CHALLENGES AND OPPORTUNITIES OF SAVING MOBILIZATION IN MICROFINANCE INSTITUTIONS (A CASE OF DEDEBIT CREDIT AND SAVING INSTITUTION, TIGRAY, ETHIOPIA)

Abstract

Savings mobilization is a critical function for the sustainability and outreach of Microfinance Institutions (MFIs) in developing economies, and this study aims to assess the major challenges and opportunities in this area, using Dedebit Credit and Saving Institution (DECSI) in Tigray, Ethiopia, as a case study. Employing a descriptive research design, primary data were collected from a sample of DECSI employees using structured questionnaires, supplemented by secondary data. The analysis identified significant internal operational weaknesses, with the absence of remarkable remuneration identified as a "very strong" barrier; other strong internal operational weaknesses included manual financial systems, time-consuming procedures, lack of modern advertisement, and absence of overtime fees. Externally, peace and political instability posed a "very strong" challenge, alongside competition from other financial institutions, poor saving culture, and underdeveloped infrastructure. While staff commitment and the potential for quality service delivery were identified positively as opportunities, factors such as staff incentives, stakeholder cooperation, and product diversification were found to be underutilized. The study concludes that DECSI's savings mobilization efforts are hindered by a combination of critical internal operational weaknesses and external environmental factors. Consequently, it is recommended that DECSI invest in a modern Management Information System (MIS), introduce technology-driven channels (e.g., mobile banking), improve working conditions and remuneration to retain skilled staff, and develop more diversified savings products.