Mission Drift in Microfinance: Empirical Evidence from Ethiopia

Abstract

This thesis attempted to examine one of the most important recently emerging issues, mission drift of microfinance institutions. The study is undertaken in the Ethiopian context where the main development concern of MFIs has been the poverty-alleviation objective and economic empowerment of poor households including women. In undertaking the mission drift analysis, data has been collected from the top ten MFIs, which also happen to be older generation MFIs, in the country for the years from 2005 to 2013. The average loan size and percent of women borrowers have been tested against sustainability indicators and with other variables. The descriptive statistics and the panel econometrics regression results using fixed effect estimation technique reveals that average loan size and proportion of women borrowers have monotonously increased. Still the maximum loan per borrower on average is less than USD 965 and nearly 52% clients are female borrowers. Virtually all MFIs are still concentrating in rural areas and their lending methodology is mostly group lending. As such there is no danger of mission drift verified in the analysis. As this is a modest first trial it is commendable that further in-depth studies be initiated to verify comprehensive findings and policy recommendations