ASSOCIATION OF ETHIOPIAN
MICROFINANCE INSTITUTIONS (AEMFI)
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)
by
Getaneh Gobezie
The Amhara Credit & Saving Institution (ACSI)
E-mail: acsi@telecom.net.et
Tell: (08) 204840 or (08) 201652
Fax: (08) 201733
Rift Valley Hotel, Adama
December 7-10, 2001
1
ABSTRACT
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.
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Table of Contents
ABSTRACT
1. BACKGROUND
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. ACHIEVEMENTS AND CHALLENGES
2.1 Outreach
2.2 Product Diversification?
2.3 Reaching the poorest?
Relevance
High Operation Cost and Non-market based Interest
The group lending methodology
The Screening "Committee"
2.4 Beyond Credit
Saving
Skill Development
Consumption Loan
2.5 Women
Low profitability, and loan usurpation by men
The skill problem
Time-Poverty
3. CONCLUSION
BIBILIOGRAPHY
ANNEXES
3
1. BACKGROUND
1.1 An Overall view of the Region
The Amhara Regional State covers 170,152 sq.km, 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.
4
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. Microfinance 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.
5
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
sector.
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.
6
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
strategies.
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.
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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 antipoverty 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.
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2. ACHIEVEMENTS AND CHALLENGES
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,
9
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?
Relevance
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
1
The measurement is based on the FGT (1984) model for poverty measurement given by :
P 
1 q
z  yi


n i 1
z

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 foodinsecure 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
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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
2
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
3
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.
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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
4
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.
121
5
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)
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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 selfselect 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
6
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
13
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.
Saving
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…
7
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.
14
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%
8
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)
9
See Michael Fiebig, Alfred Hannig and Sylvia Wisniwiski, (1999) p.4, 18. Also, Micro-enterprise best
Practice, 2000, Technical Notes, No. 3, p.2.
15
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
state10.

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
10
Jonatan Dawson with Andy Jeans (1997): Looking Beyond Credit: Business development services
and the promotion of innovation among small producers, Intermediate Technology [p: Summary]
16
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
13).
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
11
17
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
12See
Garson (1999) p.8,9; Fantahun, (2000) p.21; Yohanes & Middlebrook, (1999) p.12; Manfred
Zeller & Manohar Sharma (1998) P. 13.
13
See Manfred Zeller & Manohar Sharma (1998) P. 31
18
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
known.
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
14
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)
19
bottom-up participation on resources and development issues that concern the life of
women15.
Credit and saving programmes in particular are geared towards the promotion of offfarm 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
15
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.
16
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)
20
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).
Time-Poverty
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-
17
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 RD12), 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
18
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.
19 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
21
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.
3. CONCLUSION
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
22
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.
23
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25
ANNEXES
Table 1: Man Power
Dec
Dec
Dec
Dec
Dec
1997
410
1998
785
1999
1133
2000 (%)
Total
1996
67
2000
1133
100.0%
Head Office
7
10
18
36
36
3.17%
Branch
60
75
119
120
120
10.59%
325
648
977
977
86.23%
S/Branch
Degree (incl.M.Sc)
Diploma
12th Grade
2
21
21
3
32
238
5
49
461
13
67
730
13
67
730
1.15%
5.91%
64.43%
Below 12th Grade
23
137
270
323
323
28.50%
Source: ACSI Reports
Table 2: Operational Structure (SIDA)
Number of Branches
Dec 1996
10
Dec 1997
15
Dec 1998
21
Dec 1999
15
Dec 2000
15
July 2001
13
Number of Sub Branches
-
67
134
160
162
162
Number of Woredas Covered
Number of Kebeles
10
46
78
765
100
1259
104
1360
104
1521
Table 3: Performance Indicators of ACSI
Lonees (Gashaw Rprt)
Poverty
Alleviated ?
Number of active loan
clients
Loan clients growth
rate
No of Loans
(GashawRprt)
Total Volume of Loan
(Cumm) (Gashaw
Rprt)
Outstanding Balance
(Gashaw Rprt)
Dec 1996
7799
Dec 1997
46647
46646
-
-
Dec 1998
86652
SIDA
Dec 1999
146398
Dec 2000
203218
7%*
July 2001
242000
8.9%
169642
64020
107143
149129
37%
67%
39%
117861
199733
330567
440000
5244296
33869507
75759798
141569332
227876160
308256000
3613627
19358300
41391078
46316965
68117465
86840592
DD
*2.7Mill
poor
Table 4: Total Saving Mobilization (Birr)
Dec 1996
Dec 1997
Dec 1998
Dec 1999
Dec 2000
Gross
918869
8639165
34880408
70332977
137892527
Net Saving
537352
4915136
17613657
33729042
55479819
Withdrowal Rate(%)
41.52%
43.10%
49.50%
52.04%
59.76%
Credit Outstanding Balance
(Gashaw Rprt)
Net Saving as % of
Outstanding Crdt
Number of saving clients
3613627
19358300
41391078
46316965
68117465
14.8%
25.39%
46647
42.55%
64020
72.8%
137928
(22031nonlo
an)
81.3%
221061
(41500
nonloan)
498%
37%
115%
60%
Saving clients growth rate
July 2001
183550305.4
(Inst. 73337349)
76145948.23*
(Inst. 27718536)
58.5%
(Inst. 62.2%)
86840592
87.7%
261789
-ln client 212270
-non ln indiv. 41905
-non ln inst. 7614
18%
(Sourc:Nibret) *Cum.net saving per indiv. (client+non client)=(Br.76.14ml-Br.27.7ml)/(212270+41905) =Br.190.5
26
Table 5 : Qualitative Indicators of Wellbeing
bnftfoo bnfthou bnftedu bnfthlth bnftox
d
s
c
Interviewe
e
Freq (Yes)
Percent
bnftothr*
297
297
297
297
297
297
Overall
Living
(after
loan)
297
198
66.67%
54
18.18%
116
39.06%
6
2.02%
44
14.81
%
131
44.11%
276
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
27
Table 10: Traditional Rural Cash Saving Mechanisms: by Gender
25. tab
sex cashsav, row
|
if cash saving, where?
sex |
Home
Equeb WithRelat
Bank
1and2
-----------+------------------------------------------------------male |
115
76
9
25
43
|
38.85
25.68
3.04
8.45
14.53
-----------+------------------------------------------------------femle |
24
40
2
11
20
|
22.86
38.10
1.90
10.48
19.05
-----------+------------------------------------------------------Total |
139
116
11
36
63
|
34.66
28.93
2.74
8.98
15.71
Other |
Total
+---------28 |
296
9.46 |
100.00
+---------8 |
105
7.62 |
100.00
+---------36 |
401
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
Agriculture
Processing & manufacturing
Petty Trade
Service
Total
BBF (Sept.2000)
Monthly Balance
Cumulative Disb
(Dec 2000)
58.30%
5.91%
35.10%
0.69%
41.87%
16.86%
41.06%
0.20%
56.52%
6.40%
36.87%
0.21%
100.00%
doog/StrtgcCrdt Oct 2000
28
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
t =
2.5966
P < t =
0.9950
Ha: diff ~= 0
t =
2.5966
P > |t| =
0.0100
Ha: diff > 0
t =
2.5966
P > t =
0.0050
(*NB: mnptt= mean profitability from "Trade"; mnpta= mean profitability from
"Agriculture")
Graph 1: Returns to investment difference in profitability between activities
graph mnpt, bar by (activity) means
mnpt
.381835
0
Agriculture
Trade
Handicraft
Service
29
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
30
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
t =
1.4295
P < t =
0.9230
Ha: diff ~= 0
t =
1.4295
P > |t| =
0.1539
Ha: diff > 0
t =
1.4295
P > t =
0.0770
(*NB: mnptm= mean profitability for men; mnptf= mean profitability for women)
mnptm=.32
Graph 2: difference in profitability between sexes
graph mnpt, bar by (sex) means
mnpt
.322903
0
male
female
31
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
t =
2.3765
P < t =
0.9907
Ha: diff ~= 0
t =
2.3765
P > |t| =
0.0187
Ha: diff > 0
t =
2.3765
P > t =
0.0093
Graph 3: Existing Loan size by sex (Mean for the first three rounds)
Amnt loan round1
Amnt loan round3
Amnt loan round2
1377.5
0
male
female
/END/
32