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Linking Poor Rural Households to Microfinance and Markets in Ethiopia  Image

Promoting Inclusive Markets and Financial Systems

Linking Poor Rural Households to Microfinance and Markets in Ethiopia

Linking Poor Rural Households to Microfinance and Markets in Ethiopia

Summary

This report presents the findings of the first two stages of an assessment of the PSNP Plus project in Raya Azebo woreda in Tigray. These assessments are part of a broader longitudinal impact study of the PSNP Plus project, which aims to link poor rural households to microfinance and markets, as a strategy to assist people in accumulating assets, and graduating from the Government of Ethiopia’s Productive Safety Net Program (PSNP). The PSNP provides poor food insecure households with either food or cash in exchange for work, or direct support to people who are physically unable to work. PSNP participants are expected to graduate from the program within five years, and certain types of financial and productive assets are used as benchmarks for graduation.
 
The PSNP Plus project started in the last quarter of 2008 and aims to link PSNP participants to both formal microfinance, and in the interim, or in the absence of this, to informal microfinance by establishing Village Savings and Loan Associations (VSLAs). The project also aims to link PSNP households to markets, through the development of different types of commodity value chains. In Raya Azebo the PSNP Plus project activities started in early 2009, and the project is supporting a cereal (teff) value chain, and two livestock value chains viz. cattle fattening, and sheep fattening.
 
This study specifically focused on the two livestock value chains. At the time of the assessment in Raya Azebo, the projects informal microfinance component was limited to seven pilot VSLA groups. Although the assessment did collect some information from VSLA participants, this was limited to focus group discussions with members from six of these groups. The assessment was carried out roughly one year after the projects value chain activities had started in Raya Azebo. A household component was also included in the assessment, which comprised of a representative sample from both livestock value chains, and a control group sample. The assessment described in this report
had two key objectives:
  1. To collect a retrospective baseline on specific types of household assets
  2. To carry out a midterm assessment of the project, this included:
    • Measuring changes against the assessed baseline
    • Assessing changes in income
    • Investigating the utilization of project derived income
    • Attributing any assessed changes to project and non-project factors
The findings from the assessment suggest that the PSNP plus value chains in Raya Azebo have been well designed and well implemented, and could in principle address some of the key constraints to livestock production and marketing in the study area.


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