Document Sample

              Paper Presented for the International
          Conference on the Microfinance Development in
              Ethiopia: Prospects, Sustainability and
                Challenges on Poverty Alleviation

Evaluating the Potential of Microfinance as an Anti-Poverty Strategy:
  A Case Study of the Amhara Credit & Saving Institution (ACSI)

                            Getaneh Gobezie
                  The Amhara Credit & Saving Institution (ACSI)
                        Tell: (08) 204840 or (08) 201652
                                Fax: (08) 201733

                       Rift Valley Hotel, Adama
                         December 7-10, 2001


Micro finance is currently enjoying wider acceptance as an anti-poverty strategy all over the
developing world. Yet, while the large majority of the poor is still out of touch from any kind
of such services, the service quality leaves much to be desired for it to be effective in
achieving its goal. Challenges include both institutional as well as external. The one-fits-all
loan terms and conditions of the MFIs as it currently stands is not flexible enough to meet the
demands of micro-credit clients. The group lending methodology undoubtedly opened great
opportunity for many poor people who could otherwise have no chance to access small capital
for business activities, yet it is not with-out its own in-built problems. It cannot ensure that
those who cannot find colleagues, whom to group with, have access to credit. And those who
may want to borrow on individual bases and offer the collateral cannot be well served by this
methodology. The credit-driven micro-finance service so far focused only on the delivery of
micro-credit, with little emphasis to saving mobilization. Closer examination of the client
profile also points out many issues. Credit is delivered to those in the "productive" age group,
yet educational and skill achievements is very low. The nature of the enterprise is as expected
-- the majority are engaged in the traditional businesses of agriculture and petty trade, with
low level of skill mainly inherited from fathers or forefathers. Many, being still risk-averse, do
not want to venture into new activities. Some non-traditional activities that employ indigenous
technology/local input, often not land-based and are environmentally friendly, and enjoy less
competition and otherwise much more rewarding (like black-smithing, weaving, tannery,
pottery, embroidery, other handicrafts, etc…) are rather frowned at, for cultural reasons.
Business development services that provide opportunities to upgrade skills into other areas
are not well developed either, and the very few that exist are focused on the urban areas.
Covariate risks therefore abound, both for the institution as well as for the clients themselves.
Similar products are offered on the small market, which easily saturates. Access to the nearest
other market is blocked due to the very poor infrastructure, particularly the road network
Many of the rural areas are inaccessible in the rainy season, making development of internal
markets very difficult. The target of maintaining a 50% women's share often seems to have
been attained, yet a good deal of women actually "hand-over" the credit allocated to them to
their husbands. Moreover, women generally take significantly lower loan sizes than their male
counterpart, and their profit margin is relatively small.

                              Table of Contents

  1.1 An Overall view of the Region
  1.2 Micro-finance as an Anti-poverty Strategy
  1.3 The Amhara Credit and Saving Institution (ACSI)
  2.1 Outreach
  2.2 Product Diversification?
  2.3 Reaching the poorest?
       High Operation Cost and Non-market based Interest
       The group lending methodology
       The Screening "Committee"
  2.4 Beyond Credit
       Skill Development
       Consumption Loan
  2.5 Women
       Low profitability, and loan usurpation by men
       The skill problem



1.1 An Overall view of the Region
The Amhara Regional State covers 170,152, comprising 15.3% of the Ethiopian
territory. Most of the region lies in the Central Highlands, with highland plateau
stretching from North Shewa up to the neighboring Tigray Region. As per the
projections based on the 1994 National Population Census, the Region currently has a
population of over 16 Mill. of which about 90% are living in rural areas. The region
has 11 administrative zones, 114 Woredas and over 3240 Kebeles.

Agriculture, dominated by subsistence small holders, is the mainstay of the
population. However, longstanding population settlement, over cropping, and little or
no improvement in traditional farming practices have resulted in considerable
environmental degradation, leading to a decrease in agricultural production and
leaving the population highly vulnerable to recurrent drought and famine. Efforts in
the last five years have resulted in carrying out water and soil conservation works on a
maximum of 13.8% of the area that needs to be protected. Agriculture is still mostly
rain-fed, with development of irrigation for production still at a very basic level. Little
use is made even of rivers flowing all year round in some drought affected areas.

As in many Ethiopian rural areas, the level of poverty keeps people trapped in
marginal existence with emphasis only on day-to-day survival, with little opportunity
to accumulate capital whether to invest in improving their livelihood or as a reserve
for the hardest time. Opportunities for off-farm and alternative employment are still
limited. Industrial development is relatively insignificant.

Infrastructure is poor, with inadequate road network throughout this very mountainous
region. Many of the rural areas have no road access and are inaccessible in the rainy
season, making development of internal markets very difficult. Road density per
thousand km.sq currently stands at 31.6 k.m, (having risen from 24.4 some five years
ago) with more than 80% of the regional population estimated to be still out of
modern transportation services.

Educational and health services are inadequate, and existing services are very
unequally distributed between rural and urban areas: Gross enrolment rate for basic
education is only at 46.4% (having risen from 18% some five years ago) of the
relevant age group, with substantial gender and spatial bias between urban and rural
areas. Similarly, of the total population, only 43% (up from 30.8%) have access to
modern health services, and 28.5% (up from 10%) have access to clean water, the
picture being much worse for rural areas (BOPED, 1992 E.C).

This is as far as what is known in the literature as "Social Income Poverty" is
concerned, which does not show poverty at the household level. "Private Income
Poverty", indicating the proportion of people who cannot afford even the minimum
level of consumption (calorie, protein, or others) at household level, shows the gravity
of the problem in a country (Ranis and Stewart, 2000:109). No detailed study is
undertaken in this regard. But, a preliminary study undertaken jointly by the Ministry
of Economic Development and the Central Statistical Authority (CSA) indicates that
in 1999 more than 56% of the Regional population cannot afford the minimum
consumption for survival, (the 2200 "calorie", recommended by the WHO) where
minimum consumption is estimated in Ethiopia to cost only about $10 per
month/adult. There, are of course, variations in the poverty rate among zones of the
region, some having a substantially higher rate than indicated by this average figure.
Moreover, one should note that the poverty rate would be even higher if one considers
the $30 poverty line set for all developing countries by the World Bank.

1.2 Micro-finance as an Anti-poverty Strategy

The recent definition of poverty by the World Bank (World Development Report,
2000/2001) extended the conceptual dimension beyond the conventionally held ideas
of permanent income/consumption and social income (basic needs) to a more
comprehensive notion of lack of income/assets, sense of voiceless-ness and
vulnerability to external shocks. Thus the anti-poverty strategies not only need to
create income-earning opportunities, but also must ensure empowerment of the poor
in the sphere of state/social institutions, and security against variety of shocks. Micro-
finance is believed to be one important entry point to addressing many of them. But
services are limited in some urban areas, neglecting the majority poor.

In the region, for example, the Development Bank of Ethiopia and the Commercial
Bank of Ethiopia, respectively having 5 and 33 branches, provide virtually no access
to the rural population since they all are located in urban and semi-urban towns. Also,
private banks, though growing in number over time, do not engage themselves in this
activity. According to an earlier study, in rural Ethiopia as a whole, less than 1% of
the population has access to this source. Consequently, accessing credit for small scale
and informal operators continues to pose a major constraint to growth of the sector.

The alternative is the "informal" financial sector, mainly the individual moneylenders.
In this case, borrowers are required to provide guarantors and the interest rate is
excessively high, varying from 50% to 120% per annum (SIDA, 2001). Recent IFAD
study estimated that the Arata interest can go as high as 400% in some instances. And
this exploitative interest rate of the informal sector diminishes potential return to
factors of production, and is a constraint to diversify economic activities of the rural

The Federal Government of Ethiopia has taken several economic reform measures to
address poverty in its every aspect. Thus, while on the one hand trying to fulfill the
basic needs of the population, it also embarks upon economic reform measures
conducive for free market competition and employment creation which includes the
promotion of policies that will encourage savings, private investment, increasing
income earning opportunities and promotion of small-scale industries in the informal
sector among others. The five-year development program document emphasizes,
among others, credit as a means to increase smallholder production (EPRDF, 1992
EC:62). Financial markets are considered by the Regional Government as a good
entry point in achieving food security objectives as this will allow rural households in
both food secure and insecure areas to explore their "comparative advantages" in the
market place and to create possibilities for exchange between factor markets (AEMFI,
2000a:9). Thus, in addition to promoting provision of credit through government
channels, the program encourages micro-finance institutions to provide their services
of credit provision and savings mobilization.

However, even if policies aimed at changing the regulatory environment were
expected to pave the way for increased flows of resources to the rural and informal
sectors, microfinancial services are very inadequate still.

1.3 The Amhara Credit and Saving Institution (ACSI)

The Amhara Credit and Saving Institution (ACSI) was established in the region
aiming to feel the gap of formal institutions to meet the need of small-scale borrowers
in income generation schemes. It has its distinct vision, mission, objectives and

History: The operation of ACSI is traced back to 1995 when it was initially initiated
by the Organization for the Rehabilitation and Development in Amhara (ORDA), an
indigenous NGO engaged in development activities in the Amhara region. 1996 was
the year when ACSI had undertaken its pilot activities. ACSI was licensed as a micro
finance share company in April 1997.

Vision: ACSI aspires to see a society in which people are free from the grips of abject
poverty, with all the power determining their future in their own hands, and its own
capacity as an institution well developed to provide best services for all in need in a
sustainable manner.

Mission: ACSI’s primary mission is then to improve the economic situation of low
income, productive poor people in the Amhara region through increased access to
lending and saving services. It will maintain cost effectiveness in service delivery, and
integrates its activities with government and NGOs working towards achieving food
security and poverty alleviation in the region. The specific objectives are:
    -Productivity Objective: To promote agricultural and non-agricultural economic
      activities of the rural productive poor by providing innovative financial services.
    -Outreach objective: poverty alleviation and stimulating the region's economic
     growth, giving priority to rural and remote communities, particularly women
    -Impact objective: Significantly increase client's income and asset position
    -Institutional sustainability: promoting sustainable financial services, both
     operational and financial.

Values and Principles: Giving priority to full knowledge and understanding of the
Complex, Diverse, and Local (CDL) realities of the poor, ACSI entertains flexibility
in operation and a process of learning from practice. It fully considers rural values,
economic and social settings, settlement and gender issues, while committed to play a
key role in improving the living standard of the population through self-employment
and dignity preserving rather than charity handouts.

ACSI thus essentially targets the productive poor: those if appropriately assisted could
by themselves create the activities that could enable them to get out of poverty -- the
entrepreneurial poor. Indeed, such people do not need "direct" assistance (e.g. subsidy,
etc) for themselves, but they do need help, indirect assistance (e.g. business
development services, credit, etc) in setting up an activity that will eventually increase
income. They are not passive recipients of money transferred from other segments of
the economy in a top-down approach (the zero-sum-game), rather they need to be
empowered to create their own jobs and enhance private income, thus transforming
the funds into large and more substantial streams of money (Garson, 1999:5). Such a
strategy targets the causes of poverty rather than the poor themselves, making anti-
poverty policy cost effective.

Governance and Organizational structure: The highest decision making body of
ACSI is the board of directors. A general manager heads ACSI's activities. ACSI has
three major departments, namely: finance, credit and saving as well as four services,
namely: audit, planning and monitoring, administration, and promotion.

Currently, the Institution has a total of about 1140 employees. Of the total, about 65%
are 12th grade complete with a minimum of four months supplementary specialized
training. Some, mainly at the head office level, have diplomas, B.A/B.Sc degrees or
above, with substantial experience in the field, supplemented with international
exposure (Table1). Thanks to the strict selection procedure that ACSI follows, it can
be said that the staff both management, administrative and program staff have high
degree of commitment to the vision of the Institution and willingness to work in a
learning environment where uncertainty is likely, flexibility required and
experimentation necessary.


2.1 Outreach

Currently, ACSI operates in 13 branch and 162 sub branch field offices to implement
its plans (See Annexes). It can reach a total of 104 Woredas (out of the total 105), and
operates in nearly 1521 Kebeles. Each branch office is staffed by a manager (credit
officers), accountant, auditor, saving officer, human resource and cashier; while each
sub branch has a coordinator (credit officers), accountant, saving officer and cashier.

So far a total of nearly 242 000 clients have benefited from the "regular" credit
services of the institution, with a total disbursement of over Br. 308 Mill. Likewise the
total number of total saving clients currently is 221061 (including 41500 non-loan
saving clients), with a net saving balance of Br. 55.4Mill. (End 2000).

Major qualitative benefits include one or more of the following: increased food
security (66%), constructing/maintaining house (18%), able to send children to school
(39%), able to buy additional ox (14%), and other benefits (44%) including:
experience in cash management, no disposing off assets, not having to go to the
money-lender, increased acceptance in the community, etc.

Overall, 89.9% reported that their life is much more better than before the loan (Table
5). Some 20% reported that they exhibit no change in their life-style, while the
remaining 3.3% actually experienced worst life style as a result of the credit, which
may include failure in business, and therefore increased debt burden, having to sell
some assets to settle debt, etc.

2.2 Product Diversification?

The very poor requires diversified or flexible loan terms and conditions: diversified
loan size, flexible repayment period, repayment frequency, availability of loan on
time, diversified collateral, etc. Apparently much remains to be done on this front. But
meeting all the demands of the poor is also engulfed with a lot of problems, most
important of which is that it involves cost to the institution in terms of, for example,

increased number of staff that can efficiently respond to all existing as well as
emerging demands.

The loan size is currently limited to a maximum of Br. 5000, with a view to limiting it
to the requirements of the very poor. But some, having been clients to MFIs and
having developed their business skill, may come to require loan size beyond this limit.
No one currently caters for this demand. In the absence of any alternative, borrowers
would be forced to seek the additional money from such sources as the private money
lenders at excessively high cost, which, in fact, discourages investment activities.

2.3 Reaching the poorest?


The Micro-credit Summit would like MFIs to have as clients those whose income
places them at the bottom 50% of the poverty line. And this makes sense given the
real situation in the region. The poverty situation in the region is such that not only is
the poverty rate (incidence/prevalence) high (at 56%)1, but the depth of poverty
(intensity) is also too high. That is, the average income of the poor is not only lower
than the pre-determined poverty line, but also very far below it, or the gap between
the average income of the poor and the poverty line income level (that would enable
one to maintain at least the minimum requirements for mere survival) is very high.
Eliminating this gap not only helps reduce the proportion of the poor (hence the

    The measurement is based on the FGT (1984) model for poverty measurement given by :

                  1 q    z  yi
           P       z
                  n i 1

where  > 0;      z = Total Poverty Line; yi = Per capita consumption of household i; q = number of
people below the poverty line; n = total population. The computation provides the head count index,
Po,(when  = 0), the poverty Gap Index, P 1(when  = 1), and the Foster, Greer and Thorbeck measure,
P2 (when  = 2). Such "conventional" way of measuring poverty focuses only on one aspect of the most
accepted poverty measures, the private income poverty (or direct consumption), leaving aside the social
income poverty. Moreover, being a one-shot data one can expect a number of limitations in the
estimate, one of which being that it doesn’t show trends over time. Some surprising results are therefore
observed particularly at the dis-aggregated "zonal" level, like historically drought affected and food-
insecure areas being reported to be "better-off" than others. The poverty line employed
(consumption/income) differs from what MFIs utilize for targeting purposes, which, most often, is
household asset. See also Hatch & Frederic 1998; p.3

poverty rate) but would, at the same time, reduce the depth of poverty, which is often
taken as a more appropriate indicator of life condition in a certain locality than the
poverty rate as such. Thus, if we are to make advances on both fronts of reducing the
rate and depth of poverty and, thereby, positively contribute to meeting the target of
reducing poverty indicated in the Poverty Reduction Strategy Paper (PRSP) as well as
the 1995 Copenhagen Social Summit global target of reducing poverty by half by
2015, we need to help the very poor come out of poverty. Assuming direct correlation
between income level and the loan size demanded2 (i.e., those with better income level
demand larger loan size), this implies that we need to adequately respond to the
demands of clients who require very small loan sizes, i.e., the very poor.

High Operation Cost and Non-market based Interest

But this substantially increases operation costs to the MFIs. There are, for example,
those women who require loans as small as Br. 50, for such activities as spinning
(used for the production of the local Gabbi3). And such poor people are not
necessarily the ones with no business skill, and looking only for charity hand-outs, as
often assumed by many authors. They have the requisite skill for this specific task, the
demand for their products is often available, they can fully repay the loan and, in fact,
they are too proud to look for charity. Yet, such loan size would have required 100
clients to sell a total portfolio of just Br. 5000, the maximum allowable limit. The MFI
would need more credit officers who would attend all these clients, with additional
cost, when, in fact, it can dispose such a loan to just one big borrower.

Given the very poor infrastructure in the region, attending all such clients would
undoubtedly increase operation cost, which cannot be covered from such operations
because of the low (subsidized) interest rate. Although the National Bank regulation
has allowed MFIs to fix their interest that can cover the cost of operation, many are

  In fact some argue that although loan size is often seen as a proxy for the income level of targeted
clients, a better gauge of client income level is the average monthly payment amount. (See Sheldon &
Waterfield (1998), p.38
 Gabbi is a locally manufactured clothing item. It is manufactured by the local weaver (often male),
using input materials prepared from processed cotton, mainly by the wife. The Gabbi can be worn
during the day time as well as in the night.

still reluctant to do so because of a wrong perception that by so doing they might hurt
the poor whom they come to support out of poverty. There is a strong belief that there
is still room for improvement in terms of productivity of staff and administrative
efficiency to ensure sustainability while keeping the interest rate low so that clients
are not having to subsidize inefficient operations through higher interest rate. After all,
some may argue, MFIs are there to help the poor improve income and not to exploit!4
Thus, whereas the transaction costs of providing micro credits in targeted remote and
isolated areas become increasingly higher than those for providing standard
commercial loans, and while it is clear that prompt, reliable access to credit is more
important to clients than low interest rate as such, ACSI has still been committing
itself to a low interest rate.

Many empirical studies in this area show that the lending interest rate is not
considered to be very important by the rural poor, that demand for credit is largely
inelastic with respect to the interest rate (Schmidt and Kropp, 1987:60). Some even
argue, based on empirical evidence, that contrary to popular opinion, a policy of high
interest rate could even improve access of the poor segments of the population to
credit; that is, if a financial institution that is oriented towards the target group
demands higher interest rate than conventional banks, wealthier borrowers who are
also clients to the latter institution will not seek to obtain funds from the former
institution.5 Thus, more funds will be available to the poorest target groups. For the
MFI, this would help improve situations for sustainability while reaching areas with
poor infrastructure. Indeed, if banks are to serve customers which differ widely in
terms of service costs and risks, the only viable inducement for them is a

  Interest rate will remain a sensitive political issue in many countries and environments and NGOs
surely would not wish to become the "new exploiters"…And setting a realistic interest rates should not
be a license for higher costs and inefficiency. Organizational sustainability will depend on a range of
factors such as management, staffing and organizational structure. See Johnson and Rogaley (1997) p.
  Interest rate restriction obviously results in "income transfer" to loan recipients. But then, such rates
would induce excess demand from all types of applicants, poor and non-poor. Influence and patronage
and better connections inevitably bias the distribution of the "subsidized" credit in favour of the better
off -- more so when the local targeting mechanism is lax. Then the share of lending to the target group
would decline, and there would be large unfulfilled demand, which will be transferred to the informal
money lender, thus pushing informal market rates higher. The poor is thus hurt by "subsidized", low
interest rate. (See also Braverman and Guasch, 1993, p55, 64; Micro-credit Summit 1999 report, p.62;
Johnson & Rogalley 1997; p.52)

differentiated margin, lest they exclude the small farmers and micro-entrepreneurs and
people in remote areas (Seibel, 1996:133)

The group lending methodology

This methodology removes the main entry barrier for those with no collateral, limited
literacy, weak technical knowledge and narrow prior money management experience.
It has many advantages for MFIs in terms of screening out those who are not credit
worthy. Research on Grameen Bank reveals that:
    "Women who are really disorganized and cannot "manage" their households,
    women who are considered foolish or lacking in common sense, women who are
    "belligrant" and cannot get along with others, women with many small children,
    with husbands who are "lazy" and gamble and waste money or are "bad", are
    generally considered "high risk". It is felt that these women will be unable to use
    loans "wisely"; they would be unable to save and invest and increase incomes.
    These women, even if provided with membership, would drop out and would have
    negative influence on others." (See Syed M. Hashemi (1997); p.115)

Yet, the group lending methodology is not without problems. The advantages of peer
monitoring over traditional practices lies in its social connectedness, as local
knowledge about others' assets, capabilities, and character traits is used to sort and self
select. In theory, the dynamic of joint liability implies that groups screen and self-
select their own members to form relatively homogeneous groups; i.e. the members
share very similar probability of defaulting a loan. It is assumed that social solidarity
will ensure that the successful members cover for the defaulters6. This increases the

  In fact some argue that group lending can have both positive and negative effects on loan repayments.
It increases loan repayment because successful borrowers may help repay loans of less successful
borrowers unable to repay. Group lending may also reduce the repayment rate if the "entire" group
defaults (i.e when some borrowers who would have paid default because other group members have
done so). (See Khandker, Shahidure 1998:p.15); Tassew Woldehana (2001, p:10) argues that the
problem of such contagious effect occurs when one member of the group runs into genuine financial
difficulties and must default. In this case, it is a dominant strategy for other group members to default
on their outstanding loans as well because one member's genuine difficulties have destroyed the group's
credit worthiness…Lending sequentially to group members can minimize the contagious effect of an
individual default. The recent IFAD evaluation study of all Ethiopian MFIs (IFAD 2001, Main Report,
p:10) indicates that loans in Ethiopian MFIs are normally extended to members of a group in a
sequence of 1:2:2 (i.e., one loan in the first round, two loans in the second, and two loans in the third
round) over four weeks interval. ….Inez Murry (2001) (in CGAP, 2001, p.21) reported that Shakti
loans [Uganda] are issued to each individual within a group on a 2-2-1 basis, i.e., two group members

likelihood that the poorer and more vulnerable will be excluded, since a partially
formed peer group looking for more reliable members with whom to share risk is
more likely to reject candidates they consider most risky, namely the very poor (Anna
Mar, 1999:3). This is exactly what has been revealed in ACSI's field assessments and
various workshops.

The Screening "Committee"

The Kebele administration and the community "representatives," who may latter on be
involved in guaranteeing repayment process, also tend to focus on the less poor, or
just focus on those who are well-connected, and can deliver some kind of "gift", or
fulfill some personal advantages, etc., thus endangering the very objective of serving
the very poorest section of the population7. Such incidences are emerging at field level
on many instances.

2.4 Beyond Credit

The wrong assumption so far held was that the poor only require just credit, and
nothing else to come out of poverty. Practical evidence in many other countries as
well as in our own country reveals that this is not the case. The poor, including the
very poor, often need such additional services as saving, business development
services, consumption loan, Family planning services, insurance facilities, etc.


Some argue that the poor need saving services more than credit.
    "Most people want to save most of the time, while they do not want to borrow all
    the time. Many people may not want to borrow at all because they feel that saving

get loans the first week; the second two members receive loans a week later provided the first two have
paid their installments; then the last member receives her loan the following week…
  Johnson & Rogelly, (1997) p.12; reported similar serious "targeting errors" or "leakages" for the big
micro-finamce Institutions in Bangladesh, which in principle target loans away from the better-off, but
the poorest, who are often landless (where the "poverty line" is .5 acre), are in fact left-out.

    before undertaking major expenditure is less risky, or for moral or religious
    reasons. (See Hartmut Schneider 1997; p.24)

The form of holding wealth or capital formation which a rural economic unit chooses
depends on the return, risk, convenience and flexibility or liquidity of the alternative
investment opportunities. When saving "in cash" is not convenient, the poor resort to
saving in real asset (crops put into storage, a house constructed, a pig fattened -- hence
the idea of "piggy bank" -- a tree planted, or children raised (and educated) as an
investment in human capital, helping one's neighbours, and putting on a feast to raise
claim for future assistance (social capital).

But the return on such investments are not always very large since investments are
made in order to save (and not vice versa) when other saving opportunities are
unavailable (Schimidt and Kropp, 1987: 26). Thus, in rural areas there exists an
unused financial potential which could be put to productive use -- from the
unproductive hoarding of illiquid assets to activities where the marginal productivity
of capital (MPk) is higher. Others argue that rural areas not only have the financial
potential, but, in fact, are awash with cash in circulation.8 The advantages of
institutional deposit facilities to them, therefore, include: a combination of security,
rates of return, and divisibility of savings--"You can't sell half a cow"9.

The major premise for ACSI is, thus, that even the poorer member of the society have
savings which they hold either as real assets or in monetary form. The recent survey of
600 potential credit/saving clients indicates that some 79.2% actually have some kind
of savings, which they hold either in cash (57.9%) or in kind. Of those who said they
save in cash, 34% save at home, 28% in Equeb, 15.71% at both home and Equeb,
8.9% in Banks, and the rest in other alternatives (friends, relatives, etc). Women tend
to be more inclined to save in cash and more Equeb participants than men. Over 96%

 The cash in circulation, which includes locally disbursed funds belonging to the central government,
local government agencies and donors, is not a small amount even though local people living and
working in that area are poor and themselves have little cash. Monetization does not occur at the local
level as often as it should, because there are not many bank branches, to keep the amount of cash in
circulation at the optimal level (See Garson, J. (1999), p.21)
 See Michael Fiebig, Alfred Hannig and Sylvia Wisniwiski, (1999) p.4, 18. Also, Micro-enterprise best
Practice, 2000, Technical Notes, No. 3, p.2.

of those interviewed say they demand saving services from ACSI. Similar responses
have been obtained from potential non-loan saving clients (Table 6-10).

This provides a clear practical evidence against the commonly held belief that the poor
can't save. In fact some argue that the lower the income level, the higher the saving
rate since the poor are not very sure of future income flows.

But, the promotional work must have played a much more important role than it
actually had in saving mobilization. For example, of the 600 potential credit/saving
clients interviewed, over 30% do not actually know whether ACSI provides saving
services for people like them, (in some Branches like D/Birhan, Bichena and Dessei
the proportion goes as high as 40-50%) (Table 11). 75% are unaware that ACSI pays
an interest rate that is equivalent to what banks pay (Table 12). It is clear that the
promotion work is too weak in the majority of ACSI branches.

Skill Development

Many argue 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. This might sound more true given the
objective reality in the rural areas of the region. In the case of very poor economies
with poor infrastructural facilities of all kinds, two relevant issues emerge:
        …Credit alone tends to be used to increase the scale of existing activities
         rather than to move into new, more sophisticated or higher value added areas.
         It was unusual for credit to trigger a continuous increase in technical
         sophistication, output or employment: it was much commoner for each of these
         variables to reach a plateau after one or two loans and remain in a steady
        One of the principal reasons for the lack of innovation and sustained growth
         among the clients of minimalist [credit-only] credit schemes is that producers
         are often poorly represented among them. Commonly, lenders' portfolios are

  Jonatan Dawson with Andy Jeans (1997): Looking Beyond Credit: Business development services
and the promotion of innovation among small producers, Intermediate Technology [p: Summary]

         dominated by those involved in trade and in simple food-production and -
         processing activities, where the scope for innovation and qualitative
         improvements in techniques is limited. In the case of ACSI, the dominant
         economic activities financed by the credit are Agriculture and trade11 (Table

Where there are some alternative employment opportunities with clear advantages
both to the client as well as to the whole economy, there are some socio-cultural
stumbling blocks that impede diversification of economic activities:

        Currently, there is apparently almost no institution giving such business
         development services to a sufficient scale that can respond to all the demands
         of the poor. New institutions destined to address such demands as Regional
         Micro and Small Enterprise Development Agency (REMSEDA), etc are just
         getting established. The early establishments, like the agricultural extension
         scheme, cover only a small portion of the total farmers in the region. The
         supply side arrangement is not so strong so far.

        Many client, as can be expected, are very much risk-averse that even with
         credit availability, they do not like to venture into activities other than those
         inherited from their fathers or for-fathers. In a recent interview of about 600
         potential clients, over 78% responded that they only want to be engaged in
         activities that they know something about previously. Similar responses have
         been obtained from micro-finance clients in Tigray region (Adigudom) (See
         Fiona, 2001).

        There is also the problem of cultural biasdness towards some activities. The
         tendency (and the attendant competition for resources) is often to get on with
         such activities as agriculture, trade, etc, which are somehow free from cultural
         taboos. Some non-traditional activities which could provide alternative
 … ..Only 13 percent of the borrowers from the schemes run by PRIDE Kenya, for example, are
producers (Tanburn, 1993). A review of six large credit schemes also found that a large majority of the
borrowers were in the retail and food-processing sectors. Of the 90 percent of Grameen Bank loans that
were made to women in 1990, over 50 percent were for three traditional activities: dairy cows, paddy
husking and cattle fattening (Smillie, 1991) ibid, p.7

           employment opportunities (like black-smithing, weaving, tannery, pottery,
           embroidery, other handicrafts, etc…) are rather frowned at, and not easily
           taken up by clients. Experience suggest that they offer many advantages: they
           employ indigenous technology/local input, they are not land-based and are
           environmentally friendly. They enjoy less competition and are otherwise much
           more rewarding -- the data indicates that there is a statistically significant
           difference in profitability between these activities and the traditional ones like
           agriculture (Table 14).

Consumption Loan

Two approaches have been advocated on the role of credit in poverty reduction.
While supporters of the income generation approach maintain that credit should be
provided mainly to the entrepreneurial poor to enable them to finance specific private
income-generating activities (i.e. credit can only be a "means" to develop such
activities, and not an "end" in itself), proponents of the so-called "new" minimalist
approach argue that credit programmes would still be helping the poor fight poverty
by giving credit to any poor person (including those borrowing to meet irreducible
consumption needs) who is able to repay a loan without dictating to that person how
and on what the loan should be used. 12

But just because a loan is used for consumption purposes does not necessarily imply
that repayment will falter13…A significant number of poor households in developing
countries experience real constraints in the financial markets in the sense that they are
unable to borrow as much as they would like at the prevailing transaction terms.
Given that most of the poor attempt to borrow in order to finance consumption of food
and other basic goods that enhance health and labour productivity, such constraints
may force poor households to eat less food or cheaper foods with lower nutritional
value. Also, when consumption levels are already precariously low, they may be
forced to cancel or postpone profitable investments or sell assets -- sometimes at a

 See Garson (1999) p.8,9; Fantahun, (2000) p.21; Yohanes & Middlebrook, (1999) p.12; Manfred
Zeller & Manohar Sharma (1998) P. 13.
     See Manfred Zeller & Manohar Sharma (1998) P. 31

substantial loss -- to meet irreducible consumption needs. This may lead to greater
impoverishment in the long run.

2.5 Women, Microfinance and Poverty

There is an argument that, due to a number of factors (including rapid population
growth and population pressure on land, dislocation and separation of households due
to war, famine, resettlement, etc), there is increasing tendency towards diversification
and engagement of rural people in off-farm activities much of which is "compulsive"
and survival-oriented (IFAD 2001:7). Within this process, women are considered to
be the most active participants14. Rural women's increasing engagement in off-farm
activities is one of the factors, which is likely to put a dynamic pressure on the
traditional gender division of labour.

Thus, since the 1980s, a number of projects have been initiated in rural Ethiopia
(including micro-financing and saving and credit projects). Most of these schemes
target women and are intended to expand income earning opportunities in traditional
or new areas of women's off-farm activities to alleviate poverty and economically
empower women. The impact of these programmes on rural women's lives is not

Generally, empowerment as a development strategy approach for women involves two
levels: intrinsic and extrinsic. The extrinsic level refers to gaining greater access and
control over resources. On the other hand, the intrinsic level involves changes from
within, such as the rise in self-confidence, consciousness and motivation. It
recognizes women's triple roles and seeks to meet strategic gender needs through

   A recent World Bank Study indicated that as employment and traditional livelihood strategies for
men disappear, poor women in increasing numbers have had to make their ways into the informal
sector, primarily in low paying and often menial work -- piece work, vending, petty trading, agricultural
labour, collecting garbage, cleaning toilets, and factory employment. In almost every country in the
study, both men and women reported women's greater ability to accommodate, bury their pride and do
whatever job was available to earn the money to feed the family. This sometimes include prostitution.
(World Bank Group, p.50)

bottom-up participation on resources and development issues that concern the life of

Credit and saving programmes in particular are geared towards the promotion of off-
farm activities by rural women. These programmes are implicitly or explicitly based
on the assumption that rural women are conversant with non-farm income generating
activities, have sufficient time and labour to expand traditional, or start new, income
generating activities. As suggested above, one of the important issues relevant for
gender-focused policy interventions is the question of how rural women manage to
actively engage in off-farm activities on top of their demanding roles in agricultural
production and domestic labour. Here in lies the appropriate channel to identify the
potentials and constraints rural women face regarding gender-focused rural
intervention, especially those relating to saving and credit schemes. There are real
practical problems in this regard.

Loan usurpation by men

ACSI has a target of delivering at least 50% of the credit service to women, which
seems to have been attained. However, whether they are actually making use of the
loan themselves, thereby improving their business skill and their breakdown position16
is an issue requiring closer scrutiny. In fact, an additional area of concern, in terms of
the impact of loans of the poorest, concerns usurpation by men of loans targeted
specifically to women.

In a recent survey, the above issue has been directly posed to married women
respondents. It is interesting to note that only 38% said that they themselves manage

   See: MICROFINANCE: Theory, Policy and Experience, proceedings of the International Workshop
Held in July 2001; FBE, Mekele University. Tesfay Aregawi, p.196: Microfinance: Issues and Impact
Assessment and Gender.
  Women's relative well-being depends on the relative bargaining power of the spouses. The bargaining
power, in turn depends on the individual's respective breakdown position, which represents the welfare
level which individuals (husband or wife) would have to face if this cooperation, or marriage,
eventually breakdown (See Lutfun N. Khan Osmani 1998: p.32)

the loan, 55% used it "jointly" with their husband, while in 7% of the cases it was used
by their husbands17 (Table 15).
The skill problem

Generally, as we have outlined above, there is a serious problem of marketable skill in
rural areas. There are no institutions providing such opportunities of skill development
for the needy. Those that exist they tend to concentrate in semi-urban areas, and often
such opportunities are snatched by men. Thus, when it comes to skill acquisition,
women are more ill-equipped than male counterparts.

The survey indicated that women generally took smaller loans than their male
counterparts. And their profit margin is much lower (Table 16, 17, 18). This indicates
that women have to go a long way to be able to be good business managers
themselves. Still, however, it seems that the mere fact that they are the "sources" of
the loan to the household somehow has improved their decision making in household
affairs18 (see Table 16).


We can discuss three important issues related to shortage of time19 women face:
        Generally, most domestic tasks such as grinding grain and food processing,
         water and fuel wood collection are known to be highly arduous, labour-

   Similar impact study of credit programmes on women carried out on four credit programmes in
Bangladesh: the Grameen Bank, BRAK, a large government scheme (the Rural Poor Programme RD-
12), and a small NGO (Thangemare Mahila Senbuj Sengstha) by Goetz and Sen Gupt (1995) suggest
that women retained significant control over the use to which the loan was put in 37% of cases; 63%
fell into the category of "partial", limited or no control over loan use. Furthermore, women were found
to have greater control over small loans made for purposes which did not challenge the existing gender
division of labour (See Johnson & Rogaley (1997), p.13
    Zaman (1999:5) succinctly summarized studies which indicated that women felt that membership in
credit programmes is important from the stand point of reducing their chances of desertion by their
husbands. It is the fact that women are viewed as the sources of an important resources that appears to
underly these improvements in their status.
     Women are taking on increasing burdens in expanded roles outside the household, and time poverty
is driving many women to deeper exhaustion. When a poor woman in Zambia was asked her dream,
she simply said, "to have time to go into town and play [spend time] with my friends." (See:World
Bank Group (2001): Fourth edition; p: 42; Also Dejene Aredo, 2001, p.9

       intensive and time-consuming. And this applies to many women in developing
       countries in general.
      The burden of rural women in Ethiopia is compounded by the fact that labour
       saving "appropriate" technology is largely unknown even by the standards of
       developing countries. Access to clean water, grain mills, roads, energy saving
       devices, etc., is extremely limited.
      Some Ethiopian authors take the issue a bit further to argue the burden on
       women as relating to some cultural factors. Dejene (2000), for one, noted that
       Ethiopian rural women face significantly higher domestic labour burden
       (especially in the areas of food processing and cooking) than their counter
       parts in most of sub-Saharan Africa. Dejene hypothesizes that this is partly due
       to the sophisticated and labour intensive nature of domestic production arising
       from Ethiopian Highland culinary culture. For example, teff (the favorite food
       grain in Northern highlands) is not only labour intensive in its cultivation but
       also the preparation of injera out of teff is an equally labour and energy (fuel)
       intensive process. The preparation of home made spices (e.g., red pepper) is
       similarly a labour intensive task.


Some important conclusions can be drawn from the above discussion:
      To be well-served by the credit delivery, important demands of the poor need
       to be met. For the poor require a loan that is flexible enough in terms of
       repayment period and repayment frequency, reflecting his unreliable market or
       the risky business conditions he is involved in, availability of loan on time
       depending on the seasonality of his business, diversified collateral, etc.
      Diversifying the lending methodology away from the current "group
       methodology" into others like village banking and possibly to individual
       lending may help, for the group lending on the one hand tends to ignore the
       very poor, and on the other hand, have no room for those who can borrow on
       individual bases.
      In order to make advances on both fronts of reducing the rate and depth of
       poverty, and thereby positively contribute to meeting the target of reducing
       poverty indicated in the Poverty Reduction Strategy Paper (PRSP) as well as

    the 1995 Copenhagen Social Summit global target of reducing poverty by half
    by 2015, we need to help the very poor come out of poverty. This would mean
    delivering enough credit to the very poor.
   The poor cannot be served very well by the delivery of credit alone. Saving
    services constitute an important part of the demand of the poor. Evidence in
    many cases indicate that most poor people want to save most of the time, while
    they do not want to borrow at all.
   Credit must, above all, be accompanied by some kind of marketable skill
    development, which the poor seriously lack. Credit alone can only increase the
    "scale" of existing activities rather than enabling the poor to move into new or
    higher value activities. Given the poor market condition in rural areas, this
    gives rise to easy market saturation, which diminishes potential profitability.
    Some kind of cultural transformation may also be called for at this particular
    juncture in order to change the attitudes of some otherwise very poor people
    who are reluctant, due to obvious cultural reasons, to engage themselves in
    non-traditional activities which are much more rewarding indeed.
   The argument that establishing a market-based interest rate hurt the poor has
    no logical justification: interest is not an important part as an input in the total
    production function of the poor; and any way, given the objective reality on
    the field, we can not guarantee that the "subsidized" credit actually reach the
    targeted poor.
   Consumption loan is not necessarily a bad proposal. In particularly serious and
    hard conditions, such arrangements may rescue the poor from eating less or
    cheaper food with lower nutritional value, cancel or postpone profitable
    investments or sell valuable assets, at a substantial and permanent lose.
   Women are "allocated" some portion of the credit, but a good portion of it is
    destined to their male counterparts, violating the institutional objective. This
    partly has to do with the fact that women are still highly handicapped with lack
    of any business skill, much more than their male counterparts. On the other
    hand, however, this may have also to do with the "wrong assumptions" that
    planners of micro-finance services had on the available time that women have.
    We planners forget that women are fully engaged in domestic works through
    out the day, and have nothing to afford for such business activities. And this
    might be much more serious for the Ethiopian women.

-AEMFI: Review of Microfinance Industry in Ethiopia: Regulatory Framework and Performance,
Occasional Paper No.2, Aug. 2000
- ------------:2000a, Microfinance Development Review.Vol1 No1
---------------:2000b, Micrfinance Development Review Vol. 1 No. 2
---------------2000c, Review of the Microfinance Industry in Ethiopia, Addis Ababa
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Aggregate Report
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State: Five Year Development Program Evaluation, Amharic Version
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Vol 1: Part 5 Abridged Statistical Report
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Review, Vol.2, No1,
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Assessment of ACSI Credit Programme for SIDA Study
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- Erhard Kropp, Michael T. Marx, Ballurkar Pramod, Benjamin R.Quinones, and Hans Dieter Seibel,
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Intervention Through Iddirs in Dire Dawa, AAU School of Graduate Studies
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Agriculture & Rural Development 2/99, Eschborn
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Operations of the Dedebit Credit and Saving Institutions (DECSI), Tigray. Presented to "International
Workshop on Dimensions of Microfinance Institutions in Sub-Saharan Africa: Relevance of
International Experience." 7-8 July 2001. Mekelle University: Faculty of Business & Economics.
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No1, 2000
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Bangladesh, in Hartmut Schneider (eds): Microfinance for the Poor?
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A Case Study of BRAC
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Current Practice.
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Working Paper 1: The Micro-finance Sub-sector, Annex XΙΙ: Rural Women and Financial
Intermediation: Background Paper for Rural Financial Intermediation Programme (RUFIP)
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Caisses Villageoises, and Credit Unions: Lessons from Client-Owned Microfinance Organizations in
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Vol.29, No.4, Oct. 1998
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Table 1: Man Power
                                             Dec             Dec        Dec              Dec            Dec        2000 (%)
                                             1996            1997       1998             1999           2000
Total                                        67              410        785              1133           1133       100.0%
Head Office                                  7               10         18               36             36         3.17%
Branch                                       60              75         119              120            120        10.59%
S/Branch                                                     325        648              977            977        86.23%
Degree (incl.M.Sc)                           2               3          5                13             13         1.15%
Diploma                                      21              32         49               67             67         5.91%
12th Grade                                   21              238        461              730            730        64.43%
Below 12th Grade                             23              137        270              323            323        28.50%
Source: ACSI Reports

Table 2: Operational Structure (SIDA)
                                     Dec 1996           Dec 1997      Dec 1998          Dec 1999           Dec 2000        July 2001
Number of Branches                   10                 15            21                15                 15              13

Number of Sub Branches               -                  67            134               160                162             162
Number of Woredas Covered            10                 46            78                100                104             104
Number of Kebeles                                                     765               1259               1360            1521

Table 3: Performance Indicators of ACSI                                        SIDA
                             Dec 1996        Dec 1997        Dec 1998        Dec 1999          Dec 2000       July 2001      DD
Lonees (Gashaw Rprt)         7799            46647           86652           146398            203218         242000
     Poverty                                                                                   7%*            8.9%           *2.7Mill
Alleviated ?                                                                                                                 poor
Number of active loan                        46646           64020           107143            149129         169642
Loan clients growth                                          37%             67%               39%
No of Loans                      -                  -        117861          199733            330567         440000
Total Volume of Loan         5244296         33869507        75759798        141569332         227876160      308256000
(Cumm) (Gashaw
Outstanding Balance          3613627         19358300        41391078        46316965          68117465       86840592
(Gashaw Rprt)

Table 4: Total Saving Mobilization (Birr)
                                         Dec 1996       Dec 1997      Dec 1998        Dec 1999          Dec 2000          July 2001
Gross                                    918869         8639165       34880408        70332977          137892527         183550305.4
                                                                                                                          (Inst. 73337349)
Net Saving                               537352         4915136       17613657        33729042          55479819          76145948.23*
                                                                                                                          (Inst. 27718536)
Withdrowal Rate(%)                       41.52%         43.10%        49.50%          52.04%            59.76%            58.5%
                                                                                                                          (Inst. 62.2%)
Credit Outstanding Balance               3613627        19358300      41391078        46316965          68117465          86840592
(Gashaw Rprt)
Net Saving as % of                                                                                                        87.7%
Outstanding Crdt                         14.8%          25.39%        42.55%          72.8%             81.3%
Number of saving clients                                46647         64020           137928            221061            261789
                                                                                      (22031nonlo       (41500            -ln client 212270
                                                                                      an)               nonloan)          -non ln indiv. 41905
                                                                                                                          -non ln inst. 7614
Saving clients growth rate                              498%          37%             115%              60%               18%
(Sourc:Nibret) * saving per indiv. (client+non client)=(Br.76.14ml-Br.27.7ml)/(212270+41905) =Br.190.5

Table 5 : Qualitative Indicators of Wellbeing
            bnftfoo bnfthou bnftedu bnfthlth bnftox                  bnftothr*    Overall
            d          s        c                                                 Living
Interviewe    297        297         297        297        297       297          297
Freq (Yes)    198        54          116        6          44        131          276
Percent       66.67%     18.18%      39.06%     2.02%      14.81     44.11%       89.9%
*Other benefits include: not having to go for money-lenders, experience in cash management, no
disposing-off assets, increased acceptance by community …
Table 6: Rural Saving Experience
20. tab expersav
        any |
   previous |
     saving |
experiance? |      Freq.     Percent        Cum.
        Yes |        475       79.17       79.17
         No |        125       20.83      100.00
      Total |        600      100.00
Table 7: Traditional Rural Saving Mechanisms
22. tab mthdsav
    experience |
 saving method |      Freq.     Percent        Cum.
        InKind |         75       15.62       15.62
        InCash |        278       57.92       73.54
InKindandInCas |        126       26.25       99.79
         Other |          1        0.21      100.00
         Total |        480      100.00
Table 8: Traditional Rural Saving Mechanisms: by Gender
23. tab sex mthdsav, row
           |           experience saving method
       sex |    InKind      InCash InKindand      Other |     Total
      male |        65         197         99         0 |       361
           |     18.01       54.57      27.42      0.00 |    100.00
     femle |        10          81         27         1 |       119
           |      8.40       68.07      22.69      0.84 |    100.00
     Total |        75         278        126         1 |       480
           |     15.62       57.92      26.25      0.21 |    100.00

Table 9: Traditional Rural Cash Saving Mechanisms
24. tab cashsav
    if cash saving, |
             where? |      Freq.     Percent        Cum.
               Home |        139       34.66       34.66
              Equeb |        116       28.93       63.59
WithRelativesFriend |         11        2.74       66.33
               Bank |         36        8.98       75.31
              1and2 |         63       15.71       91.02
              Other |         36        8.98      100.00
              Total |        401      100.00

Table 10: Traditional Rural Cash Saving Mechanisms: by Gender
25. tab   sex cashsav, row
           |                 if cash saving, where?
       sex |      Home      Equeb WithRelat        Bank      1and2    Other |     Total
-----------+-------------------------------------------------------         +----------
      male |       115         76          9         25         43      28 |        296
           |     38.85      25.68       3.04       8.45      14.53    9.46 |     100.00
-----------+-------------------------------------------------------         +----------
     femle |        24         40          2         11         20       8 |        105
           |     22.86      38.10       1.90      10.48      19.05    7.62 |     100.00
-----------+-------------------------------------------------------         +----------
     Total |       139        116         11         36         63      36 |        401
           |     34.66      28.93       2.74       8.98      15.71     8.96 |    100.00
Table 11: Public Knowledge of ACSI's Saving Services
26. tab    knowacsi

  know ACSI |
     saving |
  services? |      Freq.     Percent        Cum.
        Yes |        419       69.83       69.83
         No |        181       30.17      100.00
      Total |        600      100.00

Table 12: Public Knowledge of ACSI's Saving Interest Rate
28. tab    knowr1

know ACSI's |
     saving |
   interest |
     equals |
    Banks'? |      Freq.     Percent        Cum.
        Yes |        145       24.17       24.17
         No |        455       75.83      100.00
      Total |        600      100.00

Table 13: Disbursement by Activity Composition

                                                                           Cumulative Disb
                              BBF (Sept.2000)        Monthly Balance          (Dec 2000)

Agriculture                             58.30%                 41.87%                56.52%
Processing & manufacturing               5.91%                 16.86%                 6.40%
Petty Trade                             35.10%                 41.06%                36.87%
Service                                  0.69%                  0.20%                 0.21%

Total                                                                               100.00%
doog/StrtgcCrdt Oct 2000

Table_ 14:_Returns to investment: t-test for difference in profitability between
trade and agriculture
Two-sample t test with equal variances

Variable |     Obs        Mean    Std. Err.   Std. Dev.   [95% Conf. Interval]
  mnptt* |     139    .3612378    .0334653    .3945498    .2950668    .4274088
  mnpta* |     119    .2494502    .0252301    .2752278    .1994877    .2994126
combined |     258    .3096769    .0216998    .3485497    .2669449    .3524088
    diff |            .1117876    .0430522                .0270061    .1965692
Degrees of freedom: 256

                  Ho: mean(mnptt) - mean(mnpta) = diff = 0

    Ha: diff < 0                Ha: diff ~= 0             Ha: diff > 0
      t =   2.5966                 t =   2.5966             t =   2.5966
  P < t =   0.9950           P > |t| =   0.0100         P > t =   0.0050
       (*NB: mnptt= mean profitability from "Trade"; mnpta= mean profitability from

Graph 1: Returns to investment difference in profitability between activities
graph mnpt, bar by (activity) means


       0       Agriculture          Trade            Handicraft            Service

Table 15: Women's Empowerment 1
-> tabulation of empower1

        Who |
 administer |
    loan to |
    married |
  woman?lab |
        var |      Freq.     Percent        Cum.
   Yourself |         29       38.16       38.16
    Husband |          5        6.58       44.74
    Jointly |         42       55.26      100.00
      Total |         76      100.00

Table 16: Women's Empowerment 2

-> tabulation of empower2

   You Feel |
   decision |
     making |
      power |
  improved? |      Freq.     Percent        Cum.
   Improved |         57       75.00       75.00
   NoChange |         15       19.74       94.74
      Worse |          4        5.26      100.00
      Total |         76      100.00

Table_17:_Returns to investment: t-test (Gender Differentiated)
Two-sample t test with equal variances

Variable |     Obs        Mean    Std. Err.   Std. Dev.   [95% Conf. Interval]
  mnptm* |     177     .322903    .0275038    .3659147    .2686232    .3771828
  mnptf* |     120    .2663511    .0257289    .2818463    .2154052    .3172969
combined |     297    .3000537     .019447    .3351433    .2617819    .3383256
    diff |            .0565519     .039561               -.0213056    .1344095
Degrees of freedom: 295

                  Ho: mean(mnptm) - mean(mnptf) = diff = 0

    Ha: diff < 0                Ha: diff ~= 0               Ha: diff > 0
      t =   1.4295                 t =   1.4295               t =   1.4295
  P < t =   0.9230           P > |t| =   0.1539           P > t =   0.0770
  (*NB: mnptm= mean profitability for men; mnptf= mean profitability for women)
Graph 2: difference in profitability between sexes
graph mnpt, bar by (sex) means

       0                   male                                   female

Table 18: Testing the Gender difference on existing Loan Size (Mean for the
First Three Cycles
ttest   loanm= loanf, unpaired

Two-sample t test with equal variances

Variable |     Obs        Mean    Std. Err.   Std. Dev.   [95% Conf. Interval]
   loanm |      94    1096.401    61.09481    592.3361    975.0785    1217.723
   loanf |      67    897.0149    50.21929    411.0626    796.7489     997.281
combined |     161    1013.427     41.9523     532.315    930.5748    1096.278
    diff |            199.3858    83.90012                33.68336    365.0882
Degrees of freedom: 159

                   Ho: mean(loanm) - mean(loanf) = diff = 0

    Ha: diff < 0                Ha: diff ~= 0              Ha: diff > 0
      t =   2.3765                 t =   2.3765              t =   2.3765
  P < t =   0.9907           P > |t| =   0.0187          P > t =   0.0093

Graph 3: Existing Loan size by sex (Mean for the first three rounds)

              Amnt loan round1                       Amnt loan round2
              Amnt loan round3

        0                    male                                female



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