Abstract:
Abstract
Currently, the rapid growth of microfinance industry has made itself an unavoidable part of the
world financial system. In sub-Saharan Africa, MFIs have greater number of people who save
money than other parts of the country. This study was aimed at assessing the contribution of
credit service of microfinance institutions onlives of rural households of Jarso Wereda,West
Ethiopia.Data for the study were acquired from both close and open-ended questionnaire,
informant interview, and personal observation and focused group discussion.Questionnaires were
distributed to 152 farmer clients who were selected using a simple random sampling technique.
Data from the households‟ survey questionnaire weretabulated and summarized by using
statistical package for social science (SPSS).Both qualitative and quantitative methods of data
analysis were employed. The findings of the study indicated that farmers in the study area
hadnotshown improvement in living condition because of absence of diversity of income
sources, inability in becoming self-sufficient in food, incapability of satisfying basic needs, no
change of income from moderate to high, incapability of affording cost of education and health
service and no change of living standard from moderate to high before they get credit service
from micro finance institution. Because of shortage of landand money farmers did not buy
enough improved seeds, fertilizer, herbicides, pesticides, and etc.Due to this, they cultivated only
single subsistent crops.But, after they get credit service from microfinance institution the life
conditions of people have been showing improvement.In terms of service quality, the
organization has performed poorly. Inefficiency of the institution likelack of adequate financial
advice, transparencyandapproachability, lack of easy access to account information, unequal
treatment of clients, poor handling of documents, and lack of experience are the main factors
influencing the service quality of microfinance institutions in the study area. Due to
this,perceptions of the beneficiaries were poor. In line to the above, it has been recommended
that improving the professional skill, raising small loans, upgrading the educational level of the
farmers, providing material to the institution and integration of the whole service with other
sectors require immediate attention.
