Assessment on the Implementation of Saving Mobilization in Microfinance Institutions: the case of Specialized Financial & Promotional Institution and Meklit Micro Finance Institutions

Abstract

The main objective of the research was to assess the implementation of saving mobilization strategy in Specialized Financial and promotional Institution (SFPI) and Meklit Micro Finance Institutions .The study specifically addresses the following issues; first, saving mobilization practices employed by SFPI and Meklit Microfinance institutions. Second the study tried to identify challenges facing MFIs when mobilizing savings. Third identify opportunities that enhance saving mobilizations. This study involved the use of qualitative and quantitative research approach and also instruments of questionnaires and interview were used during collection of data. Respondents were taken from two MFIs of SFPI and Meklit microfinance institutions. Questionnaires were employed to collect data from (88) respondents and interview was conducted only to five representative of MFIs. Findings reveal that the common type of saving mobilization strategies employed by Selected MFIs is product development strategy, promotion strategy, incentive strategy. This study also finds that distance/proximity/ to financial institution, transaction cost, security, Anonymity, flexible product features are key factors from the perspectives of MFIs clients to mobilize savings. From the service provider perspectives this study noted that competition from experienced banks, competition among MFIs, cost of mobilizing small savings, meeting the liquidity requirements as per National Bank of Ethiopia (NBE) directives in a cost effective way as a key challenges. Findings also affirm that there is huge untouched demand for voluntary saving mobilization among the poor in the operational area of MFIs could be an opportunity that enhance saving mobilization.