Formal financial institutions inEthiopia have traditionally focused on the accessible urbantowns leaving rural areas, where the majority of thepopulation resides, without access to financial services.Recognizing this problem, a number of development agenciessuch as Redd Barna and World Vision started to provideaccess to financial services to the poor in rural areas inthe 1980s. They undertook income generation programs byforming saving and credit schemes. Credit to the rural poorwas provided in the form of grants, and agricultural inputs.Women were the primary targets of these programs. This studysummarizes the findings of action research conducted onmicrofinance institutions in Ethiopia, with focus on theperformance of Redd Barna and on Irish Aid-supportedprogram. Action research facilitates the exchange ofinformation on innovations and experiences so that othermicro-finance institutions may learn from each other'smistakes and replicate best practices. The extended study onwhich this article is based addresses their mode ofoperation, organization, legal framework, as well as thefinancial and non-financial services they offer. The focusin on one urban and two rural and savings and credit schemes.
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