Assessment of the effectiveness of group lending in microfinance institutions: In case of Oromia credit and saving share company, Dandi branch

Abstract

Group lending has received a great attention from economists and policymakers for its successful delivery of credit to poor borrowers and its role in alleviating poverty in developing countries. This study was focused particularly on Assessment of the effectiveness of group in microfinance at Oromia Credit and Saving Share Company (OCSSCO) of Dandi Woreda. To attain this objective, the researcher used primary and secondary data. The researcher used questionnaires, interviews and, relevant documents to gather primary and secondary data from the data sources and collects the questionnaires from 189 borrowers, interviewed 6 employees and 1 branch manager, However, generally only 168 respondents consented to take part in the survey of OCSSCO from the population. The study found that OCSSCO helped the borrowers to have loans at a number of times to invest in their businesses. It was found that the amount of loans increased as the borrowers repaid the loans. The study also found that the groups lending of OCSSCO were faced by a number of challenges. These challenges included the undependable among the group members; low education among the group members; family shopping; low technology; and live competition emotion. For the data analysis, descriptive statistics including frequency and percentages were used to describe the socio-economic characteristics of the borrowers. The study concludes that there are ways that are employed by OCSSCO to effective clients to join the lending groups. The study also concludes that the loans given by OCSSCO were important in the expanding and improving the welfare of the borrowers. The loans made the saving capital grow, increase employment opportunities, and the amount of loans give to increase in amount