ASSESSMENT OF FACTOR AFFECTING PERFORMANCE OF VISION

FUND MICRO FINANCE INISTITUTION (IN CASE OF ARBAMINCH

SIKELABRANCH)

ARBAMINCH 1UNIVERSITY
COLLAEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANFE
A RESEARCH PROPOSAL SUBMITTED TO DEPARTMENT OF ACCOUNTING AND
FINANCE FOR PARTIAL FULFILLMENT OF BACHELOR OF ARTS (BA) DEGREE
IN ACCOUNTING AND FINANCE.

BY:- MEKIDES TESHOME

ADVISOR: MOHHAMED(MSc.)
 FEB, 2024
ARBAMINCH ETHIOPIA
 ABSTRACT
The study under the title assessment on factors affecting the performance of MFI, in Arba minch
credit and saving share company sikela branch, examine to know factors that affect the
organization. However according to the researchers knowledge there was no study regarding
assessment on factor affecting the performance of microfinance institution sikela branch. The
main objective of this study was be assessing the main factors that affect the organizational
performance. There are also specific objectives in the study that was being mentioned. For the
purpose of the study both primary and secondary data was be used. Primary data was being
collected through questionnaires and interview and secondary data was be collected through
available literature on the subject and published and UN published materials. The data was be
gathered by using both quantitative and qualitative data analysis particular description types of
analysis which was use tables

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CONTENTS

ABSTRACT................................................................................................................................- 1 -

CHAPTER ONE;-INTRODUCTION.........................................................................................- 4 -

1.1. BACKGROUND OF THE STUDY....................................................................................- 4 -

1.2 Statement of the Problem......................................................................................................- 5 -

1.3 RESEARCH QUESTION.....................................................................................................- 5 -

1.4 GENERAL OBJECTIVES...................................................................................................- 6 -

1.4.1 SPECIFIC OBJECTIVES..............................................................................................- 6 -

1.5 SIGNIFICANCE OF THE STUDY......................................................................................- 6 -

1.6 SCOPE OF THE STUDY.....................................................................................................- 6 -

1.7 ORGINIZATION OF THE PAPER.....................................................................................- 6 -

CHAPTER TWO; - REVIEW OF LITERATURE.....................................................................- 8 -

2.1 THEORETICAL LITIRATURE REVIEW..........................................................................- 8 -

2.1.1 Definition of Micro Finance Institutions........................................................................- 8 -

2.1.2 DEVELOPMENT OF MFI................................................................................................- 8 -

2.1.3 DVELOPMENT OF MICRO FINANCE INSTITUTION (MFIS) IN ETHIOPIA..........- 9 -

2.1.4 FEATURE OF MICRO FINANCE INSTITUTION.......................................................- 10 -

2.1.5 ROLE OF MFIS IN ECONOMIC DEVELOPMENT.....................................................- 10 -

2.1.6 CRDEIT PROVISION.................................................................................................- 10 -
2.1.7 CREDIT REPAYMENT..............................................................................................- 11 -
2.1.8 FACTORS OF CREDIT..............................................................................................- 11 -

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 2.1.8.1 CHARACTER...........................................................................................................- 11 -
2.1.8.2 CAPACITY...............................................................................................................- 11 -
2.1.8.3 CAPITAL..................................................................................................................- 11 -
2.1.8.4 COLLATERAL.........................................................................................................- 11 -
2.1.9 CHALLENGES OF MICRO FINANCE INSTITUTION...........................................- 11 -

2.2 EMPERICAL LITRATURE...............................................................................................- 12 -

2.3 RESEARCH GAP...............................................................................................................- 13 -

CHAPTER THREE; RESEARCH METHODOLOGY...........................................................- 14 -

3.1. Research Design.................................................................................................................- 14 -

3.2 Research Approach.............................................................................................................- 14 -

3.3 Target population and size..................................................................................................- 14 -

3.4. Sources of Data and Type..................................................................................................- 15 -

3.5. Method of data collection..................................................................................................- 15 -

3.6. Method of Data Analysis...................................................................................................- 15 -

3.7 Ethical Consideration..........................................................................................................- 15 -

CHAPTER FOUR:- DATA ANALYSIS AND INTERPRETATION.....................................- 17 -

4.1. Age Distribution of Employees..........................................................................................- 17 -

4.2 Sex of Employees................................................................................................................- 17 -

4.3. Marital status of the employees.........................................................................................- 18 -

4.4 Educational Status of the Employees..................................................................................- 18 -

4.5 Factor that affect the performance of vision fund micro-finance institutions.....................- 19 -

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4.6 Types of services provided by vision fund micro- finance institution................................- 20 -

4.7. Aim Of The Services..........................................................................................................- 21 -

4.8 Types of Problem in the Company.....................................................................................- 21 -

4.9 Aim of Training for the staff Members...............................................................................- 22 -

4.10. Aim of the Services of the Company...............................................................................- 23 -

CHAPTER FIVE:- SUMMARY, CONCLUSION AND RECOMMENDATIONS...............- 24 -

5.1 Summary of findings...........................................................................................................- 24 -

5.2 conclusion...........................................................................................................................- 24 -

5.3 recommendations................................................................................................................- 25 -
APPENDIXES.......................................................................................................................- 27 -

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 CHAPTER ONE;-INTRODUCTION
1.1. BACKGROUND OF THE STUDY
Micro finance institution are involve in the provision of financial services, some MFI also
provide social intermediation services including help in group promotion and the development of
self-confidence in their financial life and other services. So, micro finance is one of the most
important areas for a social change economy, regional development, poverty alleviation effects
enabling measures that increase the capacity of the active poor people to engage in gain full
developing countries (Solomon, 1996). In order to address the state of poverty and rely on low
income and unemployment rate in developing countries, social movement on the form of micro
finance has their members. However, micro finance at their early stage has faced different
economic and legal barriers in their operation and development. The main constraint expertise
access to appropriate technology (Teferi,2000). The concept of MFI has be started in Bangladesh
which the German bank was established as a research project or rural economic development
program to the poor under the Chittagong university in 1976. The central mission was render
financial service to active poor people especially women
Generally, vision fund micro finance institution would be established late from the year above
and opened its branch on different towns. Arba Minch is one of the focus the organization
opened its branch. The objective of the study is to investigate or identify factor that affect the
performance of the company it revaluate how the problem decreased & recommend based on the
study.

1.2 Statement of the Problem

In today business world, there are so many factors affecting development and performance of
business organization. Identification of these factors has a great significance for the successful
operation of the organization. Because, these factors are means to measure and enhance
organization’s strength, to minimize weakness and realize the changing business environment.
In order to avoid poverty, low income and food insecurity, micro finance should be able to
provide sustainable economic development and performance through the country. This means
MFIs is the best way to avoid poverty, low income and food in security, in developing countries
including Ethiopia by giving financial services to the large number of poor active people. Access
financial services such as loans, saving services and insurance. This enables people to increase
income and smooth consumption flows, expanding their asset base and increase their ability to

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 respond to financial and economic crises. However MFI has faced various problems that affect
their activities. These problems would be awareness of the society in using micro finance
services, lack of would trained workers and fear of the future repay the loan on due date. So
vision fund micro finance institution is one type of MFI that is affected by the above stated
problems. So the aim of this study is to solve those the above problems by indicating to the
concerning and responsible body.

1.3 RESEARCH QUESTION

1. What are the factors that affecting the Performance of micro finance institutions (vision fund
micro finance institution in case of Arba Minch Sikela Branch)?
2. Is the society has enough awareness in using the services of micro finance institutions ( vision
fund micro finance institution in case of Arba Minch Sikela Branch)?
3. What are the methods that micro finance institutions, (vision fund micro finance institution in
case of Arba Minch Sikela Branch) use to avoid problem?

1.4 GENERAL OBJECTIVES

The general objectives of this study are to assess factors that affecting the performance of vision
fund micro finance institution in case of Arba Minch Sikela Branch.
1.4.1 SPECIFIC OBJECTIVES
In addition, the specific objectives of the study are:-
1. To assess the factors that affects the performance of vision fund micro finance institution.
2. To study the awareness of the society in using services of the organization.
3. To examine the contribution of the service for organization’s dep’t and performance
1.5 SIGNIFICANCE OF THE STUDY
The output of the study would help to know about the importance of micro fiancé to know, why
and how it reduces the productivity. And it helps to know the problems affecting the
development and performance of Vision Fund micro finance institution. By clearly identifying
the factors affecting the development and performance of the organization the study would be
create awareness for manager about the changing business environment and indicate available
alternative in the organization

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1.6 SCOPE OF THE STUDY
This study would be more attractive and important if it will conduct on country level. However,
because of the existing time and finance constraint, this study would be provide only detailed
information about Assessment on Factors that affect the performance of microfinance institution
on vision fund micro finance institution in arba Minch sikella branch

1.7 ORGINIZATION OF THE PAPER

The paper would be organized into five chapters. The first chapter deals with introductory part
that includes background of the study, statement of the problem, objective of the study, scope of
the study, and limitation of the study. The second chapter would concern with literature review.
The third chapter would concern with research design and methodology. The fourth chapter
would concern with data presentation and analysis and the last five chapters would be concerned
with the summery of the major finding, conclusion and recommendation.

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 CHAPTER TWO; - REVIEW OF LITERATURE
2.1 THEORETICAL LITIRATURE REVIEW
2.1.1 Definition of Micro Finance Institutions
Micro finance institution has involved as an economic development approach in tended to
benefit low- income society especially women in urban through rural. The term refers to the
provision of financial services to low income clients including the self-employed. (Saunders &
cornet 2004). If also financial infirmaries whose primary faction in to infer midrate between
lenders and borrowers in economy.
Financial services generally comprises saving and credit. However, some micro finance
organizations also provide insurance and payment services. In addition to financial
intermediation, any MFIs provide insurance& payment services. Such as group formation,
development of self-confidence and training in financial literacy and management capabilities
among members of group. Both financial intermediation and social intermediation MFIs involve
the followings: Small loans, typically for working capital, Informal appraisal of bowers and
investments, Collateral substitutes such group guarantees or compulsory saving and Access to
repeat and larger loans, based on repayment performance.
Any institution standing between the ultimate provider of funds and the ultimate user of fund is
financial intermediation. At the same time it is important to remember that many of the services
offered by financial institution are not intermediation activities. Financial advisor services
provided by many financial institution fund management services and examples of non-
intermediately services. Also insurance agents are not principles who deal in their own name
(Gouaches, 2002)
2.1.2 DEVELOPMENT OF MFI
Low level of income and productively in poor countries is often attributed to lack of access to
institutional credit. Capital markers do not serve low income households and local money
undress often changes exorbitant interest rate, one of the first innovator financial institutions.
That often mooted to reach poor people was the Grammar bank of Bangladesh.
If was established in 1976 as a small action research project to provide credit to landless and
other asset less households using to the principles of peer group monitoring to reduce lending
risk (ACMFI). As in most developing countries, the bulk of the poor in Ethiopia live in rural
area. Urban poverty has been also on the rise or the past 50 years in the country. In attempts to
pull households form poverty, if is believed that provision of credit particularly to poor urban
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households could play an important role. If such households have capital to start or expand small
business they can credos additional self, employment almost immediately and experience vital
increase income. (Solomon, 1996) and (Defer, 2000)
According to Solomon and Tamera formed financial, the bulk of the population bank branches
are limited urban poor thus, micro financial programs and institutions consequently the poor
were forced to turn to traditional of money lender who loan at higher interest rates the payment
of which restrict the poor’s compare a five advantage and keep them under the spell of perpetual
poverty (Micro finance development review)
An attractive and innovative approach preaches provides credit to the poor has been designed
and successfully tries in many developing countries. the new approach, the best example of
which is they Germen Bank of Bangladeshi focused its credit schemes on poor house hold’s
especially poor women and offers creodont based group collateral.
This is introduced in Ethiopia 1993 under the market towns development program. The main
targets of the scheme are the bottom poor living inurbane centers that are engaged in or with to
purge micro activities (Solomon, 1996)
2.1.3 DVELOPMENT OF MICRO FINANCE INSTITUTION (MFIS) IN ETHIOPIA
The level of development of the MFIs in Ethiopia shaves substantial valuation from MFI for
another deposit mobilization, and staffing. In general all MFIs have not covered the whole
regions of the country in their financial services out reach.
This could be evidenced by the number of clients served in the subset or i.e. only about 800,000
to 1000,000 people until today. The major cause are drought limited financial and skilled human
resources in adequate in futures and lack if public awareness today frequently of MFIs,
prolonged drought has reduced the production of major food crops, resulting in acute and
recurrent shortage of food. This resulted in weak performance if MFIs by reducing loan
collection limiting their outreach and leading to determination of disbursements. These problems
threaded the sustainability of the institutions.
The primary objectives of majority of MFIs is prevision finance services to the rural and urban
poor who cannot access conventional banking services mainly because of lack of physical
collateral. The major source of financial for MFIs, including those owned by regional
government or lending activities and operational expense remained to be donations. The need to
reach the rural and urban poor has necessitated non collateral based lending system whereby peer

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monitoring and pressure is used for screening credit worthy applications to ensure repayment it
loads.

2.1.4 FEATURE OF MICRO FINANCE INSTITUTION

There are some district features of micro finance institution (MFI) in relation to other financial
intermediaries. These are:- Addressing the credit needs of the poor especially rural poor
engaging farming in small scale production & services activities, Rendering managerial
marketing technical and administrative advice to borrower and MFIs loans are small compare to
loans provided by conventional banks.

2.1.5 ROLE OF MFIS IN ECONOMIC DEVELOPMENT

The orthodox explanation of the need for credit on the part of small scale entrepreneur and peas
out farmer’s hinges on two factors probity and the exploitative native nature of informal credit.
First, the majority of people in developing countries considered to be very poor and unable
simulated substantial savings, their need external finance to break away from the vicious credit
of poverty. An external “push” is therefore necessity for the economic fiancé is considered to be
much higher and uncurious compared to those in formal sector. Hence, there is anteed to rescue
small scale borrowers form the clothes of rapacious benefits in the formal sector by providing
formal finance at responsible rates and charge (Hyuhaet al, 1993)

2.1.6 CRDEIT PROVISION

Credit is borrowed funds which specified terms for repayment when there are insufficient
accumulated saving to finance a business and when return on a borrowed funds exceeds the
interest rate charged business activity until sufficient the debt exists(Nigussieff, micro 1996).
Loans are generally made for productive purpose that is to generate revenue with in a business.
Some MFIs also make loans for consumption, housing or special occasions. Most not include
financial sustainability ensuring that the services offered meet the demands of clients that
operations are sufficient to cover cost and that clients are motivated for repay loads. MFIs can be
sustainable providing they have enough funds to confine operating in the long time. These funds
can be solely operational revenue.

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 2.1.7 CREDIT REPAYMENT
All credit (except housing loans) repayable uniformly in fifty equal weekly installments, at two
percent of loan amount per week, respective of loans amount or nature of activity. Therefore, the
interest is collided in next two weekly installments.

2.1.8 FACTORS OF CREDIT

The article tries to annotate the demands of credit which can hold away, during command
economy. If may also us to keep up with regions disciple of credit system on the market
economy because credit is the banking profession with its value system and goals and in the total
environment as the apex in the frame work of banking activity.
• The following are the factor that affects the credit activity:-

2.1.8.1 CHARACTER
Character is what you have in the bank is ascetical criteria on our consideration, because, the
bank lend money hadn’t balance sheet. Chiefly applied of group of traits that how social
significance & moral quality maintained in the specific activity.
2.1.8.2 CAPACITY
In weighting credit, risk is every significant to satisfies do care oneself with the capacity,
capability and competency of the management of the credit regulating entity which capacity of
applicants income is about present debt commitments to be determined as would as the
applicants expenditure pattern.

2.1.8.3 CAPITAL
Capital is a property risk. If measure the borrower’s financial soundness or its financial strength
that nears the applicants must have enough money his/her business to turn around on.

2.1.8.4 COLLATERAL
Collateral is anything of value pleaded as additional security as property or any of the pleaded
deposit secures the performance of contract or dosage of an purgation is fulfilled.
2.1.9 CHALLENGES OF MICRO FINANCE INSTITUTION
Micro finance institutions (MFIs) whether they are reliant on donation or equity investment Sims
at providing financial services for the economically active peers. A business under taken by the
peers has dual characteristics that are mutually center connected and also seems contradictory
when one sees it is at a place on the one hand financial services that are targeting poverty
alleviation and enhancing to the productizing of the poor should be able to mange to ensure

11
poverty elevation & enhancing producing productivity endeavors client sustainability. Any MFIs
can only sustain as long as it remains institutionally and financially make it risible as the
borrowers. It cafes are worthy its assistance. Moreover, in order to ensure institutional
sustainability ever MFIs should as much as possible worth to minimize the challenges to its
sustainability the challenges in achieving sustainability are multi-dimensional. These are
Governance related challenges, Fund related challenges and Market related challenges.

2.2 EMPERICAL LITRATURE

A study by Hall (2000) has identified two primary causes of small business failure appear to be a
lack of appropriate management skills and inadequate capital (both at start-up and on a
continuing basis). The research undertaken in Tanzania by surveying 160 micro enterprises
showed that high tax rates, corruption, and regulation in the form of licenses and permits, are
found to be the most important constraints to business operations of micro enterprises (Fjeldstad
et al, 2006 cited in Mulugeta, 2011).
In his research, Dereje (, 2008 as cited in Admassu, 2012) studied the nature, characteristics,
economic performance, opportunities and challenges of MSEs in the construction sector based
on 125 sample enterprises. The results of the study revealed that the main constraints of the
MSEs were shortage of capital, lack of raw materials, absence of government support, lack of
market, lack of credit facilities and high interest rate. Studies were also conducted specifically
with a purpose of identifying the problems that Mses Encounter.
According to HLCLEP (2006), there is lack of entrepreneurial and managerial skills, which in
turn leads to problems in production due to the unfamiliarity of workers with rapid changing
technology, lack of coordination of production process and inability to troubleshoot failures on
machinery and/or equipments is a critical problem that MSEs are facing since they cannot afford
to employ specialists in the fields of planning, finance and administration, quality control and
those with technical knowledge.
Mulugeta (2011) has identified and categorized the critical problems of MSEs in to market-
related problems, which are caused by poor market linkage and poor promotional efforts;
institution-related problems including bureaucratic bottlenecks, weak institutional capacity, lack
of awareness, failure to abide policies, regulations, rules, directives, absence of training to
executives, and poor monitoring and follow-up; operator-related shortcomings like developing a
dependency tradition, extravagant and wasting behavior, and lack of vision and commitment

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from the side of the operators; MSE-related challenges including lack of selling place, weak
accounting and record keeping, lack of experience sharing, and lack of cooperation within and
among the MSEs and finally society-related problems such as its distorted attitude about the
operators themselves and their products.
In reality, literature on MSEs in Ethiopia is mainly focused important factors that affect the
performance of small enterprise. But it didn’t conduct much in line with performance aspects of
micro enterprises and current available opportunities for MSEs. However, this research tried to
assess factors affecting the performance of MSEs and the opportunities which are available for
these enterprises.

2.3 RESEARCH GAP

As the literature shows that numerous studies were conducted by different researchers on factors
affecting performance of microfinance institution. Diversification of microfinance institution,
profitability of microfinance institution and on other topic in Ethiopia as a general. Still there are
many knowledge gaps with respect to assessment of factors affecting performance of
microfinance institution, particularly in vision fund micro finance institution.

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 CHAPTER THREE; RESEARCH METHODOLOGY
This chapter discuss about the methodology that will be used to conduct this study. The primary
aim of the study is to assess the factors that affect the performance of MFIs in case of vision fund
MFIs in Arba Minch Sikela branch. The research methodology section is clearly defining the
research design, research approach, the sample and sampling techniques, sources and instruments
that have been utilized in collecting data, the procedure of data collection and finally the method
of data analysis would be presented as follows.
3.1. Research Design
A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure. In
fact, the research design is the conceptual structure within which research is conducted; it
constitutes the blueprint for the collection, measurement and analysis of data. As such the design
includes an outline of what the researcher would be from writing the hypothesis and its
operational
implications to the final analysis of data (C.R Kothari, 2004). The current study would be
conducted by descriptive type of research design.
3.2 Research Approach
The study would be also employing a mixed research approach which involves both qualitative
and quantitative approaches. The reason why the researcher selected mixed research design is
that to increase the reliability of data and triangulating the results gain from the quantitative
(questionnaires) and qualitative data source (interview). Both methods can be using
simultaneously to support each other in times of analysis and interpretation.

3.3 Target population and size

According to Phyllis (2016) Target population is defined as “the total number of subjects of
interest to a researcher”. It refers the entirety of members from a formulation of people, events,
or objects that are either real or hypothetical, as the researcher attempts to create a
generalization. The target population of the current research encompasses all employees
and manager of the institution that currently working in the Vision fund Microfinance
Institutions Arbaminch sikela branch. The set of sampling size that would be considered for this
study include all workers of the institution which are found in Arbaminch sikela branch. The
numbers of employees and managers is 17. The current study would be adopted by using census
survey technique. The Census method is that the process of the statistical list where all members
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of the population are analyzed. A population relates to the set of all observations under concern.
Therefore, the respondent includes all Employees and managers of the institution’s this led to the
elimination of sampling errors and bias. The target population of the study would be 17 people,
such as employee and manager of company. The researcher would be taken all population. If the
population is too small no need of sampling (Kothari, 2004). By considering this idea and in
order to get reliable information about the study the researcher would use census method of data
collection.

3.4. Sources of Data and Type

With regard to the sources of data, the study would be used both primary and secondary source
of data. Based on the nature, scope, objectives and availability of time and resource, the
researcher would be used questionnaires and secondary data source like books, documents,
existing research papers, journals and publication, websites, institutions reports and other
relevant journal.

3.5. Method of data collection

For the proper achievement of the objectives of the study; among different primary data
collection method, questionnaire would be used. The respondents who are the employees of the
vision fund MFIs. And also the secondary data that would be used in this research is obtained
from like books, documents, existing research papers, journals and publication, websites,
institutions reports and other relevant journal.

3.6. Method of Data Analysis

The collected data has to be changed and interpreted in to meaningful information, figure and
statement. So it will be analyzed, processed and interpreted according to the nature of data.
Statistical Package for Social Science (SPSS) software version 26 will be employed to analyze
and present the data through the statistical tools used for this study. Descriptive analysis, the
descriptive statistical results would be presented by tables, frequency distributions and
Percentages to give a condensed picture of the data.

3.7 Ethical Consideration

In the process of the study, the following ethical issues would be considered: The first is the
researcher would take formal letter from accounting and finance Department. The researcher
would submit the letter to the selected Sectors’ vision fund MFIs Arba Minch city sikela branch

15
to encourage respondents’ voluntary participation. The researcher would be explained the
objectives and significance of the study to the respondents, and they will be allowed to exercise
their right to voluntary participation. Responding to questionnaires requires time their
participation can disrupt the respondents’ regular activities. Moreover, respondents’ willingness
and confidentiality should be value importantly. Therefore, the researcher should use only and
exactly information obtained directly from respondent.

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 CHAPTER FOUR:- DATA ANALYSIS AND INTERPRETATION
This chapter present the information gathered through both primary and data source i.e.
questioner and secondary data i.e. from documented materials to identify and investigate the
inherent problems of the micro-finance institution, sikela branch, moreover, the data rethread are
believed to help the researcher on finding out the main factors that affect the performance and
development of the company.

Furthermore for appropriate analysis and interpretation to present the précis value of the data to
the readers. Both questioner items and information rethread through secondary data are tabulated
and presented.

All the analyses are concerned in investigating and identifying factors the Development of micro
finance institution. The creditable information is obtained from the employees and manager of
the company.

4.1. Age Distribution of Employees

Table 4. 1 : age of employees of the company

Age NO of responded Percentage (%)

20-30 9 52.94
31-50 8 47.06
>50 - -
Total 17 100
Source: primary data, 2024

The above table (Table4.1.1) show that 9 (52.94%) of the employees of the Arbaminch credit
and saving share company, at sikela branch come under the age group of 20-30 years,
8(47.06%) of the employees are between 31-50 year From the above result one can conclude that
the majority of the company’s employees are young. Thus the ACSSC has good proportion of
young and experienced employees.

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4.2 Sex of Employees
Sex identification of the employees important to see or understand the male and female
participation in the company’s services activity. The employee’s responses are summarized by
the table below. This information is taken from total population based on the sample (table4.1.2).
Table 4. 2: sex of employees in Arbaminch credit and saving share company, at Sikela
branch.

Sex NO of responded Percentage (%)

Male 14 82.35
Female 3 17.65
Total 17 100
Source: Primary data, 2024
The above table (table 4.1.2) shows that from the total respondent of 17 employees of the
company, 14(82.35%) of they are males and the rates 3(17.65%) are females.

From this research, the researcher can conclude that the male employees of the company count a
great number having more than one third of the total employees of the company and it show that
the female participation is low.

4.3. Marital status of the employees

Table 4. 3: Sample respondents by marital status of the company

Marital status NO of responded Percentage (%)

Married 13 76.47
UN married 4 23.53
Divorced - -
Widowed - -
Total 17 100
Source; Primary data, 2024
From the above table (table 4.1.3), with respect to marital status of the sample respondents,
13(76.47%) are married whereas 4(23.53%) are UN married and divorced and widowed are
equal in number and percentage, that is 0 each. From this result, the researcher can conclude that
the married employees of the company accounts very great number than any of UN married
divorced and windowed employees.

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4.4 Educational Status of the Employees
Identification of the educational level of the employees is very essential and vital for the success
of full operation of the company as well as for the other business organization, to give quality
services. The educational level of employees in the Arbaminch credit and saving Share Company
at Sikela Branch are shown in the table below (Table 4.1.4).
Table 4. 4: Educational status of the Employees in the company

Educational level NO of responded Percentage (%)

College diploma - -
BA degree 13 76.47
Master(MSC) 4 23.53
Source; Primary data, 2024
The above table shows that, most of the employees 13(76.47%) are BA degree holders,
4(23.53%) of the respondents have the Master 2(6.67%) and College diploma are not in NO of
responded and percentage, that is 0. The above result is clear that the educational status of the
employees are poor and implies that, the management body of the company does not pay
attention for educational levels of the employee. Since employee’s competitiveness is very
important of successful operation and existence of any organization, paying attention to
employee’s educational level and competitiveness is cervical thing.

4.5 Factor that affect the performance of vision fund micro-finance institutions
According to the respondent’s information given, micro-finance the Arbaminch credit and saving
share company, Sikela Branch’s performance affected by so many factors.

Table 4.1.5 Factors that affect the performance of the Arbaminch credit and saving
Share company, at sikela branch
Major factors that affect the development No. of respondent Percentage (%)
performance of the company
Lack of proper use of service given by the 4 23.52
company
Lack of resource 6 35.3
Political factors 1 5.88
Climatic factors 6 35.3

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 Total 17 100
Source: Primary data, 2024
The above table shows that most of the respondents 4(23.52%) pointed out that the major factor
that affect the development and performance of micro finance institution is lack of awareness of
using the service given by the company. On the other hand, some 6(35.3%) of the respondents
believed that the major factor that affect the development and performance of VFMFIS, is lack
of resources. The others 1(5.88%) and 6(35.3%) of respondents responded respectively that the
major factor that affect the development and performance of micro-finance institution are
political and climatic factors.
The above result implies that from different factors that affect the performance of VFMFIs of
Arbaminch credit and saving Share Company. The major one is lack of awareness of wing the
service. If is advisable to the company to make proper decision to reduce (protect) those factor’s
by giving training for the society.

4.6 Types of services provided by vision fund micro- finance institution.

As respondents give information about current services provided are listed in the table below.

Table 4. 5: Services Currently Provided by the Company.

Types of service currently provided by the No. of respondent Percentage (%)

company

Loan 9 52.95

Saving service 7 41.17

Insurance 1 5.88

Total 17 100

Source:- primary data, 2024

According to the above table what does this imply? (Table 4.1.6) 9(52.95 %) of or the
respondents replied that currently they delivered only saving services. On the other hand,
7(41.17%) of the respondents notified that, currently they are wing only saving services. The
remaining 1(5.88%) of respondents are presently using only the insurance service. From these
results, the researcher concludes that the share company provides services such as loan, saving

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services and insurance. The major service that provided by the company is loan services. Next to
their share company provided saving services and insurance respectively.

4.7. Aim Of The Services

Table 4. 6: Purpose of the Service of the Company for This the Researcher Got Responses Only
From Respondents.

If you answer to Q No 6 is there No of responded Percentage (%)

any problem associated with it?
Yes 17 100

NO - -

Total 17 100

Source: primary data, 2024

The above table shows that almost all of the respondents whose response for question on table
4.1.6 is loan 17(100%) said that the loans are extremely dominated in the societies.

4.8 Types of Problem in the Company

Table 4. 7; Types of Problems that are faced by the Company. For this the Researcher for
responds only from 17respondents..

If your answer to Q No is yes what type of No of respondent Percentage (%)

problem you ever faced

Lack of awareness of the people on taking loan 9 52.94

Non-repayment of borrowed money 5 29.41

Lack enough payment for the worker 3 17.65

Total 17 100

Source: primary data, 2024

The above table shows that more than half of the respondents 9(52.94%) said that the problem is
awareness of people on taking loan and the remaining 5(29.41%) respondent that the people
faced with the fear of nonpayment of borrowed money, in addition 3(17.65%) of the respondents
are respond as the problem faced is lack of enough payment to the workers of the organization.

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As the manager of the company informed the organization was established in 1999G.C as
Arbaminch credit saving share company. The role of micro-finance institutions towards poverty
alleviation in the two is high. By encouraging or motivating the societies to credited (minimize)
and facilitate the conditions in different ways (such as informing the disadvantages of poverty,
make them as a unity and give them credit (loan) and as well as delivering them saving services.

4.9 Aim of Training for the staff Members

Table 4. 8: The Objective of Training Given by the Share Company in Sikela Branch

Does the institution given training for the staff No. of respondent Percentage (%)
members?
Yes 15 88.24
No 2 11.76
Total 17 100
Source: primary data, 2024
From the above table one can understand that more than half of respondents 15(88.24 %) replied
that the institution gives training for staff members whereas 2(11.76 %) of the respondents
replied that no training is given.

If your answer to question raised on table 4.1.9 yes No of respondent Percentage (%)
what was the objective of the training
To gives skill full and improve the work 6 35.3
performance of the employee To increase
To increase the salary of the employees after 2 11.76
completing the trading program
To motivate employee toward their work 2 11.76
Productivity 7 41.18
Total 17 100
Source: primary data, 2024
Hence, the table above shows that objective of the training provided by the company as
responded by 6(35.3%) is to give skill full and 2(11.76%) improve the work performance of the
training given by the company is to increase the salary of employees after completing the
training program and To motivate employee toward their work And the same number of

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respondents replied that the objective of the training is to increase productivity. The remaining
Productivity by 7(41.18%) replied that the aim of the training provided by the company is to
motivate By 2(11.76) the employees towards their work.

4.10. Aim of the Services of the Company

Table 4. 9: Aim of the Service given by the Company

Did your institution teach and create awareness in the No of respondent Percentage (%)
societies about the service to the company

Yes 17 100

No - -

Total 17 100

Source: primary data, 2024

As predicated from above table all of the respondents 17(100%) said institution share their
experience to the societies. From the respondents point of view, the general idea of Arba Minch
credit and saving share company, Sikela branch is have good approach towards the societies in
working the improve the living standards of the societies and alleviating poverty by delivering
proper services concerning to giving’s loan, saving and insurance to the society’s members.

As the researcher responded from the mangers of the company, the business is starting with the
intention of serve the societies by providing finance and developing saving culture toward the
member of society. The customer (clients) of the organization visits regularly for different issues,
and use the service given by the organization in proper manner.

The major source of income for the company is loan from the clients and the major expenditure
is tax, pension, salary paid for the employees, and other Miss Ilene us Expense

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 CHAPTER FIVE:- SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of findings
Their research has summarized the major finding of the study as follows:

The majority of the company employees 9(52.94) are young who belongs to 20-30 years thus the
company has a good proportion of young and experienced employees, and the number of male
14(82.35%), greater than 3(17.65%) of females. Most of the company employees 13(76.47%) of
them have degree 4(23.53%) Be master (MSC).With respect to marital status of the employees
13(76.47%) are married
# 4(23.5%) of employees said there is lack of awareness of using the service given by the
company, 6(35.3%)- respondents are said it is lack of recourses and the other 1(5.88%) and
6(35.3%) of respondents resounded respectively that the major factor that affect the development
and performance of Arbaminch credit and saving share company, Sikela branch are political and
climatic factors.9(52.95%) of the employees which currently they delivered loan service,
1(5.88%) of employees which are using only insurance services.
# All of Arbaminch credit and saving share company, Sikela branch respondents (100%) are said
that the problems exist associated with the loan in the societies. Most of the respondents
9(52.94%) said that the problem is awareness of people on taking loan and the remaining
5(29.41%) respondent that the people faced the problem of non-repayment of borrowed money.

The objective of the training provided by the company is to motivate the employees. The
companies have good approach towards the societies in working to improve the living standard
of society by alleviating poverty and delivering different service, also by solving problem.

5.2 conclusion
All the data analysis and the detailed discussions made in the preceding parts of this study area
are means to lead the researcher to possible conclusion and recommendation, so that, facts and
solutions are aimed to be stated explicitly for measures to be taken up on. Once those, factors
that affect the performance of the micro institution Arbaminch credit and saving share company,
Sikela branch, the branch which have positive relation to the company’s profitability, while at
the same time working to develop greater use of those factors which are the company’s strength
but not emphasized. This research was seen as one effort to understand the current situation of

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the company problems relating services for customers and lack if well trained, skilled and
professional employees.

There are many problems that affect the company, which the company has yet to remedy. They
are as follows:-

1, Lack of awareness about using the services given by the company

2, Fear of failure or repayment of the loan on due date.
3, Lack of provision of incentive, bonus and reward to both employees and clients from
the management point of view as a means of encouragement.
4, Low level of female participation

The Arbaminch credit and saving Share Company at Sikela branch satisfy the client by providing
different services as they want based on its rule and regulation. It also give advice to clients on
how the run their business and develop culture of saving. In some extent the company reduces
food insecurity and poverty by playing its great role in doing so.

5.3 recommendations
in order to avoid problem relating to the employees efficiency and time management habit in
rendering the company’s services within a short period of time and it improve the customer
services techniques of employees, the company have to upgrade the level of employees
competencies with the liberalization of the economy and emergency of other new sector
microfinance, the acquisition and development of new and improved skills have become
prerequisites for their survival and growth. Given the increasing divesting and sophistication of
business, it may be necessary for the company to go the market for recruiting man power with
special skill from time to time. If would be also merit with accelerated promotional
opportunities, this in turn and improve the quality services.

- With a view to overcome difficulties in the company some measure are suggested.
1, dealing with and developing the company’s habit and up grading the awareness of the
employees and the society as whole.
2, the period of repayment should be determined and strengthen repaying capacity. Knowing due
date, the clients adjust their investment & source finance to pay back.

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3, The company might consider training for employee ‘sin order to increase the effectiveness of
ever process specially regular training to increase performance of the employees, productivity
and achieve objectives’/c training add knowledge and new information on what the employees
have.
4, Encouraging female participation is better to the balanced and proper services.
5, Government has a major role in rural development effort by implementing proper policies in
micro insinuations, providing an enabling environment, in restructure, institutions service and
also difficult situation like, inflation, market fluctuation. So making close relation with gov’t is
advisable to the company.
6, Detail evaluation the client’s performance before determine loan amount.
7, The efficiency of micro financial institutions should be improved through better skilled man
power planning. A sound system of man power resources management should be embrace
recruitment, trainings, placement accountability and incentive.

8, Provide reward and bonus for good performer employees and clients to enhance completion
among them that leads increment of productivities performance.

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 APPENDIXES
SELALE UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING
Questionnaire for employees of MFIs
Assessment of factors affecting the Development of MFI (case study at Oromia credit and saving
share company in Fitches branch)
The objective this study is for the partial fulfillment of bachelor of art in accounting. The
researcher will fund out the factors affecting the development and performance of micro finance
institution and to world possible suggestion for improvement.
Thanks in advance !!
To show your choice use “√” in box provided. No need to write your name.
Part 1 Interview questionnaire
General back ground
Age: 18-29 30-50 above 50
1.2Gender Male Female
2. Educational status:-Below 12 Diploma
Degree Above degree
3. Marriage status:- Married Divorced
Un married widowed
Part II Questioner about the organization
4. How do you relate the role of your institution towards over ulceration in the turn & rural
financial problem?
Very good Good if other (specify)___________
5. What are the major factors that affect the development and performance of institution (MFIs)
Lack of resource climate factors
Political factors lack of awareness
6. What types of service your institution can give to the societies/
Loan Saving service insurance
Other (specify)____________________________________

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7. If your answer the question No 6 is loan, is there any problem related with if (loan) Yes
No
8. If your answer to the question No 7 above is Yes, what type of problem as you think?
Awareness of people on taking loan
Mon-repaying of borrowed money
Other (specify)_______________________________________________
9. Did the instruction give training for the staff workers?
Yes No
10. If your answer for question No9is Yes, what is the objective of the institution to give
training?
To give skill and improve the work performance of the employees
To motivate the employees
To increase productivity
Other (please specify)_______________________________________
11.What is your profession in the institution?___________________
____________________________________________________________
____________________________________________________________
12.Does your institution teach and aware to society about the services of MFIs? Yes
No

APPENDIXES
SELALE UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING
Questionnaire Management of MFIs
Assessment of factors affecting the Development of MFI (case study at Oromia credit and saving
share company in Fitches branch)
This questionnaire is despond to collect information for assessing fact affecting Development of
MF Fitches branch form management of the micro finance. The research promises you that all
data you provide will kept con-identical and used for academic purpose only.

28
The research will kindly reused you to complete is questionnaire genuinely in advanced.
Thanks in advance !!
To show your choice use “√” in box provided. No need to write your name.
Part 1 Interview questionnaire
General back ground
Age: 20-30 31-50 above 50
1.2Gender Male Female
2. Educational status:-Below 12 Diploma
Degree Above degree
3. Marriage status:- Married Divorced
Un married widowed

Part II questioners about the organization

4. Types business you do?
Merchandise Service
Small scale Industry
5. When did you start the business? Year____________________
6. How do you rate your business (institution) towards the poverty allegation in the town?
High Low Medium
7. What was your intention for starting the business?
Desire to work for one self
To accumulate wealth
Other (please specify)______________________________________
8. Do customers (clients) visit you regularly? Yes No
9. If your answer for question No 8 above is no why?___________
____________________________________________________________
___________________________________________________________
10. Is the society using the service given by your organization in proper manner? Yes
No
11. If your answer for question above is not what factor do you think responsible for that?
Heavy tax
Lack of demand
Lack of awareness
Other (please specify)___________________________________
12. Do you give training for employee? Yes No

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13.Do you believe that your staff worker are well trained?
Yes No
14. If the above question is not what you planning to do the staff workers?
__________________________________________________
___________________________________________________________
15. As you think what are the major problems of the institutions?
______________________________________________
____________________________________________________________
16.What is your general recommendation about the service given by your organization?
_________________________________
____________________________________________________________
17. What king of major service given by you organization?______
____________________________________________________________
18. What is the major source of income for your organization?
____________________________________________________________
19. What is the major expenditure of the organization?__________
___________________________________________________________

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