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THE IMPACT OF MICROFINANCING INSTITUTIONS ON THE LIVELIHOOD OF THE RURAL POOR
By
Abinet Gebrekidan
ADAMA UNIVERSITY
DEPARTMENT OF BUSINESS MANAGEMENT
May, 2006
ADAMA
CHAPTER ONE
INTRODUCTION
Poverty is not uncommon problem of almost all developing countries. Ethiopia is one the leading less developed countries (LDCs) that has been experiencing the bad consequences of poverty. As the result, the socioeconomic crises that occurred in different periods have been beyond what the country could resist. Above 85 % of the population is living on agriculture which is rain fed. The fate of the country¡¦s exports earnings and household consumption directly depend on the performance of agricultural sector. Even though this sector is the mainstay of the economy, it couldn¡¦t fully support the massive dependents in a sustainable way. The natural catastrophes, declining size of land holdings, inadequate supply of farm technologies etc are the factors that limit the agricultural production in the country and farm level.
Due to the above fact, the country¡¦s main and immediate objective is to strive to break the vicious cycle of poverty and to alleviate and/ or reduce the magnitude and extent of poverty. In this struggle, as to all poor countries, the binding constraint is capital formation (i.e. investment from domestic saving and external injection) to alleviate poverty and encourage investment by poor. In this regard, the micro-finance institutions (MFIs) recently gain more and more acceptance.
In additi ...