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
Thursday, June 18, 2015
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
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 Techniques
A multistage random sampling technique was used
Representative SHGs
members Selected Random Sampling
Then
Sample SHGs members drawn proportion
to their stratum size
Purposive
Sampling
Then
32 SHGs selected Stratified Sampling
Study areas: SNNPRS; Sidama and Gedeo Zone
7 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 =
𝑧2.𝑁.𝛿 𝑝
2
𝑁−1 𝑒2+𝑧2 𝛿 𝑝
2
Methodology
𝑛 = 1.962∗436∗0.52
436−1 ∗0.05642+1.962 ∗0.52 = 179

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Data Sources and Method of Data Collection
Both 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 Analysis
SPSS 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 class
Members’ cohesion
Economic factors/Variables:
Capital owned by the group
Amount of loan to be dispersed
Level of business skill by members
External fund
Inflation
Geographical factors/Variables:
Distance between member’s house
& gathering place
Institutional factors/Variables:
Level of trust on micro finance
institutions
Support from government
Support from NGOs
Group factors/Variables:
Size of the member
Leadership style of the group
Level of absenteeism
Level of conflict of interest
Availability of groups rules &
regulations
Autonomy 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
%
Househ
old 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
1
152
5
21
10
71
2
13
0
20
40
60
80
100
120
140
160
15 to 24 25 to 54 55 to 64 65 to 75
NumberofRespondent
Age catagory
SHG members
Non-SHG members
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 55% 1% 2% 42% 1%
98
1
4
75
155% 1% 2% 42% 1%
0
20
40
60
80
100
120
NumberofSHGMembers
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

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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 Descriptions
Amount 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/me
mber
3,244.231
Training Cost 375,859.73 851,904.00 305,229.16
2
Matching Grant 654,000.00 1,065,000.00
Total PV
Costs 3,308,088.64
PV
Costs/mem
ber
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: 3.95
Total 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%
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
19.0%
54.2%26.8%
0.0
20.0
40.0
60.0
Freely talk
Sometimes talkHesitate to talk
Pre-SHG communication level of members
Percentage of SHG members
78.8%
20.7%
.6%
0.0
20.0
40.0
60.0
80.0
Freely talk
Sometimes talkHesitate to talk
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:UserscocDesktopchange 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:
23
0
18
5
44
16
0
10
0
4
0
18 18
1
0
5
10
15
20
25
30
35
40
45
50
Hawassa Leku Yirgalem Aletawondo Dila Bule Wonago
NumberofSHGmemersbelowpovertline
Study Areas
Pre-SHG Post- SHG
Major Findings

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Socio Contributions
The 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:UserscocDesktopTypes 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:UserscocDesktopEconomic 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 SHGs
The correlation between Seventeen variables C:UserscocDesktop17 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 Loadings
Total %
of Variance
Cumulative % 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 Matrix
F1= 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 -.305
Level of members cohesion in SHG a respondent participating .018 -.115 .732 .139
Amount of capital owned by SHG respondent participating .804 .060 -.023 -.139
Amount of loan agreed to be disbursed .014 .597 -.490 -.157
Level of business skills a respondent believed that s/he has .269 -.008 .344 .576
Fund accessed from external source by the group -.695 -.134 -.417 -.187
Level challenge faced as a result of Inflation .055 -.668 -.048 .158
Distance from members gathering place and their home .106 -.224 .093 .526
Level of trust respondent has on local microfinance Institutions -.091 -.104 .093 .621
Perceived level of support from local government -.088 .802 .186 .202
Perceived 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 .109
Experience of respondent being absent from SHG meeting .542 -.310 -.402 .285
Frequency 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:
𝑊 = (𝟎. 𝟏𝟕𝟓𝟒𝟏𝐹1 + 0.14716𝐹2 + 0.13325𝐹3 + 0.12294𝐹4)/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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Conclusions
The 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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Recommendations
Mary 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)= 𝑛=𝑗
0
𝐹𝑉𝐵 𝑇
1
(1+𝑖) 𝑛 − 𝐹𝑉𝐶 𝑇
1
(1+𝑖) 𝑛
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

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