed that lack of women empowerment is also a source of most women’s
failure for the growth and development of their
business

Figure 4.6. Knowledge and Skills on Financial Documents Preparation

44
 CHAPTER FIVE
5. Summary, Conclusion, and Recommendation
5.1. Summary
GMFI consists of 12,042 beneficiaries who have access to GMFI loans in which 4700
clients of them have been clients of the branch for the duration of 3 years and above
whereby the majority are from the age of 30-39. The purpose of given out loan is to
empower women and youth to generate income to their families and to reduce poverty
in the region. The total amount of loan given varied from gender perspectives; for
women, it ranges from 1,000-100,000 and for men it goes up to 250,000. For a person to
take a loan of more than birr 20,000, the applicant must present business plan to GMFI
prior to access loan, but below birr 20, 000, no business plan required. If an individual
failed to repay back loan as needed, the GMFI filed the case to Kebelle leaders or court
to resolve the issue where the client should adhere with the rules of law regarding loan
and repayment terms and conditions through justice.
All women client of the branch who are eligible to access loan have full membership
status, for example, they opened account books from the branch, they have Kebelle IDs
as well as trusted guarantors from well recognized government or NGO institutions for
their qualification to access loan. Poor women who have no relatives from job holders
are denied of access to financial services because institution needs the mandate of the
guarantor to pay every debt when the client failed to repay back the amount of loan
taken.
The outreach strategies of GMFI on poor women in the town is done by opening MFI
branches in all Woredas, creating awareness through Kebelle leaders, conducting
meetings and dialogues with Kebelle members most specifically women so that they
registered and actively engaged in microfinance services to boost their economy at
household levels. The outcome of the study revealed that the divorce rate of women
accessing microfinance services reduced, their relationship with husbands improved,
their household decision making power, involvement in community and local
organization affairs to develop their leadership responsibility, self-esteem and self-
confidence improved. Although men remained dominants as heads of household, still
idea and opinion sharing for decision making is improved so that women are free of any
expenditure without prior permission from husband. Capacity of women to run business
increased as stated that almost all women engaged in MSEs are the ones administering

45
their business without husbands’ involvement, but they received awareness from their
husbands on how they could run and administer the businesses in an appropriate manner
although they lack necessary skills in financial transaction and documentation but those
who are not married receive awareness from their relatives on how to properly
administer a successful business.
Because of the above mentioned terms and conditions poor women becomes victims of
poverty since they are not capable to access loan from MFI easily, their children do not
access private schools where good education is provided, they are not capable of
catering medical fee when someone fall sick, they do not buy good quality cloths,
nutritious food and other necessities because they do not have sources of income.
Regardless of the terms and conditions of the loan requirements set by GMFI, the
microfinance services received by women clients is much appreciated due to the fact
that it helps the women to engage in business, generate income and cater for food,
school fees, medication, clothing, transportation, building and expanding business,
improvement of socio-political participation in the community and women’s decision
making at household level is highly increased.
Finally, women engaged in MSEs who have access to GMFI loan have not received
capacity building on necessary skills like financial management training, business
administration and communication training, book keeping, marketing or logistics and
supply chain management.
Gambella Microfinance Head explained that, Gambella microfinance institution has been
giving out loan to women who registered and opened saving account with the institution.
For GMFI to have more clients who can easily access their services, the outreach strategy
was developed whereby GMFI opened MFI branches in all Gambella Woredas, staff had
been sent out to conduct mass awareness raising sessions with Kebelle leaders,
community members and women in particular as per Kebelle and villages where women
can be reach with information. Kebelle leaders played very crucial role in gathering
women in all communities in Gambella town and explained to them the importance of
engaging in microfinance services which elevate their poverty and increase their self-
reliance at household and communal levels in terms of decision making power.
During discussion with GMFI Head as one of the key informants, he explained that their
outreach strategies on poor women in Gambella town helped in receiving more women in
this 2018 compared to previous years. The institution also encouraged women clients to
mobilize other women who have not join the institutional services. He also availed that,
46
creating awareness through Kebelle leaders, conducting meetings and dialogues with
Kebelle members, most specifically women to register and actively engage in
microfinance services was very remarkable and women who joined the microfinance
services should boost their economy at household levels and they should have confidence
in participating on social, economic, and political concerns in the community.
During FGD, women engaged in MSEs who have access to loan from GMFI stated that
men in Gambella town who have jobs in institutions refused to be guarantors to poor
women who are willing to access financial services because of the terms and conditions
set by GMFI for any individual to take loan from the institution. Women also stressed
that, poor women having no trusted guarantors were deprived from taking the amount of
loan that they need and their concerns was how could those women’s economic status
improved to reduce poverty.
The characteristics of the respondents considered in this study were obtained from 230
individuals included in present study. The majority of the participants were above the age
of 30. The respondents, whose educational level ranged from primary to diploma level,
mostly learned about the existence and function of the microfinance institution from
friends and relatives. The respondents’ profile composed of all women who have access
to microfinance services for 3 years and above who have membership with GMFI, with
decision-making power, socio-economic and political participation in the community,
savings and other expenses. Furthermore, it was observed that the participants differ in
their marital status, i.e., consisting of single and married.
Regardless of the terms and condition of the loan requirements set by GMFI, the
microfinance services awarded to women clients is much appreciated due to the fact that
it helps the women to engage in business, generate income and cater for school fees,
medication, clothing, transportation, building and expanding business, improvement of
socio-political participation in the community and women’s decision making at
household level is highly increased.
Moreover, participation in microcredit programs helps to increase women’s welfare and
reduce male bias. Efforts on women empowerment will help society to get rid of social
evils. Microfinance helps poor people including women in getting employment,
increasing confidence, enhancing communication skills and in other aspects as well.
Women gain greater control over resources like material possession, intellectual resources
like knowledge, information, ideas and decision making at home, community, society,
and Churches as a result of involvement in these microfinance programs.
47
 5.2. Conclusion
For GMFI to have more clients who can easily access their services, the outreach
strategy was developed whereby GMFI opened MFI branches in all Gambella Woredas,
staff had been sent out to conduct mass awareness raising sessions with Kebelle leaders,
community members and women in particular as per Kebelle and villages where women
can be reach with information. Kebelle leaders played very crucial role in gathering
women in all communities in Gambella town and explained to them the importance of
engaging in microfinance services which elevate their poverty and increase their self-
reliance at household and communal levels in terms of decision making power.
The outreach strategies on poor women in Gambella town helped in receiving more
women in this 2018 compared to previous years. The institution also encouraged women
clients to mobilize other women who have not join the institutional services. He also
availed that, creating awareness through Kebelle leaders, conducting meetings and
dialogues with Kebelle members, most specifically women to register and actively
engage in microfinance services was very remarkable and women who joined the
microfinance services should boost their economy at household levels and they should
have confidence in participating on social, economic, and political concerns in the
community.
One of the major challenge faced by poor women who have not rusted grantors have
been suffering from men in Gambella town who have jobs in institutions because they
refused to be guarantors to poor women who are willing to access financial services due
to the terms and conditions set by GMFI. Poor women having no trusted guarantors were
deprived from taking the amount of loan that they need and their concerns was how could
those women’s economic status improved to reduce poverty.
Regardless of the terms and condition of the loan requirements set by GMFI, the
microfinance services awarded to women clients is much appreciated due to the fact that
it helps the women to engage in business, generate income and cater for school fees,
medication, clothing, transportation, building and expanding business, improvement of
socio-political participation in the community and women’s decision making at
household level is highly increased.
Moreover, participation in microcredit programs helps to increase women’s welfare and
reduce male bias. Efforts on women empowerment will help society to get rid of social
evils. Microfinance helps poor people including women in getting employment,
increasing confidence, enhancing communication skills and in other aspects as well.
48
Women gain greater control over resources like material possession, intellectual resources
like knowledge, information, ideas and decision making at home, community, society and
nation through involvement in these microfinance programs
For an individual to take loan from the branch he/she should have membership status and
open account from the branch. To apply for loan, an individual has to have Kebelle ID,
Account book from branch, guarantee from recognized government or an NGO institution
and he/she must have money being saved from the branch. The total amount of loan given
varied from gender perspectives. For women, it ranges from 1,000-100,000 and for men it
goes up to 250,000. For a person to take a loan of more than birr 20,000, the applicant
must present business plan to GMFI prior to access loan, but below birr 20, 000, no
business plan required. The purpose of given out loan is to empower women and youth to
generate income to their families and to reduce poverty in the region.
If an individual failed to repay back loan as needed, the GMFI filed the case to Kebelle
leaders to resolve the issue, if the client failed pay back the money, then the Kebelle
leaders forward the case to court where the client should adhere with the rules of law
regarding loan and repayment terms and condition through justice.
According to the findings from the study, Micro financing has yielded positive impacts on
women’s economic empowerment. Women’s participation in the GMFI program has also
contributed substantially to the improvement of their income. The majority of women
clients of GMFI have improved their access to and control over assets.
In this regard, women now own and control economic assets such as small
business/shops, NFIs, and better dwellings. The loan program helped clients to diversify
their sources of income by practicing income-generating activities such as small shops
and cafeterias (tea/coffee café) which are useful indicators of decision making on use of
loan in the paired t-statistic/t-test. In similar manner, the loan program improved the
saving habit of women clients and the control over their savings.
In the study, improvement of average Monthly household income, personal cash savings
and improvement of asset possession are positively related to the intervention of the
GMFI loan program. In general, this study had revealed that decision making on use of
loan an indicator of women’s economic empowerment was positively correlated with the
micro-finance service program.

49
 5.3. Recommendations
According to the findings and conclusions drawn from analysis, this research identified
trends that should be put in to consideration for further empowerment of women engaged
in micro and small enterprises and poor women who are not taking part in MSEs for
poverty reduction at their household levels in Gambella town.
The study recommends that in order to strengthen the effect of microfinance services on
empowerment of women in Ethiopia and Gambella in particular,
1. Gambella Micro Finance Institution should expand its service coverage to the
areas where its service is presently non-existent, especially the areas far from
Kebelle Centers or main town where poor women spend their time idly at their
homes and also in the Churches during prayer services where many people
comes together without accessing information about where to access
microfinance services for poverty reduction;
2. Gambella Microfinance Institution should build the capacity of women engaged
in micro and small enterprises by giving them different training services on
entrepreneurial skills that include risk and financial management to improve
their competence, to raise their knowledge and skills, and to reduce the daily
problems which they face in financial narrations and documentation;
3. Gambella regional government should plan other source of financial related
services which could increase access and participation of poor women to engage
in micro and small enterprises.
4. Management of microfinance institutions should come up with fair and clear
policies that should enable poor women who have no collateral to acquire loans
and financial innovations in order to reduce the bureaucratic procedures of
acquiring loans.
5. Gambella microfinance intuition should set appropriate measures which should
prioritize only poor women to access microfinance services rather than allowing
the better off women who have additional income at their households to benefit
from the services in the branch.

50
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Belay Asefa (2001). Best practices in Microfinance: Lessons to Ethiopia. A paper

presented International workshop on microfinance, Mekelle University, Ethiopia.

Central Statistical Authority (CSA), (2007). Ethiopian Census on Housing and

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Cheston, S.; Kuhn, L. (2002), Empowering Women through Microfinance, Draft

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Gebrehiwot Ageba and Wolday Amha (2001). Micro and Small Enterprises
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Getahun Fenta (2015), Social Capital and Urban Informal Economy: A case of
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Harper, M. (2003). Microfinance – Evolution, Achievements and Challenges,

ITDG Publishing, UK.

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Kabeer, Naila. (2005). Is Microfinance a magic bullet. for women Empowerment?
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Global Gender Gap, Geneva: World Economic Forum

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women’s Empowerment as a Variable in International Development. Workshop
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Padma, M. (2003). Women Economic Empowerment and microfinance: A review
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53
 APPENDICE
APPENDIX A
GAMBELLA UNIVERSITY
SCHOOL OF GRADUATE STUDIES
MASTER OF BUSINESS ADMISNTRATION
Focus Group Discussion for women accessing GMFI for 3 years and above
The purpose of this interview questions is to know the extent of Financial Institutions in
addressing financial needs of poor women in Gambella town. This study is undertaken for
academic purpose only. There for, I request you to answer the questions undoubtedly and
honestly.
1) Have you heard about the MFI? What were things you heard about the
institution?
2) What extend do you know about MFI in supporting poor women in Gambella
town?
3) Is there any economic and social improvement among poor women who access
loan from MFI?

4) Who is the decision making in the family where woman own micro and small
enterprise?
5) Is there any change you observed among women who engaged in MSEs in
household decision making power?

54
 APPENDIX B
GAMBELLA UNIVERSITY
SCHOOL OF GRADUATE STUDIES
MASTER OF BUSINESS ADMISNTRATION
In-depth Interview questions for women owned Micro and Small Enterprises.
The purpose of this interview questions is to know the extent of Financial Institutions in
addressing financial needs of women owned micro and small enterprises. This study is
undertaken for academic purpose only. There for, I request you to answer the questions
undoubtedly and honestly.
A. Demographic Information of Women Owned Micro and Small Enterprises
Age _________________

Religion _________________

Marital Status _________________

Level of Education _________________

Duration of Microfinance (MFI) Membership (In Years) ______________

B. Characteristics of Women Owned Micro and Small Enterprises

1. What made you become an entrepreneur/start the enterprise?
2. What can you say about terms and conditions of loan received?

3. How much do you earn per Month?

4. What services do you use to cater with your income (choose as much as you can)?

a. school fee

b. medical fee

c. clothing

d. NFIs

e. Other……………………. (specify)

5. In your view, what are the advantages and limitations of the microfinance
delivery by the Gambella MFI?
6. How do you utilize the loan secured from the MFI? How do you compare the
income and saving levels before and after joining the MFI?

55
7. Do you make contributions to the household from the loans secured from the
MFI? If yes, how does your husband view your contribution to the family?
8. Is there any change in your household decision making after your MFI
membership?
9. Are there any changes in your social, political and economic participation
before and after you became a member of the MFI? What about with respect
to your legal rights?
10. How would you compare your self-confidence before and after you joined the
MFI services?

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 APPENDIX C
GAMBELLA UNIVERSITY
SCHOOL OF GRADUATE STUDIES
MASTER OF BUSINESS ADMINISTRATION
In-depth Interview questions for the Microfinance Head in Gambella Town.
The purpose of this interview questions is to know the extent that MFI address financial
needs of women clients engaged in micro and small enterprises and the outreach to the
poor. This study is undertaken for academic purpose only. There for, I request you to
answer the questions undoubtedly and honestly.
1. Who are the beneficiaries of MFI in the branch?
2. What are the outreach strategies used by MFI on poor women?
3. Do microfinance programs help to reduce poverty?
4. Do microfinance institutions contribute positively to women empowerment?
5. Does MFI provide the amount of money required by women?
6. What is the loan averages of MFI provided to women owned MSEs in the branch?
7. What are your requirements to provide loan?
8. What problem did you face in relation to?
• saving
• lending/loan
9. What measure did you take to solve the problem you faced?

57
 APPENDIX D
GAMBELLA UNIVERSITY
SCHOOL OF GRADUATE STUDIES
MASTER OF BUSINESS ADMINISTRATION
Dear Respondent
The aim of this questionnaire is to seek views on the microfinance and women
empowerment in Gambella Region. I kindly request you to spare time to fill this
questionnaire which is mainly intended for academic purpose. The information collected
will be treated confidentially.
Respondent particulars: Please put “√” where appropriate.

1. AGE
18 to 29 30 to 39 40 to 49 50 to 59 60 and above

2. MARITAL STATUS
Married Single Widower

3. LEVEL OF EDUCATION
Other
Primary level Secondary level Diploma/University s

4. What is your total earnings per month from various sources?

(a) Less than 5,000.00 birr ()

(b) Between 5, 000 – 10,000 birr ()

(c) Between 10,000- 15,000 birr ()

(d) Above 15, 000 birr ()

5. Are you a member in a Gambella microfinance institution?

(a) Yes () (b) No ()

58
6. What is the duration since you took the first loan?
(a) Less than one year ()
(b) 2 – 3 years ()
(c) 3- 4 years ()
(d) 5 and above ()
7. For what do you intended to use your loans?
(a) Expand business ()
(b) Dairy farming ()
(c) Building ()
(d) Agriculture ()
(e) Poultry ()
8. What amount have you borrowed?
(a) 1,000 – 5,000 ()
(b) 6,000 – 10,000 ()
(c) 11,000 – 15,000 ()
(d) 16,000 – 20,000 ()

(e) 20,000 and above ()

9. Is your husband aware of your working problems?

(a) Yes () (b) No () (c) None ()
10. Have your job improved your knowledge and personality?
(a) Yes () (b) No ()
11. Who is responsible for daily shopping for the house?
(a) Self ()

(b) Husband ()

(c) Both ()

(d) Others ()

12. Have you facing any conflict with your husband concerning your work?
(a) Yes () (b) No () (c) None ()
13. Is there any income you spend without the permission of your husband?
(a) Yes () (b) No () (c) None ()
14. Are you free to spend money buying your clothes without permission of your
husband?
(a) Yes () (b) No () (c) None ()
15. Are you free to spend money buying children clothes without consulting your

59
 husband?
(a) Yes () (b) No () (c) None ()
16. Do you have a saving account with your financial institution in Gambella?
(a) Yes () (b) No ()
17. How do you see your living standards after having access to Microfinance services?
(a) Improved () (b) No change ()
18. What is your relationship with your husband as you involve in MFI’s activities?
(a) Improved ()

(b) Same ()

(c) Worse ()

(d) Neutral ()

Circle the appropriate number where 1=strongly disagree; 2=disagree; 3=neutral;

4=agree; and 5=strongly agree

Social /Cultural Impact SCALE

Household life has enhanced as a result of women being able to
19 invest in Micro Finance Institutions credits. 1 2 3 4 5
The rate of divorce has reduced as women invested with loans
20 from MFIs. 1 2 3 4 5
Among women who use loans from MFIs has increased self-
21 esteem. 1 2 3 4 5
Self-confidence increased among women before access to
22 borrow credit from MFIs and make investment. 1 2 3 4 5
Self-confidence has increased among women after access to
23 borrow credit from MFIs and make investment. 1 2 3 4 5
Husbands are generally proud of their wives’ capability in
managing businesses and showed awareness about their wives’
24 business venture. 1 2 3 4 5
Women have gained greater say within the family when it comes
25 to economic and other decisions. 1 2 3 4 5
Women started attending seminars as a result of investing in
26 business using loans borrowed from MFIs. 1 2 3 4 5
Women have become more visible as leaders and members of
community organizations since they started investing in business
27 from MFI loans. 1 2 3 4 5

60
 Economic Impacts
By creating jobs and generating income as a result of investment
using credit from MFIs, there has been an enhanced in well-
29 being of women in Gambella town. 1 2 3 4 5
Women groups from Gambella town have no trouble in
30 repayment of loans from MFIs. 1 2 3 4 5
Interest rates that charged by MFIs in Gambella town does not
31 discourage women groups from borrowing credits. 1 2 3 4 5
Women have increased business related knowledge and skills
32 such as preparing simple income statement and financial reports. 1 2 3 4 5

Thank you for offering me your time and your participations!

61