ROLE OF MICROFINANCE ON SOCIO-ECONOMIC EMPOWERMENT OF RURAL WOMEN IN TARMABER DISTRICT, NORTHSHOA ZONE, AMHARA REGIONAL STATE, ETHIOPIA

Abstract

Microfinance institutions considered as an important development program in Ethiopia, focused on reducing the poverty level of the community, especially women are in the mainstream of microfinance programs. This research was conducted to analyze the role of microfinance on rural women's socio-economic empowerment in Tarmaber district, Amhara Regional State, Ethiopia. Multi-stage and purposive sampling techniques were followed to select 248 respondents from the three randomly selected Kebeles of Tarmaber district out of those which 118 were microfinance users and 130 non users. The primary data were collected by using semi-structured interview questionnaire from 248 respondents, six KII and two FGDs in each sample Kebeles. To find out factors affecting rural household’s participation in microfinance, nature of MFI credit utilization and examine impact of microfinance on rural women’s socio-economic empowerment in the district, data were analyzed by using descriptive, inferential statistics and econometric model. In the study, STATA software used to analyze the data. Binary logit model used to examine factors affecting MFI participation. Based on logistic regression those factors, education level, dependency ratio, annual farm income, annual off-farm income, distance from microfinance, saving, loan interest rate, and access to training significantly affected microfinance participation. The PSM used to examine the impact of microfinance participation on the annual income of rural household and women empowerment. The matching algorithm used was radius caliper band width 0.25. Results of ATT shows that microfinance user households have 2205 birr annual income difference than non-user households and there was 0.042 WEAI score difference between two groups. The researcher used WEAI to identify the level of women empowerment in the district and the result was 72%. There was a difference in the level of empowerment between microfinance user and non-user groups. The result from KII and FGD shows that majority of microfinance user households used microfinance loan for intended purpose, while some of them used for personal consumption (ekil, yebet tata,). Based on the findings, the study makes recommendations for microfinance institution in the district to give more training on effective loan utilization, close the gap and making efforts to minimize significant factors that contribute to women's disempowerment in the district.