1.
PERFORMANCE ANALYSIS OF MICROFINANCE
INSTITUTION AND ITS SUSTAINABILITY AND OUTREACH
(CASE STUDY IN SAWLA TOWN)
CHAPTER ONE
INTRODUCTION
BACK GROUND OF THE STUDY
Poverty is a common problem of almost all developing countries. As a result their
main and immediate objective is to strive to break the vicious cycle of poverty and to
reduce the magnitude and extent of poverty. In this regard, the microfinance
institutions recently gain more and more acceptance. Currently, these institutions play
a very vital role in global poverty reduction debates microfinance could be a powerful
strategy or instrument among several others for alleviating poverty in Ethiopia.
Ethiopia is one of the poorest countries in the world characterized by low per capita
income and highest population pressure. The prevalence of poverty has been a
common phenomenon in the Ethiopian society. Although the agricultural sector which
is the mainstay of Ethiopian economy, is inadequate to feed the growing population.
The 1997 world development report of the world Bank put Ethiopia second from the
last comparing it with 133 countries of the world based on per capita income which is
%100. Nearly 47% the rural populations are living below the poverty line compare to
33% in the urban areas (RUFRP, 2001).
Consequently few recent ideas have generated as much hope for alleviating poverty in
low income countries as the idea of microfinance. Microfinance promised both
combating poverty and developing the institutional capacity of financial systems
through finding ways to cost effectively lending money to poor households and it
exploits new contractual structures organizational forms. This reduces the riskiness
and costs of making small uncollateralized loans also demonstrated that even poor
households can save in substantial qualities (Morduch, 2000).
Therefore microfinance is chosen as one of the most efficient instrument to promote
economic development and to fight poverty in poor countries. Numerous micro
finance institutions (MFIS) all over the world have proven that financial services can
be offered on sustainable cases with high outreach. Around the world microfinance
institutions are increasing seen as the new jobs creator (41-Bagdacti and Bruntrup,
2005).
Similarly by considering the importance of MFIS, the government of Ethiopia
recognized and supported money innovative microfinance operation. Then new
microfinance technologies have been developing in Ethiopia since past decade that
has lowered the cost of lending to entrepreneur and households with limited means to
alleviate the deep-rooted poverty. This improved income and consumption level of the
majority.
The microfinance institution share company currently operated in Sawla town will be
investigated in this study.
STATEMENT OF THE PROBLEM
In many of developing countries microfinance institutions accepted rightfully as the
most important means in alleviating poverty and improving the standard of the poor.
the study further note that, the sustainability of MFIs and outreach are being hindered
by inadequate savings mobilization, huge operating costs, and lack of access to credit
services. The prevailing operation of the formal or conventional financial institutions
in many low-income countries such as Ethiopia is inefficient in providing sustainable
credit facilities to the poor. The majority of the poor access financial services through
informal channels, moneylenders, Iqub, Iddir, friends, relatives, traders, etc. (Wolday,
2002).
Duressa (2009) stated that majority of the MFIs in Ethiopia are not yet financially and
operationally sustainable, especially he concluded that MFIs owned by government
are better in their performance than MFIs funded by NGOs in terms of their financial
and operational sustainability. In terms of outreach, NGO supported Ethiopian MFIs
are limited to the project areas where they undertake their development activities.
Poor farmers lack access to financial markets, Lack of rural microfinance institutions,
which deliver financial services to the poor, is one of the constraints on production in
many developing countries. In the Ethiopian context, microfinance institutions have
been established and operating with the ultimate goal of poverty reduction (Pius,
2005).
According to Yaron (2002) introduced a new criterion for measuring the success of
microfinance institutions, which is „sustainability and outreach‟. He argues that if
financial institution is able to provide a wide range of financial services in efficient
manner they are likely to contribute to income expansion and poverty reduction.
Therefore, measuring the performance of MFIs based on the criteria of
„sustainability‟ and „outreach‟ can serve as a means of assessing the development
impact the service brought while reducing the methodological problem.
The critical point of outreach and financial sustainability in brief are food security,
creation of job opportunity and stimulating the local economy. Although outreach
was some positive implications for financial sustainability. First, growth enables the
organization to reach large number of client. Second, growth reduces average
operating cost for the institutions. Third, growth helps institutions to satisfy their
client’s need through various services. Fourth, growth gives better image of the
institutions to attract loan able funds from banks for further expansion and it increases
the borrower’s willingness to repay (Schreiner, 2003).
The financial performance sustainability and outreach of MFIs greatly influences its
operational results and business efficiency. Besides, healthy financial sustainability
and outreach performance of microfinance institutions is obviously very important for
a well-functioning financial system in developing countries.
Therefore, it is highly significant to evaluate the financial sustainability and outreach
performance of OMFIs using different performance indicators to identify the
challenges and make policy recommendations to improve outreach and sustainability.
2. AN ASSESMENT ON THE ROLE OF GOOD GOVERNANCE IN
PROMOTING ECONOMIC DEVELPOMENT: THE CASE STUDY OF
SAWLA TOWN
CHAPTER ONE
1. INTRODUCTION
1.1. Background of the study
One major issue regarding the application of governance concepts to
economic development is the role of government in economic
development. Good governance is term that has become a part of the
vernacular of a large range of development institutions and other actors
within the international arena. To promote the economic development
researchers have studied the application of good governance in many
developed and developing countries. Good governance is perhaps the
single most important factor in irradiating poverty and promoting
development. Good governance addresses economic institutions and
public sector management including transparency and accountability,
regulatory reform and public sector skills and leadership United Nations
Organizing (UNO, 2004)
The statistical argument of economic development indicates that the
successful experience of industrial countries on the operation of activity
role of government directives and private resources to change of the
structure of their economy. Good governance is comprehensive strategic
planning process that includes important policy components. Such as
understanding political, social and economic institutional environment of
central and local government. But for this paper it is limited to see good
governance in economic aspect primarily .With regarding economic
development good governance used regulatory reforms in promoting
economic growth. Firmcompetiveness and consumer welfare (Aoki,
2002).
The concept of good governance has received increasing attention at the
end of the 1980s in Africa, in its regional institutions as well as at country
level. We observe since then an increasing relevance of the concept for
over all development policies, for all strategies to speed up development
processes for measures to change development institutions, and for the
quality enhancement of sectoral development interventions. Although
good governance become a concept being increasingly important for
donors in the context of their development co-operation, it is the
interest what the concept really means for development management
and state reform in African countries. According to an assessment by the
African Development Bank (ADB 1994, 176-191) the importance concept
of African development is related, first of all, the necessity to create the
basic extra-economic conditions that are important for the growth of
African economies as for example an effective public administration,
functioning legal framework, efficient regulatory structures, transparent
system for financial and accountability. In this context, it is the issue of
the quality of the public goods supplied at country-level that makes
good governance such an important concept (ADB 1994, 176). Secondly
the concept of good governance refers to the developmentally
potentials of the democratic challenge in Africa as accountability, rule of
law, freedom of expression, association and public choice of
governments are important elements of African renewals. Thirdly good
governance refers also to the consolidation of market reforms although
quite different development path are possible within the context of
market oriented of economic systems, good governance market-
oriented systems in a specific socio-economic context especially also in
Africa.
Ethiopia which is one of the developing countries of the world, has
experienced with three major government systems .these are
Monarchy,Dergue,and current Federal Democratic Republic of Ethiopia
(FDRE) all of which have their own economic policies which contributed
to the current and future development of the country (Ayele,2006).
Good governance has resulted in important roles of regional and local
government in the process of economic development. Local official has
become actively involved in economic development promotion activities.
They recognized many business development opportunities resulting
from changes in the advancement of communication technology and
globalization of world economy (Rubin, 2003).
Good governance created and strengthens the relationship between
citizens and government. This means people and government of the
country are able to work with each others in order to bring above all
community development in general sustainable economic development
that meet. This study was concerned in Tigray regional state in Aksum
town administration specially targeting on the town resident people.
Thereforethe researcher interested to study the role of good governance in
promoting economies devel opment (Ibid).
1.2 statement of the problem
For long period of time Ethiopian government is criticized as a one of the
least developing state in the world, especially with in sub-Saharan
African. The behind conclude Ethiopian country as such is that political,
social and economic status of the country was not satisfactory (Knife,
2001).
The governance means the process of decision making and the process by
which decisions are implemented or not implemented. Governance is
used several contextsuch as corporate governance, international
governance, national governance and local governance (United Nations
Economic and social commission for Asia and the Pacific). Governance
has been defined as network of private non governmental bodies that
have a role to play in the formulation and implementation of public policy
and the delivery of public services. The main hindrance for development
is lack of good governance’s we know, good governance have vital role
in economic development of state.However,currently our country
marching on the way of development .As economic trend indicates,
Ethiopia on state flowing due to different by infrastructural activity. So
long as the Ethiopia is affected by lack of good governance within
country, especially in Sawla town administration.Currently,
administrative authority in Sawla town is struggling to apply good
governance in the town due to fact that is some economic improvement in
town because the two words are good governance and economic
development are not separate. For instance in Sawla town administration
civil society are becoming beneficiary in their entrepreneurship activities
by using different technology planned by government. But this does not
addressed to all area in Sawla town. Lack of good governance adversely
affects the economic efficiency of the country, region, zone as well as
town. This is the fact that is happening in Tigray regional state especially
Sawla town administration. In this town, consequence of lack of good
governance are low participation, coordination between community, civil
society and private sector and staff at few also whose performance and
product are high in Sawla town(Smith, 2007).
The other problems are regarding limitation of management capacity,
including lack of resource and information of the townlevel,
lowadministrative skills training and education town employees. If the
government civil society, community and the private sector work together
to solve the above listed problems to achieve fast the economic growth in
Ethiopia in general and Aksum town. Thus the researcher is motivated to
conduct this study in order to suggest some mechanisms for those
problems in the cause study area in Sawla town administration. Good
governance is not only for a type of government and its related political
values but also for certain kinds of additional components it implies
government that is democratically organized within a democratic political
culture and with efficient administrative organization, plus the right
policies, particularly in the economic sphere (Smith, 2007).
3. EFFECT OF INDIVIDUAL AND GROUP BEHAVIOUR ON JOB
PERFORMANCE (IN CASE OF MELO KOZA HEALTH
CENTER)
CHAPTER ONE
1. Introduction
1.1Back ground of the study
An organization has set its deliberate plane it has to recruit and select individuals who
are willing and able to perform of all the specific tasks which are required to
accomplish its objective. Organizational behavior studies individual and their
behavior within the context of the organization in work place setting. Group behavior
is the interaction between individual collectively and the process such opinions
attitude growth conflicts and feed backs this interaction to fulfill some needs
satisfaction of helps to provide basic for his interaction with specific members of the
group (John Michael 2005 p 11).
Individual behavior involves the study of learning awareness creativity motivation
training and job performance, this includes how individuals behavior alone in an
organization (John Michael 2005p11).
The key to achieving and maintaining competitiveness in an organization is allowing
each and every employee in the organization from the chief executive officer to
operational workers to contribute their maximum possible efforts of the organization
success by removing obstacles to performance tapping in to an individual or
employees and managers need to understand why people behave and thing as they do
and how these activities have an impact organizational job performance.(Michael A
Pirson and Poul Lawerence,2010 ).
This research paper concerned to study on Wolkite town health center and it describe
how individuals ability, personality, perception, value, attitude, group norm and group
size culture are interacting in the work place will have an impact on the Melo Koza
health center job performance either directly or indirectly.
Therefore this paper is focused to assess the impact of individual and group behavior
on job performance and to give recommendation to Melo Koza Health Center.
1.2 Statement of the problem
In general an organizational behavior is a field of study that investigates impact of individuals
and groups behavior within the organization for the purpose of applying the knowledge towards
improving organizational effectiveness (Ivancievich, 2005).
Any aspect of activities that affect the behavior of human beings in any organization is
considered to the subject of organizational behavior. Basically the behavior of people in an
organization either individually or in group will contribute to the success or failer in organization
in which they are working (David Buchanan and Andrezj Huzynski, 2007).
Hence studying organizational behavior enables us to know the behavior of to predict their action
to specific situations and influence their behavior towards achieving organizational, group and
individual goals through interaction of interests (Andrezj Huzynski 2006).
The difference of workers in age, sex, ethnicity and culture is growing organizational making
understanding of organizational behavior and benefiting from it is a great challenge for
management (David Buchanan, 2008).
In organizational behavior there is a needed to study the group behavior along with individual’s
behavior. An individual behavior may be affected by other groups or by individual behavior
inside the group may differ from his/her behavior outside understanding these behavior demands
to analyses the impact of individual and group behavior have on job performance with the
organization therefore, the effect of the above and other unmentioned factors might kinder the
successful job performance (Muzafer Sheriff, 2003).
Even though Melo Koza Health Center has a problem of individual and group behavior on job
performance because of difference in age, sex, norms and culture is growing in organization
making and Understanding of organizational behavior and benefiting from it is challenge for
management the individual behavior is affect the group behavior in job performance in work
place(HRM of Melo Koza Health Center ).
As the studying the impact of individual and group behavior on job performance is very
important, academic research on the individual and group behavior in Ethiopia is rare. The few
works conducted on individual and group behavior have not paid particular attention to the
impact of individual and group behavior on job performance. This paper intention to filling the
gap with aim of bringing of the theoretical literature on the impact of individual and group
behavior on job performance on Melo Koza Health Center.
1. THE ROLE OF LEADER SHIOP STYLE ON EMPLOYEES PERFORMANCE (IN CASE
OF DEMBA GOFA WOREDA PUBLIC ADMINISTRATIVE OFFICE)
CHAPTER ONE
1. INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Leadership is the process of influencing people and providing safe environment for them in
addition with objective of organization (Bantie,W 2006).
Leadership is a winning combination of person’s trait and ability to leading; welding
performance; influencing people and providing safe environment for their activity (Richard;
1995).
Leadership is a process which involves setting direction for the organization; aligning people
with objectives through organization Communication and motivation of people to act by
empowerment and need gratification (Lasster, 1980).
Leadership in country is the process of influencing other to understand and agree about what
needs to be done in organization levels and how to do it by facilitating of individuals and
collective efforts to accomplish shared objectives (Rost, 1991).
Leadership is the ability to influence the competence or motivation of individuals in a group to
bring meaning full change for organizations good success (James, 1990).
Leadership in organization is the process of guiding and directing the behavior of the people in
work environment.
Leadership is the process undertake in government, business companies, organization and the
public enterprise regardless of their size and the nature of any organization (Debora, 1956).
Leadership process includes; practice of planning work allocation, organizing, controlling and
decision making in the progress of our modern business companies (Rosni, 1997).
Leadership is the process undertake in government, business companies, organization and the
public enterprises regardless of their size and the nature of any organization (Debora, 1956).
Leadership process includes; practice of planning, work allocation, organizing, controlling and
decision making in the progress of our modern business companies (Rosni, 1997).
1.2. STATEMENT OF THE PROBLEM
Leadership is the art of motivating the group of people activity for achieving common goal.
Good leadership is the one who made sustainable impacts on employees for certain
development whereas the bad leaders are those which lacks necessary skill, ability,
performance and other overall quality of leadership competencies (Mullins, 2004).In our
observation Farta woreda public administration office leaders threat workers or machine
believing also manage their time effectively job performance from workers, in response of this
workers don't handle their worker properly.
Leadership style and employee performance have negatively co-related in the organization
(Banio 2014).Leadership style theoretically should be adopted to demand situations
requirement of peoples and challenges of organization faces. However in practical the
preliminary investigation result shows there are different problems related with application of
leadership for motivation and performance. The administrative practice mostly is not meet the
demand of situation fully (Robert 2001). Conduct on natures and impacts of leadership style
and he design to describe the context of leadership activity and the system of reward even if he
solved the above problems. There is un solved problems with regard to leadership styles with
the issue of competency, reward, performance and conflicts.
Despite the above fact; the situation in Farta Woreda with regard to leadership reveals some
problem. This is reflected in high employee turnover, carelessness in job performance, lack of
belongingness and similar related problems.
To investigate the role of leadership style on employee performance in Farta Woreda public
administration office not study or assess by other researchers.
2. ASSESMENT OF THE ROLE OF COMPENSATION AND BENEFIT ON EMPLOYEE
PERFORMANCE :(A CASE STUDY ON COMMERCIAL BANK OF MELO KOZA
BRANCH)
CHAPTER ONE
Introduction
1.1Back ground of the study
Throughout the world, many scholars defined compensation and benefit indifferent way
according to ( Monday, 2008) compensation is any types of rewarded that individuals receive in
return for their labor, there are two main form of compensation that is direct compensation and
indirect compensation. Direct is wage and salary or more simple pay. Indirect compensation
refers to various types of benefit then the organization provides valuation. To various types of
benefit then the organization provides valuation pay holiday, health insurances, pension and
hiring one among others. Compensation is a systematic approach to provide monetary values
to employees in return for work performed by employees, it is the major cost of doing business
for many organization at the start of 21 century (Ivanchuvich, 2007).
Many organizationswhether private or governmental have their own resources such as human,
material, information and capital to their success or achievement of their goals. Among these
resourceshuman resource is the most fundamental resources for any organization. These
resources suppliesthe knowledge, skill creativity and their efforts to effectively utilize other
resources for their desired objectives to be achieved for doing so the availability of the
individual to be qualities, specific place and time has to be determined to achieve the goals
(Hayle Mariam Marreada, 2013).
Compensation is an important factor affecting how and why people choose to work at one
organization over others. Employers must be reasonably comparatively with several types of
compensation in order to hire, keep and reward the performance of individual in the organization
(Robert,L.,2000). Benefits is indirect financial and not financial payment employer receive for
continuing their employment with the company are an important parts of just about carry
employees compensation they include things little health and life insurance pension time of
with pay and a child care facility benefit other form cash it help employees to attract retailed
prove a source of motivation for employee the various type of possible benefit and survive.
(Carry Desser, (2006)
Compensation refers to all extrinsic reward employers receive in exchange for their work.
Compensation and benefit activities are very important for human resource to develop
administers and maintain compensation program that are perceived equitability by employees
that consequence of an equitable compensation program is that individuals are more likely to be
attracted and take jobs in organization where employees do not voice wide spread concerned
about equity. Greater loyalty, less turnover, and higher commitment to achieve organizational
performance.(Liold Byers,2004).
1.2 Statement of the problem
Compensation system are very crucial for any organization (mondy, 2001 ).if employees are
compensating appropriately, it will be increase their performance and motivate them to become
more productive .Thus compensation has positive relationship with employee’s performance
(Nawab and Batti,2011).
.Caruth and Handlongthen, 2001 explained employees are encouraged when they are financial
rewarded directly fasten their performance’. However, it is challenging task for an organization
to full fill all the needs of the employees. There are varieties of factors that affect organization
not to compensate employees properly. These include; economic condition of the company,
supply and demand of the work force in the labor market, government policies and guidelines,
external market condition and competitors has considerable influence on employee’s
compensation.
If the employees are not compensated properly it will be decrease employee’s attitude toward the
work, it will be decrease organization productivity, employee’s performance and satisfaction and
motivations also decrease.
Compensation has a negative impact on employee attitude and behavior when employees are
dissatisfies and the level of turnover will high.organaization with poor compensation system will
loss employees that tend to retain by their effective performance.
The company personal tries to assess the problem by asking those who are leaving the company
those who have unsatisfied employee. Now a days there are different organizations in Ethiopia
from this organization research selected service providing organization rather than that of
manufacturing and merchandising among different survive providing organization in current
studying would have been focused on the commercial bank of Ethiopia in Melo koza branch .
3. ASSESSMENT OF HUMAN RESOURCES PLANNING
ACTIVITIES IN DEMBA GOFA WOREDA POLICE OFFICE
CHAPTER ONE
INTRODUCTION
Background of the Study
The quality of organizational employees, their enthusiasm, job satisfaction, and sense of fair
treatment significantly impact productivity, customer service levels, organizational reputation,
and overall sustainability (Tyson, 2006). Given the critical role that people play in a competitive
business environment, effective human resource management is essential. This encompasses all
managerial functions related to planning, recruiting, selecting, developing, utilizing, and
rewarding human resources to maximize their potential within the organization. Human resource
planning specifically involves determining and ensuring that an adequate number of qualified
individuals are available at the right time, aligning individual job satisfaction with the
overarching goal of enhancing the organization’s future performance (Megginson, 2006).
In contemporary organizations, human resources are increasingly recognized as sources of
competitive advantage. As such, effective human resource planning is integral to developing
strategies that enable organizations to respond adeptly to market demands and improve service
quality. By integrating human resource management strategies with organizational success,
companies can better meet the needs of employees and stakeholders alike. Each employee is
provided with standard plans and performance objectives that outline tasks and expected
outcomes, ultimately driving future performance (Aquinas, 2006).
Against this backdrop, this research proposal focuses on assessing the human resource planning
activities of the Police Office in Demba Gofa Woreda. The aim is to identify current practices,
evaluate their effectiveness, and recommend improvements to ensure that human resources are
managed efficiently, thereby strengthening the overall organizational capability within the police
service. This study will contribute to the existing body of knowledge and provide valuable
insights into effective human resource management practices within public sector organizations.
Statement of the Problem
According to Shunt You (2006), human resources are the primary assets of an organization,
surpassing financial and temporal resources in their contribution to overall development. Human
resource planning involves the strategic alignment of workforce size and skills with
organizational needs, facilitating the recruitment, retraining, and optimization of personnel to
meet organizational objectives and adapt to changes in the external environment. Despite its
critical importance, human resource planning often faces several challenges, including
inadequate promotion and motivation of personnel, particularly within law enforcement
agencies.
Effective human resource planning activities are vital for enhancing organizational effectiveness.
They encompass the evaluation of compensation, the development of knowledge, skills,
standards, abilities, and discipline (Desseller, 2011). While these activities offer substantial
benefits for increasing organizational effectiveness, they are often hampered by various issues,
such as a shortage of skilled, qualified, and disciplined personnel.
In the context of the Demba Gofa Woreda Police Office, the challenges surrounding human
resource planning warrant investigation. Specifically, there is a need to assess current human
resource planning practices to identify gaps and barriers that hinder the effective management of
human resources. This study aims to explore these issues and propose actionable strategies to
enhance human resource planning within the police office, ultimately contributing to improved
organizational effectiveness and service delivery.
