Ethiopian Microfinance Sector Challenges and Problems

Abstract

Primary objective of this paper was to identify the root causes of the problems and challenges faced by Ethiopian microfinance sector and to, subsequently, recommend remedial measures. In depth interview has been used to identify and understand the problems and challenges faced by microfinance institutions. This study depicted that Primary cause for all problems is fund shortage and; in turn, the primary cause for fund shortage is insufficient start up equity capital. In addition, ownership structure is identified as supplementary cause of governance problems. Finally, it is recommended that solving these couple of problems is a must to overcome all challenges of the sector as taking measures on other problems is unlikely to provide long-lasting relief from the undesired effect.