efficacy of shg model of mary joy development association in snnprs, ethiopia

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EFFICACY OF SHG MODEL OF MARY JOY DEVELOPMENT ASSOCIATION IN SNNPRS,

ETHIOPIA

The Department of Cooperative,

College of Business and Economics,

School of Graduate Studies

Hawassa University

Hawassa, Ethiopia

Monday, April 17, 2023

Presented by: Eyob Muhdin Ahmed

Coopw /027/05

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Despite positive long-run growth and development ever revealed, Ethiopia has been faced by different socio-economic problems since decades ago until now;

United Nations Development programme (2014), like other African country, poverty is still the major problem in Ethiopia though it continues to decline;

And still 29.6% of the population in 2011 lived below absolute poverty line (World Bank, 2014);

NGOs have been utilizing SHG model as a means of alleviating poverty and promoting sustainable of socio-economic development of marginalized community groups in Ethiopia.

It is hoped that the result or findings from this study will contribute to ...

Presented by: Eyob Muhdin, Coopw/027/05

Introduction

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SHG model addresses and recognizes the potential of the poor sectors of the population (Kindernothilfe, 2008);

SHG lead poor population sector to develop strengths and skills they are often not aware of or which they have been unable to develop themselves;

SHG Model is an extremely efficient one, as the ratio of target group reached to cost is lower than that of a lot of other forms of livelihood development strategies (Ibid);

NGOs have been involved in socio-economic development program using SHG model as an approach and have been playing a pivotal role in poverty alleviation movement in Ethiopia;

However, the contribution of most NGOs involved with poverty alleviation and socio-economic development program in Ethiopia using the model has not been measured in detail yet;

Hence, there is a lack of comprehensive information or data on the overall performance of SHG model so far utilized by NGO in Ethiopia; So dose for Mary Joy Development Association;

Thus, as an effort for filling up the above mentioned gaps, this research has been conducted to assess the efficacy of SHG Model used by Mary Joy Development Association on socio-economic development of targeted community.


Statement of the Problem

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Objectives of the Study

Study Objective

Overall objective

ObJ2:To analyze the modus operandi and its applicability of Mary Joy Development Association for SHGs in the study area

ObJ4:To assess the contribution of SHGs formed by Mary Joy Development Association towards the community in the study area

ObJ3:To examine the efficiency of SHGs formed by Mary Joy Development Association on socio-economic development of its members

ObJ1:To assess the services provided by Mary Joy Development Association to the SHGs and members in the study area

To assess the efficacy of SHGs formed by Mary Joy Development Association on socio-economic development of the members and non-members in two zones of SNNPRS named Sidama and Gedeo Zone.

ObJ5:To identify the factors influencing the effectiveness of SHGs more in the study area

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Study Areas

Source: SNNPRS, Bureau of Finance and Economic Development, 2014


Methodology

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Sampling TechniquesA multistage random sampling technique was used


Representative SHGs members Selected Random Sampling

ThenSample SHGs members drawn proportion

to their stratum sizePurposive Sampling

Then

32 SHGs selected Stratified Sampling

Study areas: SNNPRS; Sidama and Gedeo Zone7 towns selected Purposive Sampling

Methodology

The study has also considered non-members

96 non-SHGs members have been selected purposively

3:1 non-SHG members to SHG ratio was used while selecting the non-SHGs member.

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Distribution of Sample SHGs Members and Non-SHGs Members by Geographic Location


No

Sample Study Areas

Number

of SHGs

Number of SHG

Members(N=Population)

Number of sample

SHG members (n)

Number of Sample

non-SHG members

1 Hawassa town 6 100 41 18

2 Aletawondo town 3 51 21 9

3 Yirgalem town 4 51 21 12

4 Leku town 3 56 23 9

5 Dilla town 11 117 48 33

6 Bule town 2 56 23 6

7 Wonago town 3 5 2 9

6 Total [SHGs members and non-SHGs members]

32

436

179

96

Source: Mary Joy Development Association, 2014

Methodology

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Sample Size:N=436

n=179

The following formula was used :

Where,

n = size of the sample (number of members surveyed)

N = number of members in SHG established before three years ago (436)

e = Acceptable error (+/- 0.0564, for this case)

p = Standard deviation of the universe (0.5 in this case)

z = Standard variate (1.96 at 95% confidence level, for this case)


𝑛=𝑧 2 .𝑁 . 𝛿𝑝

2

(𝑁−1 )𝑒2+𝑧 2𝛿𝑝2

Methodology

= 179

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Data Sources and Method of Data CollectionBoth primary and secondary data source used

Primary data have been collected from members and non-members

Secondary data have been gathered from different records of SHGs and project : Budget, Physical plan, Reports, Project implementation and training manuals and, Different accounting statements, records and memorandum of understandings of SHGs formed.

The following data gathering tools were used: Pre-tested questionnaires Document review

The survey/study was conducted from 09 August, 2014 to 10 September, 2014.


Methodology

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Methods of Data AnalysisSPSS version 20 application software and Ms-Excel sheet was used

Descriptive statistics: Mean, standard deviation, percentages, frequency, charts, and graphs

Inferential statistics: Paired student t-test statistics and Pearson correlation coefficients

In addition, the following methods of analysis have been used: Poverty Indices Analysis

Incidence of Poverty (Headcount Index) Depth of Poverty (Poverty Gap) Poverty Severity (Squared Poverty Gap)

Cost-Benefit Analysis of Efficiency Descriptive Methods of Efficiency Evaluation

Expert judgment and, Specific evaluation questions

Factor Analysis.


Methodology

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Social factors/Variable:Similarity of social classMembers’ cohesion

Economic factors/Variables:Capital owned by the groupAmount of loan to be dispersedLevel of business skill by membersExternal fundInflation

Geographical factors/Variables:Distance between member’s house

& gathering place

Institutional factors/Variables:Level of trust on micro finance

institutionsSupport from governmentSupport from NGOs

Group factors/Variables:Size of the memberLeadership style of the groupLevel of absenteeismLevel of conflict of interestAvailability of groups rules &

regulationsAutonomy of the group

Effectiveness of SHGs

Source: Researcher, 2014

Conceptual Frame Work of Factors Determining the Effectiveness of SHGs

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Socio-Economic Characteristics of Respondents

Major Findings

Respondents

Level of Education

Respondents

Marital StatusSex

Source: Own survey data, 2014

Male: 10.6% Female: 89.4%

Male: 28.1% Female: 71.9%

Members Non-members

Respondents

Illiterate: 31.8% Literate: 68.2 %

Members Non-members

Illiterate: 14.6% Literate: 85.4 %

Married: 63.7% Widowed: 26.3%

Members Non-members

Married: 41.7% Widowed: 20.8 %

Household Size [Mean]

SHG members

4.43

52% of sample SHGs members

have a household size of 4-6

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Age Composition of the Respondents


15 to 24 25 to 54 55 to 64 65 to 750

20

40

60

80

100

120

140

160

1

152

5

21

10

71

2

13

SHG membersNon-SHG members

Age catagory

Num

ber

of R

espo

nden

t


Major Findings

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Heads of SHG Members’ Family



Husband Elder male children Elder female children Wife Other

Number 98 1 4 75 1

Percent 0.547486033519553 0.00558659217877095 0.0223463687150838 0.418994413407821 0.00558659217877095

10

30

50

70

90

11098

1 4

75

10.5474860335195530.0055865921787709

5 0.0223463687150838 0.4189944134078210.0055865921787709

5

Num

ber o

f SHG

Mem

bers

Major Findings

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Types of Service Provided to SHGs Members by Mary Joy Development Association


Major Findings

Skill Building Services type:Trainings such as CSSG formation and SPM

Financial Grant Supports type: 1500 ETB as a financial support (matching fund)

Technical and Material Supports: • Guidance, Mentoring and Coaching

• Minutes-writing books, pass-books, ledgers

writing books, attendance sheets , etc.

Networking and Referral: Linkage with • Omo micro finance institutions and with

Micro

• Small scale Enterprises development

offices

62.57%

are

Satisfied

& the

rest

HS

91.62%

are

satisfied

97.8% of

SHGs

members

received

All SHGs

Members

received

97.8

%

(tech

nica

l )

100%

(m

ater

ial )

supp

orts

72.0

7%

are

Satis

fied

86.6

% o

f SH

Gs

conf

irm

ed t

hat

they

are

link

ed

60.3

4%

are

Sati

sfie

d

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Modus Operandi and Its Applicability of Mary Joy Development Association for SHGs in the Study Areas

56.4% of sample SHG members - SHG formed by SHG members with little support of MJDA

87.7% of sample SHG members- Decision are made based on SHG Rules and Regulation

65.9% of sample SHG members- Practice of updating rules and regulations made Occasionally

Undertaking Regular Meeting by SHGs: 59.2% - Every week; 31.8% - Every month

Leadership Practice within SHGs: 96.6% - Members elect leaders occasionally (73.2%)

97% - took loan average amount 1,860.89 ETB (a minimum of 500.00 ETB and a maximum of 8,000.00 ETB) of which 52.51%- one time , 88.8% -Save weekly, 70.9% -deposit in MFI


Major Findings

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Cost-Benefit Analysis Summary


Major Findings

Cost Benefit Analysis

S.N DescriptionsAmount in ETB Total

Net benefit in ETB[Total]

Net benefit per SHG member in ETB

[4030 members]2012 2013 2014

Costs:

Total PV Benefits

13,074,233.42 PV

Benefits/member

3,244.23 1

Training Cost 375,859.73

851,904.00

305,229.16 2

Matching Grant 654,000.00

1,065,000.00Total PV

Costs

3,308,088.64 PV

Costs/member

820.87

3 Actual staffs’ Salaries

(100% Level of Effort)

106,560.00

NET BENEFIT

9,766,144.78

NET BENEFIT/

MEMBERS

2,423.36

4 Actual local Transport Cost for Animators

144,000.00

Total Costs (Future Value) 1,029,859.73 851,904.00 1,620,789.16

Cost to Benefit

Ratio at Individual level:

1: 3.95Total Costs (Present Value) 1,029,859.73 810,642.31 1,467,586.61 3,308,088.64

Benefits :

3 Reported average net income of SHG members on 09/09/

2014

14,439,063.24

Total Benefits (Future Value)

14,439,063.24

Total Benefits (Present Value) 13,074,233.42 13,074,233.42

Present Value Discount Rate ;Ethiopia (National Banks of Ethiopia, 2014) 5%Source: Own survey data, 2014

Efficiency of SHGs

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Descriptive Analysis of Efficiency for SHG Model Social Impacts :

Economic Impacts :

From this, it can be conclude that the SHG model of MJDA efficient.


Major Findings

Pre-SHG period Post- SHG period

54.2% - used to talk sometimes 78.8% - freely talk

63.1% - never been interacted with outsiders 81.4% - interacting with the outsiders

30.7% - never experience family violence 45.8% - never experience family violence

Pre-SHG period Post- SHG period

50.3%- self-employed 87.2% - self-employed

682.23 ETB - average monthly income 1,336.85 ETB - average monthly income

688.26 ETB - average monthly expenditure 1,056.49 ETB - average monthly expenditure

59.2% - below national poverty 28.5% - below national poverty


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Socio Impacts:SHGs benefited the SHGs members socially through:

Increasing the communication level,

Increasing the frequency of members’ interaction with outsiders and

Reducing family violence.

For instance:


Major Findings

Socio-Economic Impacts of SHGs on Members

Freely talk

Sometimes talkHesitate to talk

0.0

50.0

100.0

19.0%

54.2%26.8%

Pre-SHG communication level of members

Percentage of SHG members

Freely talk

Sometimes talkHesitate to talk

0.0

50.0

100.0

78.8%

20.7%.6%

Post-SHG communication level of members

Percentage of SHG members


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59.2%

Economic Impacts:SHGs formed SHG member benefited economically through:

Creating employment opportunities, ( from 50.3% to 87.2%)

Increasing members’ income ( From 682.23 ETB to 1,336.85 ETB )

Improving expenditure Patter C:\Users\coc\Desktop\change in Expenditure pattern.pdf

Increasing saving pattern (72.1% - never save during Pre- SHG period, but all SHG members started to save now)

Reducing Poverty level of SHG members.


Major Findings

28.5%

Post-SHG period

Pre-SHG period


Reduced

By

30.7%

Number of SHG members below poverty line

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Economic Impacts:The total amounts of income the respondents (whose income is below national poverty line) have and the national poverty line has decreased by 11%

But, paradoxically, the following findings on Changing in poverty level are found too:


Hawassa Leku Yirgalem Aletawondo Dila Bule Wonago0

5

10

15

20

25

30

35

40

45

50

23

0

18

5

44

16

0

10

04

0

18 18

1

Pre-SHG Post- SHG

Study Areas

Num

ber o

f S

HG

mem

ers

belo

w p

over

t lin

eMajor Findings


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Socio ContributionsThe SHGs brought positive social change through:

Increasing number of people who are participating in advocacy activities (Example: environmental protection, property rights and access for public goods) ;

Increasing number of people who are participating in faith based organizations;

Increasing number of people participating on election process;

Improving friendly relationship of the community;

Improving community attitude about gender equality;

Increasing women participation on outdoor activities of different community issues;

Creating swift access for information transmission;

Increasing the level of knowledge on family planning;

Increasing participation on charity work in the community;

Increasing participation of community members on environmental sanitation and protection movement;

Increasing the sanitation of SHG members’ household;

Improving the child care and support mechanism in the community and

Increase in community cooperation and mobilization schemes on different socio-economic aspects.

C:\Users\coc\Desktop\Types of Social Contributions.pdf


Major Findings

Socio-Economic Contribution of SHGs to the Nearby Community in the Study Area


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Economic Contributions:The SHGs contributed the community economically via:

Creating access for information on business development services

Improving the saving culture of the community

Decreasing the number of unemployed community members,

Increasing the number of people participating in Equb

Increasing the economic status of women in the community

Increase in access for amenities among SHGs members’ family (water, electricity, health and care, education and food and nutrition).

C:\Users\coc\Desktop\Economic Contribution of SHGs.pdf

In general, it can be able to infer that the SHGs formed in the study areas have been contributing to the community both economically and socially through:

Improving the aesthetic value of SHGs members and their families in particulars and wide community level as a whole.


Major Findings


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Factors Influencing Effectiveness of SHGsThe correlation between Seventeen variables C:\Users\coc\Desktop\17 Variables assumed to be influential factors on SHG effectivness.pdf checked for significance using Pearson correlation coefficient analysis procedures.

Fifteen variables: found significant and correlated moderately, except two variables: Availability of Rules and Regulations and Autonomy of SHGs.

Suitability Inspection:

KMO statistical value = 0.652

Bartlett inspection significant level value of 0.000 < 0.005;

The data for each of variables included are suitable for factor analysis.

Extraction of common factors:


Major Findings

Component

Extraction Sums of Squared Loadings Rotation Sums of Squared LoadingsTotal %

of VarianceCumulative % Total %

of Variance%

Cumulative

1 3.078 (20.517) (20.517) 2.631 (17.541) (17.541)2 2.498 (16.651) (37.168) 2.207 (14.716) (32.257)3 1.846 (12.304) (49.472) 1.999 (13.325) (45.582)4 1.261 (8.404) (57.876) 1.844 (12.294) (57.876)Extraction Method: Principal Component Analysis.


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Four factors are extracted

Their loading is found to be greater than the eigenvalues of ‘one’

The variance contribution rate: 17.541%, 14.716%, 13.325% and 12.294%;

The total cumulative variance contribution rate are: 17.541%, 32.257%, 45.582% and 57.876%, respectively.

Thus, the effectiveness of SHGs could be explained effectively by the four “Principal Component” or “Common Factors” in accordance with their level of contributions.

Giving Common Factors a Name:

Based on their factor loading the four factors have been given a name accordingly below:


Major Findings


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Rotated Component MatrixF1= Group Factor,

F2=Institutional Factor,

F3= Social Factor and

F4= Economic Factor


Major Findings


Variables

Component/Common Factors

F1 F2 F3 F4

Level of agreement on "members are from similar social class -.053 .708 -.202 -.305Level of members cohesion in SHG a respondent participating .018 -.115 .732 .139Amount of capital owned by SHG respondent participating .804 .060 -.023 -.139Amount of loan agreed to be disbursed .014 .597 -.490 -.157Level of business skills a respondent believed that s/he has .269 -.008 .344 .576Fund accessed from external source by the group -.695 -.134 -.417 -.187Level challenge faced as a result of Inflation .055 -.668 -.048 .158Distance from members gathering place and their home .106 -.224 .093 .526Level of trust respondent has on local microfinance Institutions -.091 -.104 .093 .621Perceived level of support from local government -.088 .802 .186 .202Perceived level of support from MJDA -.188 .030 -.031 .670

Number of members of SHG where respondent participating .843 -.190 .085 -.206

Perceived leadership style the SHG followed -.034 .044 .731 .109Experience of respondent being absent from SHG meeting .542 -.310 -.402 .285Frequency of conflict of interest among SHG experienced .596 -.168 -.363 .095

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.a. Rotation converged in 7 iterations.

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Calculating the comprehensive evaluation score:

Finding the respective weighted average scores under each common factor named using the proportion of the

variance contribution of each common factor (F1, F2, F3, & F4) to the cumulative variance contribution of the four

common factors via the following regression function:

)/0.57876

In this case, it is assumed the higher the coefficient of each common factor, the most strongly influential factor on

the effectiveness of SHGs would be (Xiao, 2012)

F1 (Group Factors) are the main influential factor on “effectiveness of SHGs” than others;

Accordingly, under Group Factor Category, “Number of members of SHG where respondent participating”,

is the most influential variable on the effectiveness of SHG


Major Findings

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ConclusionsThe services provided by MJDA enhance the capacity of SHGs and their respective members

The rules and regulations of SHGs are well applied and followed by the SHGs and their members

The SHG model used by MJDA has brought positive socio-economic development both on SHG members and the community at large

The SHG model addressed female community member whom they are under economically productive age group and have an average household size of 4.43 more

The SHG model used by MJDA is efficient in terms cost of implementing the program and the benefit it brought up on the SHG members

The effectiveness of SHG is more influenced by “Group Factor”( Number of SHG members) that other


Conclusion& Recommendations

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RecommendationsMary Joy Development Association need to devote on more financial resources and increase the amount of matching fund provided

The organization need to invest more in business and financial literacy trainings such as Entrepreneurship to SHGs members

The organization need also give due consideration in selecting its beneficiaries for its SHG program

The organization and other like-minded organizations need to give due attention on group factors specially minimum and maximum number of SHGs while they are forming SHGs.


Conclusion& Recommendations

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References

Factor Analysis: Xiao, H. C. a. X., 2012. The Application of SPSS Factor Analysis in the,

Changsha, China: Department of Economics and Management, Changsha University of Science and Technology.

Beaumont, R., 2012. An introduction to Principal Component Analysis & Factor Analysis, London: Robin Beaumont.

CBA: Venton, C. C., 2013. Partnerships for change: a cost benefit analysis of Self

Help Groups in Ethiopia, Teddington: Tear fund Horn of Africa Regional Office.

Poverty Analysis: Röder, K., 2004. Poverty analysis with SPSS. Beira, Mozambique: NA.


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Poverty Indices Analysis

`

Cost-Benefit Analysis of Efficiency

PV(NB)=

Factor Analysis Model


Methodology

Where, n is the population, y is the per capita consumption, z is the poverty line, and α is a not negative parameter.

Where, PV(NB) is the net benefit converted into present value, FVBT is the total benefit, and FVCT is the total cost incurred while implementing the SHG project, і is the national interest rate set by national bank of Ethiopia, and n is the time.

Where, Xi (i=1,2,3,….m) is measured variable, aij (i=1,2,3,…m and j=1,2,3,…n) is factor loading, Fi (i=1,2,3,…n) is common factor, and ei (i=1,2,3,…m) is specific factor..

Analysis Model and Formulae used

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Factor Analysis Steps followed:1. Inspection to measure suitable for the factor analysis using Bartlett Test of Sphericity and

KMO (Kaiser-Meyer-Olkin)

2. Extraction of common factors through standardizing the original variable data, and calculating their correlation matrix, and analyzing the correlation between the variables.

3. Rotation method to have variable factors preferably interpreted that is rotating.

4. Calculating the factor variable scores

5. The final step is calculating the comprehensive evaluation score and looking the cumulative effect of each variable using the following formula:

Where, ∂i is for the weight of each factor which is equal to the contribution of each common factor to the total variance contribution of p common factors, namely

In this particular case study, ∂i is the degree of influence the common factors.

Accordingly, in our case the higher the common factor named i.e. the higher ∂i`, the most strongly influential factor on the effectiveness of SHGs would be.


Methodology

efficacy of shg model of mary joy development association in snnprs, ethiopia

Government & Nonprofit

socio economic development

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study area obj3

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