Evaluating the Potential of Microfinance as an Anti-Poverty Strategy: A Case Study of ACSI

This paper examines the potential of microfinance to alleviate poverty in the rural areas of Ethiopia, highlighting the efforts of The Amhara Credit and Savings Institution (ACSI) in this area.

The paper discusses:

• Poverty in the Ethiopian state of Amhara;
• Microfinance as an anti-poverty strategy;
• ACSI mission, vision, operating principles and activities;
• Its achievements in terms of outreach, financial and qualitative benefits to clients.

From its study of ACSI, the paper concludes that:

• To be well served by credit delivery, the poor need flexible loan terms and conditions;
• Diversifying the lending methodology away from the "group methodology" into others like village banking and individual lending may help;
• 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;
• Credit must be accompanied by some kind of 'marketable skill development';
• Establishing a market-based interest rate is necessary;
• The poor also need consumption loans;
• Women are "allocated" some portion of the credit, but a good portion of it is destined to their male counterparts, violating the institutional objective;
• Policy makers need to consider the fact that women are fully engaged in domestic work through out the day, and might have no time for business activities.