A Study on the Loan Funding Process for Microfinance Customers in the South Region of Ethiopia

Abstract

This study explores the loan funding process for microfinance customers in the Southern region of Ethiopia, focusing on borrower experiences and satisfaction. Employing a descriptive research design with a quantitative approach, the research aims to provide an accurate portrayal of the loan process from the borrower’s perspective. Stratified random sampling was used to ensure proportional representation of borrowers across these institutions. Data was collected through questionnaires and analysis was conducted using percentage values. The findings reveal that borrowers generally perceive the loan funding process as efficient, with timely access to funds and clear communication of loan terms. The study also identifies the importance of minimal bureaucratic barriers, effective risk assessments, and flexible repayment options in enhancing borrower satisfaction. However, areas for improvement were also highlighted. Strengthening monitoring and evaluation systems, expanding feedback mechanisms, and offering greater loan flexibility could further improve the experience. Recommendations include enhancing financial literacy programs and increasing the flexibility of loan terms to reduce defaults.