The Effect Of Microfinance Services On Poverty Reduction Among Microfinance Borrowers: The Case Of Vision Fund Microfinance Babich Branch, Liben Jawi District, West Showa Zone, Oromia, Ethiopia

Abstract

This study assesses the effectiveness of microfinance services provided by Vision Fund Microfinance Babich Branch in reducing poverty among its borrowers in the Liben Jawi district. The study's objective is to evaluate the contribution of microfinance services to poverty reduction. A sample size of 206 households was determined through random selection using the lottery method. Primary data was collected directly from clients via questionnaires and analyzed using descriptive and inferential statistical methods. The findings indicate variables like age, family size, distance from the lending microfinance institution, education status, sex, training, loan utilization, membership duration, and savings significantly influence poverty reduction. Conversely, marital status and loan duration were found to be insignificant predictors. The study is contextualized within Ethiopia's broader efforts to sustain economic growth and accelerate poverty reduction, emphasizing the strategic role of microfinance institutions. The results highlight the significant impact of Vision Fund Microfinance Babich Branch's services in improving the economic conditions of households in the study area. It is recommended that Vision Fund Microfinance Babich Branch invest in comprehensive training programs to enhance borrowers' financial management skills and effectively utilize loans. Encourages borrowers to fully utilize loans for income-generating activities that maximize the impact on poverty reduction. Regular follow-ups should be conducted to track progress and adjust strategies as needed, ensuring the effectiveness of microfinance services. Continuous monitoring and evaluation will help identify areas for improvement and ensure the services remain impactful.