Determinants of Microfinance Service Utilization among small holder farmers in Erer Woreda of Soamli Regional State

Area of this study is Erer district of sitti zone, Somali regional state. The government of Ethiopia has been working on eradicating poverty which is the enemy of the country. One of the dominant tools that help to reduce poverty at households’ level is provision of microfinance services to the poor in a sustainable way. The objective of this study is therefore to investigate Determinants of Microfinance service utilization and its determinants among smallholder farmers based on data collected from 134 randomly selected respondents, in Erer Woreda Somali Regional State. The study used both primary and secondary data sources. Primary data was collected through questionnaires, interview schedule and focus group discussion. Secondary data was collected from Erer microfinance institution and reviewing of various documents. A descriptive statistics and econometric model (Binary logit model) were used for the analysis of the data gathered. The result indicates that utilization of microfinance service is significantly influenced by factors such as gender of the household, distance of the farmers from the MF institution, saving habit and training. More over the study pointed out major problems confronting utilization of MF services such as in adequate amount of credit, low level of awareness about the services, smallholder farmers’ mobility, and climate change, fear of interest rate, risk fearing. The finding generally suggest the need to enhance appropriate actions on determinants of microfinance service utilization among small holder farmers and agro-pastoral farmers. Microfinance institution is advised to pay appropriate attention to factors that influence microfinance service utilization in order to improve the performance of microfinance service provision and service utilization and develop gender sensitive strategies that promote the service provision among the male members of the community.