The role and performance of microfinance institutions (MFIS) in Ethiopia

Ethiopia that is located in Northeastern part of Africa, has an estimated population of more than 75 million inhabitants, of which a 50% population of approximately below poverty line, Ethiopia had an estimated Gross Domestic Product(GDP) per capita in 2015 of US$ 597 (International Monetary Fund (IMF) - World Economic Outlook April 2014). Over 80% of the Ethiopian population lives in rural areas and 45% of the population lives below the official poverty line. Microfinance Institutions (MFIs) in the country are contributing to poverty reduction by providing loans and to mobilizing savings from low-income segments of the population. The objective of this paper is mainly to study the role and performance of Microfinance Institutions during the period of 2004-2014. In this study, the researcher purely used secondary data mainly from annual reports of National Bank of Ethiopia and other sources. This paper ensured some of the problems facing most of the MFIs in general and finally put forwarded possible suggestions.