Micro Lending Institutes in Ethiopia in alleviating poverty & ensuring sustainable Development for women

 

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Ethiopia’s poverty ranks among the world’s most tragic cases. This pits Ethiopia among the world’s most poor nations. Through Micro Lending Institutes in Ethiopia there are ongoing processes and efforts aimed at alleviating poverty & ensuring sustainable Development for women as the primary modus to alleviate poverty and ensure sustainable development in Ethiopia.

Using empirical data and ongoing micro lending processes we identify the commitment and progress of these activities and evaluate the role of both the Micro lending institutions in Ethiopia and the women in poverty alleviation and the ensuring of sustainable development. Through identification of factors leading to poverty and those hindering the provision of micro lending services, a clear picture of the role of micro lending institutions is identified, recommendations and other respites to improve the services and enlighten the Ethiopians on poverty alleviation is made essential.

Agriculture, as the main economic activity in Ethiopia has played a major role in sustainable development through sustenance of the population by providing food and healthcare amenities. Various risk sharing methodologies amongst households in Ethiopia in their purge for better agricultural practice and various informal credit transactions within these households and communities have provided models for micro finance services. Through this data, various aspects of poverty in Ethiopia and opportunities of using this data to create apertures of alleviating poverty are identified.

Based on findings about sharing risks among informal networks in Ethiopia, panel data shows that various social networks in the Ethiopian rural community have their own informal credit transactions aimed at helping each other in facilitating various socio-economic activities and sustaining them throughout (Ayalew Daniel (2004)37[1]. Ayalew argues that, “there is compulsion by various aspects of the Ethiopian community to stifling micro lending services while there are a horde of factors that facilitate the need for micro credit” (Ayalew 3-4).

The Amhara region of Ethiopia has been able to achieve over half a million micro finance clients (Gobezie, 2-4)[2]. Evaluation of the micro finance services and the impact of this huge clientele are necessary. This paper seeks to identify both impact of micro finance services to the women and the role of these micro lending institutions in alleviating poverty through lending to women. The various factors leading to women being the primary target of micro lending and their role as the key aspects of poverty alleviations efforts need to be realized and assess so as to realize both pitfalls and achievements in these efforts.

Much of these findings assess and determine the impact of the micro lending institutions and their services as well as the loans offered to Ethiopian women’s lives. These impacts define the roles of these institutions through encouraging and putting emphasis on more action to help in the provision of these services, also, the significance of women activities in the economic growth of Ethiopia. As such, this paper is a clear picture of policies, activities and roles of each player in the Ethiopian poverty alleviation efforts. It draws out how sustainable development, women empowerment and capacity building is enhancing the state of the Ethiopian community.

Ethiopia and its poverty

According to (IFAD)[3], Ethiopia is a nation whose half populace lives under extreme poverty. Most of the population depends on agricultural activities to get food and earnings to improve on their lives. It’s an agrarian society living in a land of drought since most Ethiopians depend on agricultural activities to sustain their lives. Yunus argues these agricultural are not productive enough and borrowing within the cross cultural environment becomes a good respite. This is due to climatic conditions and the impacts of war in Ethiopia. Recurring drought and poor water infrastructure lead to poor agricultural output causing famine and prolonged shortage of food. International Fund for Agricultural Development (IFAD) points out that “Recurring droughts leave poor farming families without food crops, causing periodic famines. The persistent lack of rainfall is a major factor in rural poverty. Food aid is crucial in saving the lives of millions of people who are chronically food-insecure or affected by drought” (IFAD, 2001).

Ethiopian poverty lies within the context of farming since this is the primary social-economic activity. It’s the small scale farmers who are worst hit by poverty. Others depend on herding as their source of livelihood. The victims of this abject poverty are women who lead most of these poor families.

This poverty is rampant especially in rural Ethiopia where farmers and herders live. IFAD puts the percentage poverty in Ethiopia as 52% in the rural Ethiopia and 36% in urban Ethiopia. The two most unequal areas and indicators of the Ethiopia situation is the Amhara region where poverty is very high and the Oromia region where life standards of the people there are very good.

Due to major shifts in political alignments, weather and the uncertain climatic conditions, Ethiopian farmers have been unable to sustain progressive agricultural practices leading to food insecurity. Increasing HIV/AIDS cases is ridding the Ethiopian society is energetic young with up to 5% of the adult populace HIV positive leaving the society in deeper poverty.

Poverty is a big challenge and the fundamental issue of economic development in Ethiopia (Gobezie 3-9). A huge segment of the populace undergoes difficult lifestyles leading to endemic poverty which has been the lead factor in Ethiopia’s economic retrogression. 50 percent of the Ethiopians live below the poverty line (See IFAD, 2001). The key factors leading to this high level poverty in Ethiopia are:

Minimal asset possession, Very few employment opportunities, Low income, Poor skills, Low quality education, Lack of proper healthcare services, Poor health status of the society, etc.

This population depends mainly on agriculture. The agricultural activities have led to over use of the land and subsequently causing soil degradation, deforestation, drought, civil war, and inappropriate government policies.

Micro finance and women entrepreneurship has become the lead aspect of poverty alleviation in Ethiopia. The principal objective is to increase capacity in the society so as to induce sustainable development. Through women, Micro finance institutions have been able to initiate development through lending, facilitation, and sponsoring projects and business initiatives. Inception of sustainable and profitable microfinance institutions that are accessible to a large number of poor households who have no access to banks is now a key to sustainable development strategy of Ethiopia.

Political and institutional representation of Ethiopian women

Micro finance institutions in Ethiopia attention is at “identifying the characteristics, features, aspirations, motivations, needs and wants of women entrepreneurs in Ethiopia, with the intention of formulating strategic support interventions to improve advocacy and their access to services” (Zewde & Associates,2002) (iii)[4].  This emphasis is aimed at enhancing creation of jobs, gender equality, women entrepreneurship and sustainable development. More attention is given to women entrepreneurship development so as to achieve various development standards through micro enterprises.

To achieve sustainable development, women need empowerment and sufficient support to push for their interests. This requires ample representation in both the government and various important institutions. Politically Ethiopian women have no significant voices both politically and institutionally. Their representation in the civil service is a paltry percentage. Efforts to address the misrepresentation of Ethiopian women have been given concern by the federal government of Ethiopia.

The federal government has moved in to address the socio-economic discrimination of women through initiatives such as the Ethiopian Women Development Fund (EWDP) and the Women’s Development Initiative Project (WDIP). These organizations have enhanced women’s empowerment and represent women interests (NEWA, 1). [5]In the civil service, efforts to increase women employment have not made significant gains. However employment in the informal sector has reached 30% mark which is still way far below the empowerment mark which would give women pride and ability to have a voice in national fronts. 90% of this segment of women working in the informal sector is in low paying ranks making them ineffective in enacting any forcible women benefiting policies.

According to Network of Ethiopian Women Association (NEWA), nearly half of the working women are self-employed, 43% worked for a family member, against a small number (only 9%) that work for non-family owned business. Of these, 41% did not receive any form of payment (NEWA, 1). This completely pits women under the strain of misrepresentation and prone to injustices and various forms of discrimination and prejudices.

In the civil service, the federal government has put in place affirmative action policies to help women representation and have equitability. However, NEWA points out that “there are no clear guidelines on this affirmative action policy, hence making it impractical in terms of protocol. The judiciary and legislative branches women are sparsely (extremely poorly) represented. In parliament, only 7.7% of the members of the national federal assembly are women. This makes women voices to be dimmed by the din of male autonomy and prowess. This clearly indicates the long way the Ethiopians have to go to achieve women empowerment” (see NEWA, 1).

Regardless, the government is committed to achieving women empowerment through empowerment based on advocacy on education. There are also immense efforts to promote gender equality through the PASDEP’s pillar, Unleashing of the Potential of Women. According to United Nations Population fund (2007) [6] the Ministry of Women’s Affairs has been established to make operational the National Action Plan for Gender Equality.    United Nations Population fund (UNPF) says that key strategies are in place to help achieve empowerment (see UNFP, 2003).

Capacity building for strengthening coordination role of the Ministry of Women’s Affairs and to ensure partners has the knowledge and skills to support gender interventions. Advocacy and Policy Dialogue to mobilize resources for undertaking gender interventions and to influence implementation of appropriate policies; Strengthening and Coordinating Partnerships to build synergy in gender mainstreaming and create a critical mass of gender advocates and Developing Systems for Improving Performance to monitor and evaluate results being achieved; The federal government has partnered with various stakeholders to foresee implementation of these key policies. These partners include: United Nations Population Fund, Ministry of women affairs, Ministry of finance, WHO, UNICEF, UNDP, WFP, UNHCR, UNAIDS.

Gender inequality and women repression in Ethiopia

Gender inequality in Ethiopia is a profound socio-economic constraint and social problem which badly has affected and stifled women efforts in empowerment. Almost 20-35% of the rural poverty adversely affects women. The women are the heads of these families which practice cattle herding and small scale farming.  These people own about an acre or less of land. They hardly have access to basic social and economic infrastructure like health and educational facilities, veterinary services and water.

This level of under-development has overwhelmed the women of Ethiopia. The women are grossly affected by attitudes towards their rights leading to cultural practices which demean the women. Female genital mutilation, HIV/AIDS prevalence, prostitution, domestic violence leading to wife beating, culture and marital rape has demoralized the Ethiopian woman. Other factors leading to stifling of the Ethiopian woman abilities include societal abuse of young and mature women, early marriage, milk teeth extraction practices, work prohibition and other social norms.

The context of Ethiopian community gender sensitivity has led to Ethiopian women having fewer chances in the job sector in Ethiopia. The urban setting still inhibits the women from participating in active employment. In cases where women are employed, the pay scale is lower regardless of the job group. The male in that job group earns more than the woman.

These abuses and discriminations against the Ethiopian women have led to the economic empowerment programs through various stakeholders in Ethiopia. Non governmental organizations and micro-finance institutions have rallied behind women to create sustainable development and reduce poverty, lobby for better women rights and compromise demeaning social values.

The context of Ethiopian community gender sensitivity has led to Ethiopian women having fewer chances in the job sector in Ethiopia. The urban setting still inhibits the women from participating in active employment. In cases where women are employed, the pay scale is lower regardless of the job group. The male in that job group earns more than the woman.

These abuses and discriminations against the Ethiopian women have led to the economic empowerment programs through various stakeholders in Ethiopia. Non governmental organizations and micro-finance institutions have rallied behind women to create sustainable development and reduce poverty, lobby for better women rights and compromise demeaning social values.

This is through empowering the women through: Entrepreneurship development, Capacity building

Irish among other international non-governmental organizations have moved in to Ethiopia to facilitate this. The Ethiopian government has also committed itself through the grassroots Initiative Fund to support women groups in organizing themselves into active socio-economic drivers and also embarked on capacity building through training and teaching skills so as to improve women abilities.

Gender inequality emanates from lack of autonomy and voice in the society. Ethiopian women have undergone various forms of discrimination due to their misrepresentation, poverty and lack of autonomy as members of the society. Abuses, physical violence and lack of equal opportunities in all sectors represent the gender inequality (Amha 2-9) [7]

Women values and rights have been violated due to behaviorism of the society. Feminism origin is based on the theory of behaviorism whereby societal behavior and perception based on a gender approach focuses on what the society perceives and what the gender units of the society perceive.

The Ethiopian regression and women oppression is based on these values wherein the male units of the gender view the women as subjects rather than basic units of the society. Based on traditional perspective, the behavior of the males and their reactions to the female roles and genre rights is unduly convectional. This context has roused feminism and led to the movements and government policies which advocate on women empowerment so as to offer women an equal voice and role in the societal growth.

The policies and the principles of feminism lead to the quest for balance of power in the society. The balancing process helps to maintain the stability of relations between states. A balance of power system functions most effectively when alliances are fluid, when they are easily formed or broken on the basis of expediency, regardless of values, religion, history, or form of government. Occasionally a single state plays a balancer role, shifting its support to oppose whatever state or alliance is strongest. A weakness of the balance of power concept is the difficulty of measuring power’

 

Feminism theory and Women empowerment

Feminist theory expounds on the need for gender inequality and addresses need for knowledge and support of gender politics, power relations, and sexuality. According to Marilyn Frye’S [8]feminist theory informs the essentiality of these social and political relations hence a lobby for the promotion of women’s rights and interests (Frye 406-416). According to Ellen Willis[9] feminism movement should address global issues such as rape, incest, and prostitution (Willis, 3-14) .It should also consider and address culturally specific issues such as female genital mutilation in some parts of Africa and the Middle East and glass ceiling practices that impede women’s advancement in developed economies in order to understand how gender inequality interacts with racism, homophobia, classism and colonization in a “matrix of domination (Heywood, Leslie; Jennifer Drake eds, 13)[10] . Other feminists have argued that gendered and sexed identities, such as “man” and “woman”, are social constructs meaning that some gender roles are socially conditioned rather than innate.

These perspectives have been advocated by the ‘third wave feminism’. This is the wave that sought to liberate women from the feminine belief that women can only find consummation in family and child bearing and rearing. Women empowerment is the tool which women from a cross continental perspective can achieve power to liberate themselves from the diverse gender inequalities, injustices and poverty (Willis, 2007).   These beliefs and faculties are slavery to the social values and mental notions in the conscience of women.

Christina Hoff Sommers proposes equity in her purge towards equity feminism. This ideology is meant to advocate and lobby for equality and equity in the civil rights and amenities like jobs, roles and other socio-economic activities in the society.

The forms of feminism (liberal and radical) represent various degrees’ of women needs which need to be addressed though there is male discontent to this movement. Liberal feminism lobbies for equality of men and women through political and legal reform. It deals with female ability to exhibit finesse, their consistency and equality through their own actions and choices.  Through interaction and realizing objectives of collective responsibilities, liberal feminism advocates for the equality and participation of both women and men collectively to uplift the society. Liberal feminism seeks to address reproduction, abortion, sexual harassment, education, political representation, equal job opportunities and equal payments in every job group. It also seeks to establish the removal of domestic violence and other forms of social injustices against women.

Radical feminism embraces the concept of women working towards freeing themselves an oppressive and male dominated system. Radical feminism blames male-based structure as liable for injustice and inequality. Radical feminists view all aspects of capitalism as barriers of women empowerment and social liberation hence the need to eliminate the roots of capitalist values.

These values have become the driving force behind women empowerment efforts. Empowering women as a subject explain the context of feminism on the liberal perspective. A powerful women league will lobby for justice, equity and respect for women across the world.

Ethos’s of feminism have been embraced by various institutions including the United Nations. These institutions offset the need to address the faculties of liberation of women through empowerment and representation. The guidelines of these institutions lie within the third world feminism or rather the post colonial feminism policies. This is whereby; the United Nations have been monitoring the progress of the former colonies and assess gains and impacts of policies. This has covered the status of women in the third world and also their social status as part of the global society. The context here is the need to disembark from traditional male stereotype culture and respecting equality and participation of women in socio-economic activities.

It is clear that, when both paid employment and unpaid household tasks are assessed to evaluate the level of input by either man or women, women work more than men. In rural areas of third world, countries women work 20% more than men. Feminism seeks to address this difference in performance through giving women equal rights like men, and equal opportunities. This means civil rights and job opportunities to be equitably dividend among the sexes. As such, the society will be void of gender inequality and oppressive traditional norms.

To achieve these distinctive social values and status, women need to be empowered through offering knowledge and capacity to sustain their lives as equal entities of the society. Micro finance is one of these key empowerment channels. It has become an essential and effective tool embraced by the federal government of Ethiopia and the Ethiopian women so as to empower women and as such achieve poverty alleviation and sustainable development.

Poverty alleviation is essential in improving the gross domestic growth of the state while improving the lives and economic standards of the Ethiopian community. This way various stratagems and micro-businesses started by women will achieve sustainable and highly productive status and uplift the women lives and abilities as well as contribution in the society.

The Federal Government of Ethiopia has enabled Ethiopian women enjoy their rights regardless of society’s bias towards women, and their own low-level of awareness. Ethiopian women are not completely benefiting from these constitutional rights. This has led to efforts aimed at changing the attitude of the society towards women, raising the gender awareness, and building their capacities.

Toppling of the dictatorial regime of Mengistu Haile Mariam in which women played an immense role in overthrowing, women have distinctively implemented gender polices and the establishment of the Ministry of Women’s Affairs. According to a 2007 charter of women “This is a structure which connects the federal to the wereda levels; the ratification of the Constitution, which guarantees the rights of nations-nationalities and peoples as well as the rights of women; the ratification of the family law, which ensures the rights of women to own and control resources as well as their equal rights to decide on family affairs; the amendments on criminal laws and procedures with the view to protect women against violence and harmful traditional practices; the affirmative action taken to increase their participation in education and employment, and related activities that are being carried out to gradually increase their representation in the peoples’ councils at all levels.

As a result of these and various other positive measures, hundreds of thousands of women are currently organized under several small-scale businesses and cooperatives in their quest for a better life. Women are also organized to protect their rights under various gender-based and professional associations. The participation of women in education at all levels has increased dramatically. Needless to state that the political participation of women at the federal, regional, wereda and Kebele levels has also increased significantly (Gobezie 9-15)

History of Ethiopia

Lucy 3.2million years old

The fossils found in Woranso-Mille area of the Afar Region, Ethiopia 3.2million years ago are an important history of Ethiopian women. Ethiopia prides itself of the fossil Lucy which is about 3.2million years old. Lucy is a symbol of Ethiopian women pride and their role in the history of Ethiopia. Anthropologists reckon Lucy was a tree climber who was hard working as a family provider. These aspects of Lucy are the traits of the Ethiopian woman. She is hard working and productive. She is responsible for many gains in the sustainable development in Ethiopia as well as the well being of the Ethiopian families since she remains the head of the family.

Kingdom of Axum

The Kingdom is connected to the Adulis site and is renowned as part of the ancient Ethiopian civilization. It was on the Ethiopian coast of the Red Sea. Its nexus with the Ethiopian women aspects as hardworking and productive has made calls for feminist approaches towards the unethical approach towards the Ethiopian woman.

The history of the Kingdom of Axum and its role in other parts of East Africa is relatively of profound interest to the history of Ethiopia.

However various contexts arise and connect the Kingdom of Axum to troubles with the Arab conflicts. Arabian soldiers fought the Kingdom of Axum often, enslaving women and the others in the Kingdom. The tradition may well have contributed to the problematic nature of the Ethiopian regime over the past decades where military and dictatorships have ruined the growth and development of the nation. The most adversely affected by this purge were women and children. This traditional suffering of the women resulted to the convectional approach to family and development by Ethiopian women though in a much constrained manner. This has been there for a long time leading to men folk in Ethiopia to escalate in their discriminations and socially instigated injustices against the Ethiopian women.

The Arab influence on the Axum kingdom may have contributed to the social discord to women importance since most Muslim society have been known not to give women any credence and respect. If this was borrowed by the Ethiopian Axumite Kingdom which then reached its zenith power after the Arabic fights were conquered by it, then it has been relevant to the social values embraced by the Ethiopian society and the subsequent generations.

The military regime 1974-1987

Colonel Mengistu Hailemariam (born 1937) was the leader and most brutal officer of the Derg, the military junta that governed Ethiopia from 1974 to 1987, and the president of the People’s Democratic Republic of Ethiopia.

He led legendary Ethiopian Red Terror of 1977-1978, a repression campaign against the Ethiopian People’s Revolutionary Party and other anti-Derg factions. Mengistu came in after  Haile Selassie the emperor who has roots to the Kingdom of Axum

Mengistu’s purge was seriously countered by insurgency much of which was related to women backed militia. These guerillas led to the Ethiopian Civil War that toppled Ethiopian the military dictator Mengistu Haile Mariam in 1991 and also by repelled an invasion launched by Somalia in the 1977–1978 Ogaden War. Mengistu’s “Dergue” regime was responsible for human rights violations on a massive scale. The abuses hit hard on women and led to the escalation of oppressive measures and social values on women in the Ethiopian society.

Proud Nation

Ethiopians since the toppling of Mengistu in 1991 have gradually become a nation that is seeking to become a developing and equitable nation. Investments and sustainable development have become integral in the government policies leading to equitabilty and social growth.

These principals have helped the society to embrace education and other empowerment faculties important to the Ethiopian society. Women empowerment has become a key element of implementing these necessary principals. It has been an integral principal in the proud nation to stop discriminations against women and bring in gender equality.

Poverty and famine in Ethiopia

The 1984 drought in Ethiopia has left scars and depression in the society. This famine escalated its effects up to 1988. This famine killed about one million people in Ethiopia and sparked a great international relief effort which included women and international singers and governments.

This was a great depression for Ethiopia leading to constraints in social values and government policies on growth and development.

The famine is related to the civil war between the Mengistu regime and the counter insurgency which was working on toppling the dictator and his junta. The insurgency of the Tigrayan Liberation Front and the government of the Ethiopia was the ultimate cause of the famine since the war stalked Ethiopian fields leaving them unattended since peole were fleeing or actively involved in the war. Though the failure of the short rains in the 1984 was a major factor, previously, the lack of collective efforts by those who had been farming led to shortage of food supplies hence the subsequent famine.

Locusts

Ethiopia has been plagued by locusts leading to massive loss of food crops and essential flora. Due to the war there were almost zero efforts to stop the locusts. The locust problem has become a key element in the famine that plagued the Ethiopian land for quite a long time.

Locusts invaded areas like Ashya. The Wadi area has minimal green vegetation due to locusts. This has led to constrained Agricultural practice. However, the locust problem in Ethiopia is rampant on this Eastern side of the country.

Primitive food crop production in Ethiopia

Primitive methodologies of crop production in Ethiopia have remained and have been traditional practices. The modes include ancient storage techniques salting and drying then storing the food in granaries and bags without using insecticides. This method leaves the cereals at risk of being attacked by weevils and eventually being destroyed.

These primitive methods have led to food insecurity in Ethiopia and have facilitated the increase in droughts and famines.

Causes of poverty and political problems in Ethiopia

According to (MEDAC, 1996) poverty is a big challenge and the fundamental issue of economic development in Ethiopia. A huge segment of the populace undergoes difficult lifestyles leading to endemic poverty which has been the lead factor in Ethiopia’s economic retrogression. 50 percent of the Ethiopians live below the poverty line. The key factors leading to this high level poverty in Ethiopia are:

Minimal asset possession, Very few employment opportunities, Low income, Poor skills, Low quality education, Lack of proper healthcare services, Poor health status of the society, etc (AEMFI)[11]. This population depends mainly on agriculture. The agricultural activities have led to over use of the land and subsequently causing soil degradation, deforestation, drought, civil war, and inappropriate government policies

According to Association of Ethiopian Microfinance Institutions (AEMFI) Micro finance and women entrepreneurship has become the lead aspect of poverty alleviation in Ethiopia. The principal objective is to increase capacity in the society so as to induce sustainable development. Through women, Micro finance institutions have been able to initiate development through lending, facilitation, and sponsoring projects and business initiatives. Inception of sustainable and profitable microfinance institutions that are accessible to a large number of poor households who have no access to banks is now a key to sustainable development strategy of Ethiopia.

This level of under-development has overwhelmed the women of Ethiopia. The women are grossly affected by attitudes towards their rights leading to cultural practices which demean the women. These include; Female genital mutilation, HIV/AIDS prevalence, Prostitution, Domestic violence leading to wife beating, Culture and marital rape leading to demoralization of the Ethiopian woman

Other factors leading to stifling of the Ethiopian woman abilities include: Societal abuse of young and mature women, early marriage, Milk teeth extraction practices, Work prohibition and other social norms.

Ethiopia’s poverty is due to immense poverty and poor infrastructure. The country’s rural areas are plagued by poverty. There is uneven balance of supply and demand of services necessary to initiate socio-economic growth. Most of the locals practice small scale farming and mainstream agriculture. These activities compose the source of food and other necessities for about ten out of ten Ethiopians. (Gobezie 23). [12]

This high poverty is as a result of constraints that are limiting the even supply and demand of these necessary services like micro-lending through micro finance institutions (5). Gobezie reveals that these difficulties are due to poorly designed regulations and policies, organizational behaviors, the incentive problem, as well as weak capacity of institutions implementing it.

The incentive of these financial institutions is mainly meant to uplifting the standards of the Ethiopian community through micro-enterprising and self help initiatives. Much of these incentives are aimed at women.

Constraints which are faced here include; Gender, Policies, Infrastructure, Educational constraints.

Regardless of these constraints, there is progress in the rural levels. The aims of these initiatives are poverty alleviation. The success of these initiatives however are slow coming based the fact that the conditions of road networks and communication system are poor and that both literacy and capacity is minimal in the rural people resulting to low skill achievements in business development.

Almost 20-35% of the rural poverty adversely affects women. The women are the heads of these families which practice cattle herding and small scale farming. Gobezie argues that, its important to empower women so as to improve on agriculture and micro-enterprise activities[13].  These people own about an acre or less of land. They hardly have access to basic social and economic infrastructure like essential healthcare and educational facilities, veterinary services and water.

This level of under-development has overwhelmed the women of Ethiopia. The women are grossly affected by attitudes towards their rights leading to cultural practices which demean the women. These include

Female genital mutilation, HIV/AIDS prevalence, Prostitution, Domestic violence leading to wife beating, Culture and marital rape leading to demoralization of the Ethiopian woman

Other factors leading to stifling of the Ethiopian woman abilities include:

Societal abuse of young and mature women, early marriage, Milk teeth extraction practices, Work prohibition and other social norms.

The context of Ethiopian community gender sensitivity has led to Ethiopian women having fewer chances in the job sector in Ethiopia. The urban setting still inhibits the women from participating in active employment. In cases where women are employed, the pay scale is lower regardless of the job group. The male in that job group earns more than the woman.

These abuses and discriminations against the Ethiopian women have led to the economic empowerment programs through various stakeholders in Ethiopia. Non governmental organizations and micro-finance institutions have rallied behind women to create sustainable development and reduce poverty, lobby for better women rights and compromise demeaning social values.

This is through empowering the women through:

1.      Entrepreneurship development

2.      Capacity building

Irish among other international non-governmental organizations have moved in to Ethiopia to facilitate this (Hagos, 5)[14].The Ethiopian government has also committed itself through the grassroots Initiative Fund to support women groups in organizing themselves into active socio-economic drivers and also embarked on capacity building through training and teaching skills so as to improve women abilities.

Micro finance institutions in Ethiopia

Micro finance institutions Ethiopia began their activities recently. The issues of legislation and policies by the government have been a key obstacle in implementation of micro-finance policies and the subsequent inception and establishment of micro-finance institutions in Ethiopia.  A great number of MFI’s have now been registered in Ethiopia and are offering lending services. This has led to growth and empowerment of the rural areas.  These registered and legally operating micro finance institutions have a common goal, ‘to help alleviate poverty through using social groups and self help groups as their main channels of initiating development’. This is through lending them money using a group based strategy.

These micro finance institutions have worked to reach sizeable chunks of the poor populace. However, they have been facing problems since some of their efforts have faced huge loan losses. There are also constraints in-terms of a very weak system for managing information, limited funds to lending micro-entrepreneurs, entrepreneurial quality, and limited technical and banking skills of staff.

The micro finance institutions have opted to form entrepreneurship development projects all which involve women and disabled personalities. These projects are being supported by the government through the ministry of labor and social services. The ministry has mandated non-governmental organizations to pilot these projects at grass root levels. The non-governmental organizations have formed management committees represented by women to manage these development projects. Rather than giving relief and helping through humanitarian faculties, the NGO’s play the role of facilitator, wherein, they refer and facilitate funding of micro-enterprise projects as well as lending to women entrepreneurs (Fiona, 2-6).

This shift from relief assistance to sustainable development is indicative of considerable gains made through micro-finance institutions. According to Fiona, Through microfinance services the Government and Non Government Organizations (NGOs) are now able to enable the rural and urban poor increase output and productivity, induce technology adoption, improve input supply, increase income, reduce poverty and attain food security. This has led to establishment of sustainable microfinance institutions that reach a large number of rural and urban poor in Ethiopia (2-6).

Based on the UNDP assessment on the Ethiopian active poor, about 8% of the active poor make use of the micro-finance services in Ethiopia. This is just part of 6million poor people who are eligible for micro-finance lending (see UNDP, 1999). However, UNDP latest assessment shows an improved outlook. About 16% of the active poor have been using micro-finance services.

The micro finance institutions in Ethiopia have been reviewing the development of the micro-finance industry in Ethiopia through a body they have formed renowned AEMFI. The body has been Reviewing the industry’s growth and potential (AEMFI, 5), Assessing the regulatory framework of the industry, Analyzing the performance and legitimacy of MFI action in Ethiopia, Identifying problems and recommendations by the government of Ethiopia and NGO’s so as to improve accessibility of micro-lending to the Ethiopian poor.

The aims of AEMFI correlate to the argument s by Chaves and Gonzalez (1994) whereby, sufficient and accessible financial services are the most paramount and effective measures to combat and alleviate poverty (5).

Micro-finance institutions have been seeking more effective ways to enhance sustainability and outreach (AEMFI, 29). [15]Sustainability of micro-finance institutions has been through generating sufficing funds to cover the cost of service provision.  Giving loans to as many people as possible has been the key factor.

Over the recent years MFIs in Ethiopia have reached more than 500,000 active poor Ethiopians. The Micro finance institutions have been able to lend about 526 million Birr (64.5 million US dollars) to these active poor Ethiopians. On average, there is roughly over 273 million Birr (33.5 million US dollars) in terms of loan outstanding. The micro finance institutions are in the process of seeking over 129 million Birr (15.8 million US dollars) for savings.

Government-supported Micro finance institutions have lent 239 million Birr (29.3 million US dollars) to Ethiopian farmers to buy farm inputs like fertilizer and improved seeds.  44% of these clients are women.

The context of challenges shared by both the micro finance institutions and the women is diverse. This is based on the fact that, targeting the rural poor is expensive to the institutions. On the other side, the perception has forced some of the micro finance institutions to target accessible poor people. This context is that, the institutions that target poverty alleviation in the rural poor areas incur very high costs of operations and as such minimize their profit margin (AMEFI, 4-37).

The effectiveness of this active role by micro finance institutions is seen within the perspective of loan repayment rate, size of the clientele as well as the size of the loans given to the clients. The progress indicator of the micro finance institutions in Ethiopia is the high repayment rate which is 94% to 100%. Observations show that, the impact of the micro finance institutions in Ethiopia is seen through improved agricultural activity and quality of skills and small enterprise initiatives in rural areas (AMEFI, 30).

The case studies conducted in credit services (Fiona, 1999) ‘revealed that overall, credit provision had a significant impact on increasing agricultural production through build-up of production assets, particularly draught oxen, and increasing the amount of land farmed by clients who were able to retrieve land previously rented out and farm it themselves, and clients who were able to get more land through rent’.

“Trading activities also engaged in by female and other clients increased in scale. Female clients were particularly able to take on trading activities which had previously been inaccessible to them through lack of capital. Increased income generated by the credit input had a positive impact primarily on household food supply, and on educational provision for children as well as clothing and other basic necessities. However, the positive impact reported was dependent on continued access to credit on regular basis”. (Zegeye Bentie, et, al.) [16]

According to reports by (AEMFI, 30-35) the demand for micro finance services is increasing every day. The demand for input credit is gradually growing. This is in the agricultural sector wherein farmers are seeking money for farm inputs like fertilizers and quality seeds for better yields. This is attributed to implementation of new extension programs which are aimed at increasing production and productivity of the people through agriculture by the micro finance institutions and the government of Ethiopia.

On a cross continental perspective life expectancy and decreasing wages as well as poor background of men and their families has led to women becoming more dynamic in their search for secure life for their children. Most women in the informal employment and business are in such activities because of decreased social welfare and poor amenities for their children which through participation in these activities can transform these situations in the family. On cross cultural approach, women are violated and left to strife to help their children because of societal values as well as religious norms which reflect on them negatively.

The main problem in the society is the question of how a woman can be able to offer proper parenting and other social responsibilities while doing business. Women have created schedules and programs in their working program. They seek to address their family issues and make them priority so as to maintain a balance of competency at work and consistency in good parenting and having amicable relation with the husband.

Constraints facing the MSE sector

According to Amha,[17] the constraints facing MSEs in most developing economies are similar: They include, Unfavorable legal and regulatory environments and, in some cases, discriminatory regulatory practices; Lack of access to markets, finance, and business information; Lack of business premises (at affordable rent); Low ability to acquire skills and managerial expertise; Low access to appropriate technology; and Poor access to quality business infrastructure (AMEFI, 32-36).

Role of Micro finance institutions in alleviating poverty and creating sustainable development in Ethiopia

The micro finance institutions in Ethiopia have sought sustainability and outreach as the keys to success. The sustainability has been through generating capital to cover the cost of production and loan-able funds. The context of outreach is in the level of success attained as well as the extent which the MFI has met the clients demand for financial services (Yaron)[18].

Micro-finance institutions in Ethiopia have prioritized women in their services.  According to Getaneh Gobezie, the rationale behind prioritizing women is based on principles. Women spend their income on their family needs, their honesty and commitment to repaying loans; they are not well represented and are the economic backbone of family and society.

Sustainability of women economic activities is through empowerment. The role of micro finance institutions is to lend only to women with capacity to sustain their economic activities as well as increasing these activities potential. Micro-finance institutions in Ethiopia have mobilized women self help groups to up the potential of the women.

Lending however is based on credibility and viability of each economic activity proposed economic activity by the client. Getaneh argues that, capital misallocation is major constraint in micro finance services. He points out that there is no guarantee that money will go to the targeted poor women. The commonplace scenario is that, subsidized services induce excess demand from all sorts of clients, either poor or well up. Getaneh identifies contentious problems within both the NGO and Micro finance institutions nexus within the society. They have the capacity to Influence and patronize allocation of funds due to these connections inevitably biasing the allocation of the funds in favour of some parties. “Especially where targeting is relaxed, money can go to un-targeted people, who could have better chance of accessing resources from alternative sources. This creates market segmentation in the local economy (among same kind of people in terms of economic situation and risk profile) – some accessing subsidized funds, while others accessing it on market terms” (pg 7 of 42).

The Ethiopian government has since 2002 been carrying out implementation of the Rural Development Strategy and the Poverty Reduction Strategy. This is currently interpreted as the “Sustainable Development and Poverty Reduction Program. This has clearly depicted the commitment and the objectivity of the government to the objectives of revitalizing development in the Ethiopia.

These objectives are ensconced in various perspectives which are: Agricultural Development Led Industrialization (ADLI), Justice System and civil service reform, Decentralization and empowerment, Capacity building in public and private sectors

Such a four-pronged approach is believed to be effective in the fight against poverty and that it ensures sustainable development.

The rationale of approaching rural women is basic since it is evident that rural women are conversant with non-farm economic activities and can be able to start up own businesses which can generate income. However, Kabeer argues that credit alone is not sufficient to alleviate poverty without the necessary skills and capacity to implement and carry out business (Kabeer 2-7). Gataneh echoes this point by claiming that “credit alone, without the necessary infrastructure to enhance the skill capacity of the potential borrower, would often end up without achieving the intended goal of enabling the poor get out of poverty”(Gobezie, 21 of 39)[19]

The micro-finance institutions are consistently empowering women and building capacity in the clientele while the context of infrastructure has been the responsibility of the government.

Gains made through women entrepreneurship and empowerment

Women in Ethiopia have gradually elevated their social status to better heights through active participation in business activities. However, this is not in significant numbers, larger portions of the woman populace in Ethiopia have not participated in sustainable development, empowerment and capacity building. Micro finance institutions in Ethiopia have increased lending and facilitation so as to encourage more women to participate in these activities (FDRE).

Incorporation and growth of microfinance in Ethiopia is an identification of considerable levels of high demand and potential market growth for micro-credit financial services. It is also a change of tact by the NGO sector and government from relief assistance to sustainable development (Dejene Aredo, 1993)[20]. Interventions through the delivery of microfinance services are considered as the policy instruments of the Government and Non Government Organizations to enable rural and urban poor increase output and productivity, induce technology adoption, improve input supply, increase income, reduce poverty and attain food security (AEMFI,  20)

Most women are active in the informal sector doing menial work to sustain their livelihood (FDRE)[21]. The activities practices here include vending, trading, agriculture and related labor cleaning public and private utilities like toilets, collecting garbage and working in industries and factories (IFAD 3). This, though, is one of the gains made since women have left their cocoon within the societal values perspective.

Micro-enterprise Services have been incepted in Ethiopia with the purpose for Growth and poverty alleviation through women. Micro-credit has become the key entry point in poverty alleviation based on the fact that its women and children who are worst hit by poverty. Through the Ethiopian government, policies and the legal infrastructure to foresee implementation of micro-lending services in the rural areas has been put in place.

Literature review

The context of micro finance institutions favoring working with Ethiopian women rather than the male genre is understood within a perspective of honesty and capacity to repay as well as the potential to gain from the institutions and the commitment to using the money wisely as well as repaying it.  Rural micro-finance intermediation constitutes the key aspect of development within an international context (CGAP)[22] .  This rural micro-finance intermediation basically is aimed at women. This depicts the rationale of why women are favored by micro finance institutions. Actually, women have access to micro finance and this is based on the key aspects of their subjection to poverty.

The aims of favoring them in micro financing are to build capacity and empower them. According to Getaneh Gobezie, there are several factors that lead to women to be favored by micro financing institutions.

Evidence shows that gender inequalities in developing societies inhibit economic growth and development and that these inhibitions affect women;

Women are not well represented among the international perspective of poor people

Women spend more of their income on their families and seek to make sure that they put sufficient efforts to care for these families on a long term perspective.

Women have the habit of honoring repayment agreements and cooperativeness, leading to service efficiency and sustainability;

Microfinance is an effective means for empowering women in both urban and rural areas.

Empowerment is defined as the process by which women take control and ownership of their lives through expansion of their strategic life choices. Kabeer explains that this is through three mains strategic factors. Namely: Resources, Agency, and Achievements

This argument further stipulates that, resources are the key element of empowerment since they are the backbone of sustenance. They are the micro finance institutions and other amenities which prevail upon start up problems and help initiation of poverty alleviation. The agency factor reflects to individual’s goals and strategic plans and their implementation stratagem.

Achievements reflect on the resourcefulness and gains made through implementation of strategic plans in micro entrepreneurship.

The delivery of micro finance services to women in Ethiopia is through two major methodologies, The Group Guarantee Lending Model, Self-Help Group approach

Gobezie argues that Group Guarantee Lending model is the single most critical input for poverty reduction. This model incorporates access to finance through groups as the key element of poverty alleviation. 35% of Ethiopian women are using this model. Efforts to create more access to credit, by reaching areas where the poor lives, penetrating into remote villages, in different areas is making progress however it is hindered by poor infrastructure. Group Guarantee Lending Model (GGLM) is an opportunity for poor the poor women. It eliminates the start capital barrier for the women with no collateral, limited literacy, weak technical knowledge and narrow prior money management experience. This perspective is what De Soto [23]contextualized. The poor have dead, capital, title deeds and a lot of plans about entrepreneurship and a lot more positive incentives, but they don’t have the potential to make this a reality (but not statutes of incorporation).  Internationally there are different perceptions on role of women in the socio-economic activities. Oppressive social values and policies in social level inhibit women from active participation and ventures in these socio-economics activities.

Gender inequality has contributed to a decline in women socio-economic growth contributions. There is a need to understand the basic methodologies of helping women, both through active participation in the society and through legislation so as to help the women to become active in social-economic activities and leadership in business. Men and society have biased women roles and have sidelined the women as family care takers. Women are integral units of the society, family and social stability.

Within a cross continental context, communities have dwelt on the importance of educating the girl child into top level education distinctions. This hypothetical approach to capacitating the woman has led to more women becoming empowered through education. As such more women have been able to join the labor industry in high number during the past two decades in both developing and the developed economies. More educated women are becoming participants in liberation of women from gender violence and bias in the business front. Participation in business management, engineering, teaching and computer science are courses and careers being taken up by women nowadays,( Mana Otero and Elisabeth  Rhyne,1994).[24]

Kabeer [25]portrays various aspects of women participation in socio economic activities through institutions. Kabeer points out that, agencies form the integral part of women acquiring basic ability to make decisions, negotiate, and manipulate situations and skills to effectively use resources. If financial support is availed women can take steps to address the cultural and legal barriers inhibiting their empowerment (Fiona)[26]. As such, the context of empowering women becomes a basic aspect of poverty alleviation. The use of micro finance institutions to capacitate women entrepreneurship then becomes an element of indicating women as the only integral keys to open the doors to poverty alleviation. This however is faced by the challenge of encouraging women to actively participate in socio economic activities as well as making use of available resources like micro finance.

Selamawi [27]argue that, the women potential is contentious. The relative well being and the continuity of women performance in entrepreneurship depends on the husband’s potential in the family. A man who is able to provide and earn substantially is not deterred by women practice of business or economic activity.

This means, any income comes at the cost of loosing other valued resources such as time, health and general well-being. Any positive impacts of increased incidence of earnings among women, such as more autonomy and personal power, not to mention reduced poverty affects men but improves the welfare of the family and the children. In Ethiopia this context applies but where women’s wages remain low, or they are pressurized into surrendering their earnings to fathers, husbands, or other relatives their autonomy is not seen.  Chant further argues that; the market value of women’s work may not be important to women in comparison with other aspects of their employment which, in a given social and cultural context, may be strongly valued at a personal level, such as modesty, respect, acceptability to husbands and kin, job fulfilment and/or the ability to reconcile paid work with childcare (Chant)[28]

More than 60% of women in the societal level practice indigenous businesses to raise their standards of lives and to support their families. This shows that women, though active and dynamic still respect family and espouse the virtue of family. Dior needs in family life and a passion to achieve more status and significant roles in family and society has prompted this active practice of entrepreneurship. Initiatives to improve women’s economic situations demonstrate the need for indigenous solutions to women’s problems. It is paramount that women need access and opportunities, not paternalism (Howells, 22)

Poor housing in low income families has seen most of the mothers in these families seek employment or take up informal business. A chunk of households in urban settlements are women headed due to this problem. Also more women are now joining self help groups which are playing significant roles in building better housing for the women. The ideology is that, more women in business are creating sustainable development and creating stable families.  These aspects of women commitment to family value and economic empowerment portray the picture why micro finance institutions have more trust in women than in men. Through groups as well as self help initiatives, sustainable development has gained momentum in both Ethiopia and the rest of the third World.

The role of the micro finance institutions is to create more access to enterprising and small scale businesses which have become the commonplace practices and opportunities for most women seeking entrepreneurship. In Ethiopia women have taken up micro-businesses. Informal opportunities include hawking, vending, street food selling activities, and stall based business. Women who run these businesses keep records of their sales so as to know their income and capital base. Another cluster of informal business opportunities include: candy makers, seamstresses and hairdressers.  On cooperative aspects, the women are involved in production of handicrafts, food processing and small scale manufacturing operations Buzzard, (see, Wright, Graham A.N., Deborah Kasente, Germina Ssemogerere and Leonard Mutesasira)[29]. Active participation in these activities has led to the creation of sustainable development since families have food security and can afford healthcare and education. [30]. This way, they are able to contemplate on progressive activities to increase their capacity (James Hochschwender, Weidemann Associates, Inc, 32)[31]

The argument of supporting small enterprises and self help groups and businesses lies within the context of the simplicity of this. Micro finance institutions find these activities easier to manage. Informal business form the basis of successful ventures especially in start up type of business. This is because the setting offers a broader view on the demographics making accessibility of products and services easier while the business woman is able to identify opportunity and customer-clientele needs more comprehensively (Lariviere S and Frederic Martin, 1999) [32]

The context of women groups lies within McLean’s argument, wherein, women, when they come together are able to think more of their passive self than their problems, as such find resolves for the passive and eradicate individual fears. This perspective works well in self help groups since it’s a set up of like minds and similar goals. Where women are vulnerable to the forces of their day-to-day poverty which are compounded by financial exploitation, physical abuse, and general social harassment, they have found that collectively in these group settings, they are able to struggle against these forces and odds to effect change in their lives and work, Chen, Marta and Elizabeth Dunn (1996). [33]

Micro finance as the key element has become the tool of bringing women together. The perspective of working collectively inspires confidence and diversity. Collective action is the condition under which groups of people with common interest will perceive that interest and act to achieve it, Renee Chao-Beroff, Wolday Amha, Tesfaye Mengesha, Yohannes Sefere, Kurundi Tsegera (2000) [34].  This way potential and ideas on improving skills, business and other vital capacities necessary to develop women abilities is made affable.

This way, micro enterprises and small businesses have a chance to get new strength through learning and sharing from each other. However this has to be through commitment and enthusiasm to go a extra mile to achieve these goals. Though small businesses are not the only socio-economic drivers in poor rural areas, women also have ventured in agriculture and making these practices a self employment and income generating schemes (see UNHCR 2002)[35].

According to IFAD government and NGO’s in Ethiopia have concerted efforts to enhance self-employment and income generation schemes, through expanding micro-enterprise services. This is very vital to avert this undesirable poverty. Both NGOs and the government have different primary long term plans for the women and the society which include: Increasing literacy and education in rural areas, Improve health care and nutritional provisions, Reduce and crack down on female abuses, Crack down on child labor, Enhance watershed development, Increase resources and capacity to help women’s empowerment

Microfinance has helped to reduce women vulnerability through assisting them to become micro entrepreneurs so as to increase their sources of income, savings, expand their options for credit, and improve household money management.  Micro finance helps to accumulate physical assets, increase expenditures on housing, and strengthen women’s role in collaborative economic decision making. It’s argued that ‘the positive protective role of microfinance is related to the fungibility of credit within households and the common use of credit beyond the enterprise.

As such, the context of sustainable development based on capacitating the victims of poverty becomes the key element of micro finance institutions as well as the NGO’s favoring women in their objectives. However, other methodologies of poverty alleviations through micro finance have used the concept of micro finances and education as two key elements of developing capacity and economic progress (see Dawson, Jonatan Dawson with Andy Jeans) [36] Educating women and other members of the society creates more social capacity and puts the community in good stead to counter problems of decreasing social welfare and poor healthcare. A learned society knows the need for proper education, proper healthcare and increase equity and improved social welfare.

Sustainable development within such a society is bankable and incorporation of socio-economic activities only thrives and meets less hostile factors. Demographics and other essential factors attribute women as the pivotal elements in achieving this kind of potential.

The perspective of micro credit and women is diverse.  Within the Ethiopian women perspective, its identifiable that, empowerment is conceptual, and it is seen in the national initiative ‘the women’s development initiative project.

According to Nana [37]and Staschen [38] “the main objective of the Women’s Development Initiative Project (WDIP) project is to empower women economically and socially and thus enable them play a great role in the development of the country. The target group of this project is destitute women who have the potential to run their business but lack the means. These women are encouraged to come up with their own business initiative. Their initiatives are evaluated and those who come up with realistic and smart business ideas are organized into groups and are given training. The training covers business skills, bookkeeping, financial management and gender, family planning, HIV/AIDS, environmental protection, nutrition, legal literacy and harmful traditional practices. On completing their training, each group constituting 10-20 individuals is given a maximum of 4000USD grant to start business. Some of the groups are engaging in group-based business activities while others work at individual level after borrowing money from their group capital.”

The NGO’s and micro finance institutions working in Ethiopia have observed the major constraints facing the framework of creating sustainable development. There has been a call to the government to identify these key problems forcing the sustainability of micro finance and sustainable development. These problems forwarded to the federal government of Ethiopia are the major cause of rural poverty and need to be addressed urgently so as to increase the potential of the women and other players in social economic activities in Ethiopia. According to IFAD these problems are: wide fluctuations in agricultural production as a result of drought, an ineffective and inefficient agricultural marketing system, underdeveloped transport and communication networks, underdeveloped production technologies, limited access of rural households to support service environmental degradation, lack of participation by rural poor people in decisions that affect their livelihoods

The Challenges facing MFI’s and the Ethiopian Women Entrepreneurs

According to Zwede & Associates[39] (26-39) “Multi-faceted subjects, such as the social and economic empowerment of women, are central to the analysis of women’s entrepreneurship. In order for a woman to be empowered however, she needs access to the material, human and social resources necessary for making strategic choices in her life. Yet women have historically been disadvantaged in accessing not only material resources like credit and other property, but also in obtaining social resources such as education, information and modern technology. All of these factors have negative implications for the type of enterprises that women are engaged in.”

According to recently conducted studies by AEMFI, (AEMFI, 2002) women who are engaged in micro enterprises started their business to overcome the challenges of poverty and its consequences. Hence, some of the driving forces behind starting a business may include:

Unsatisfied household subsistence needs, such as basic requirements like food, Clothes and the education of children; Girls dropping out of school, being unable to get wage employment, Perforce, resort to self-employment; Family pressure upon girl school-leavers to be self-sufficient; and Credit facilities being offered on women’s doorsteps.

(see, IFAD 2007, AEMFI, Swede & Associates, )

Swede & Associates identify that; “In most cases, the commonplace picture on micro-enterprise practitioners is that  the personal characteristics of an entrepreneur, such as gender, ethnic background as well as religion often influence the opportunities of Ethiopian women entrepreneurs. Of these characteristics, sex difference is the most widely relevant factor. Women and men generally have different degrees of access to opportunities that affect their individual abilities to participate in economic activities. Following from this, gender is in many cases a major determinant of one’s additional household obligations, which limit the amount of time one can allocate to economic and other productive activities. Women carry a disproportionate burden of household obligations. Women in comparison to men often differentially experience access to and control over resources (pg xiv)”.

For many of the reasons stated above, experience shows that in Ethiopia there is a link between complex gender-specific constraints and the types of economic activities which urban and rural women tend to be engaged in[40]. This in turn appears to have a number of implications for the distribution of credit and other support services. Some of the specific constraints include: the limited market-related skills of women; the limited access to and control over productive resources; the limited time owing to the demands associated with the reproductive roles of women, and the general inability of women to recruit and hire skilled laborers (Ayana1)[41]. These constraints, which are further affected by the traditional, gender-based reproductive roles and responsibilities, generally confine poor urban and rural women to economic activities that are less productive or profitable than those of their male counterparts. This is partly related to the fact that self-employed women tend to focus on economic activities that are perceived to be more flexible (such as petty trade which involves less risk), [42]and on activities that can be either home-based or carried out in the vicinity of the household, thus enabling them to fulfill the demands associated with their reproductive role. Evidence suggests that even relatively better off women in Ethiopia tend to focus on areas in which they have traditional, gender-based skills and know-how, such as food processing, clothing and hairdressing (Nana, 1)[43]. The CSA estimates that the low representation of women entrepreneurs in the small scale manufacturing sector (26 per cent) could be attributed to a number of factors such as:

– Low levels of education and lack of opportunities for training for women;

-Heavy household chores that leave women less time to devote to their businesses;

-Lack of contact with and exposure to the business world;

– Meager financial and human capital at the disposal of the women concerned;

– Issues relating to ownership rights, which deprive women of property ownership in general and consequently, of the ability to offer the type of collateral normally required for access to bank loans.

Key issues emerging

 

The key issues (such as the constraints and emerging as well as existing opportunities) identified by this paper about micro finance role in Ethiopia are summarized below.

 

Insufficient Empirical Research on Women in micro enterprises

 

The basic anomaly identified is inadequate empirical studies on women entrepreneurs in Ethiopia. According to Swede & Associates, “Women-owned and operated small enterprises that are relatively growth-oriented are practically unexplored from a research perspective”. There is no proper legislation and a framework to carry out empirical research on women small enterprises and their needs in developing businesses and other socio-economic activities.

This has led to lack of data and records to show essential demographics and other factors which can stimulate or stifle sustainable development. Documenting and collection of data should be initiated through modern technology so as to have the proper outlook about the potential of women and their concise profile as entrepreneurs.

 

Lack of support by Financial Institutions to micro enterprises

The banking sector in Ethiopia has lacked the will to offer a chance to the micro-small enterprises owned by women in Ethiopia. If they have, they’d be offering a lifeline to the growth of the Ethiopian economy. Banks are mainly in urban areas and target the well to do clients. This façade of the banking sector creates a gap in empowerment since even their loans as well as their collateral requirements do not reflect on the strengths of micro- enterprises run by women. Its within this context, micro finance institutions have been seen as the only financial institutions that are accessible to micro and small enterprises (Tafesse, 1)[44]. The impact of micro-finance on major business activities is less admirable since micro-financial institutions (MFIs) do not finance small enterprises but often lend for household and domestic requirements which only save family needs and micro-economic activities.

In a nutshell, micro finance institutions in Ethiopia have been striving to expand their outreach both in terms of the area and size of clients, their loan product development capacity is limited.  “The objective of the MFIs is poverty reduction and the sources of their loan funds are mainly provided by donors”. Swede & Associates (Xvi)

The credit delivery methodologies by micro finance institutions are largely group-based (Zewde & Associates, xvi). “This is done to overcome the problems posed by borrowers’ inability to put up individual collateral for individual loans. However, as the financial profiles of clients develop, the group system may not, for various reasons, continue to be practical, useful or relevant. The MFIs are not ready to create alternative systems of relevant collateral to meet the changing credit needs of clients. Another serious problem is that women who engage in small-scale enterprises or growth-oriented MSEs do not get credit from MFIs. This is mainly due to the low loan ceiling set by the National Bank (the licensing agency for MFIs). Furthermore, women entrepreneurs are blocked from borrowing from the conventional commercial banks because they cannot offer the required collateral in fixed asset form. This indicates a serious gap in the provision of credit to such small-scale enterprises and presents a particular obstacle for women entrepreneurs” (see pg xvii).

Lack of Strong Organizations for Women Entrepreneurs

Lack of staunch women organizations has led to slow empowerment. According to Irish firm Zewde & Associates, “some associations of women entrepreneurs have started coming into the picture, such as the Women Exporters’ Association. These associations are very young and lack the capacity in many aspects to meet the demands of their members in the areas of training, access to information, marketing and other support services. The existence of a strong network amongst women entrepreneurs and organizations is also highly essential for increasing the visibility of women’s entrepreneurship at government level and among key stakeholders. Such measures should help to draw attention to the need for a better enabling environment for the sector.

(see Zewde & Associates ,2002 report Pg xvii)

 

Conclusion

 

The efforts and commitment by the federal government of Ethiopia in adopting and implementing the Poverty Reduction Strategy Paper (PRSP) is a great chance to direct the required attention to women entrepreneurship sector. Various constraints should be addressed and creation of sustainable development as well as poverty alleviation will be achieved.

There is an improved reception to micro credit services within the women league of Ethiopia. However, fewer women are participating. There is a growing need to examine and assess how this could be limited and micro-credit services become encouraged. The role of the micro finance institutions should be assessed and recommendations made to enhance their participation in creation of sustainable development.

Gender based constraints and educational constraints should be contextualized within micro finance perspective so as to offer solutions to factors leading to stifling of women development. Also an urgent need to assess the role of the micro finance institutions in improving the infrastructure, life and cultural perceptions of the Ethiopian people so as to find modalities which can best support sustainable development.

 

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Getahun Nana, Legal Framework for Microfinance Institutions in Ethiopia, A paper presented at International Conference on the Development of microfinance in Ethiopia: Achievements, Problems and Prospects,  Bahir Dar, 1999

 

 

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