| Abstract: | Microfinance business, developed over the last 30 years, came to picture to
provide credit service to the poor and low-income clients. It also works towards
inculcating the culture of saving whereby clients manage to accumulate asset
in the form of cash and in kind for investment, among others.
The research employed secondary and some sort of primary data for the period
2005-2010 where the study focused mainly on market structure and
performances of Ethiopian MFIs. Market concentration analysis has been made
using concentration ratio (the four largest MFIs) and HHI on the basis of active
borrowers and loan portfolio. The study also used the best and widely used
performance indicators namely depth of outreach, breadth of outreach, deposit
loan portfolio ratio, gender sensitivity, Return on Asset (ROA), Return on Equity
(ROE), portfolio asset ratio, operating expense ratio, cost per borrower, active
borrowers per loan officer, portfolio quality, and debt to equity ratio.
The findings of the study indicated that the Ethiopian microfinance industry is
booming though the rate of growth of outreach started declining steadily during
the last three years. The loan balance per borrower /GNI per capita of
Ethiopian MFIs shows that the sector is poor performer in reaching the poorer
as they extend larger loans than the MBB benchmark. The largest four MFIs
enjoyed substantially higher growth as compared to Ethiopian MFIs as a whole
and the market structure suffers from high market concentration during earlier
years and has shown remarkable improvement and become moderate starting
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from 2009. The average of six years under consideration (2005-2010) is also
considered to be moderate.
The Ethiopian MFIs in general and top four in particular are less
gender sensitive as compared to African average. Despite this, the
microfinance industry in Ethiopia recorded remarkable
performances in terms of profitability, efficiency and productivity
indicators when compared to African industry standard and MBB
benchmark. However, the quality of portfolio is less and debt to
equity ratio shows that Ethiopian MFIs have less access to
commercial sources as compared to that of African MFIs. The
Findings of the study are beneficial for regulatory authorities,
policy makers and practitioners for necessary consideration so as
to enhance the competitivene |
