The Impact of Access to Microfinance Credit on Multidimensional Poverty Index (MPI) Reduction Among Female-Headed Households in Wukro Town, Eastern Zone, Tigray Region, Ethiopia

Abstract

This study examines the impact of access to microfinance credit on multidimensional poverty (MPI) among female-headed households in Wukro Town, Tigray Region, Ethiopia. Employing a mixed-method approach that combines quantitative household surveys with qualitative interviews, the research investigates how microfinance influences income, education, health, and overall living standards. The findings indicate that microfinance significantly reduces multidimensional poverty by enabling women to start or expand small businesses, support children’s education, and access basic healthcare and food. However, microfinance alone does not fully address the deeper challenges in post-conflict settings; many households continue to face psychosocial stress, limited social inclusion, and unstable income due to market fluctuations. These results align with the multidimensional poverty frameworks of (Sen, 1999) and (Alkire, 2015), emphasizing the need to integrate financial services with social, psychological, and community support. The study concludes that while microfinance is a critical tool for economic empowerment, its long-term effectiveness in reducing MPI in conflict-affected areas requires complementary interventions such as mental health support, gender-sensitive programming, and broader post-conflict rehabilitation.