Poverty, Access to Finance and Markets in Rural Ethiopia : EMPIRICAL EVIDENCE FROM COFFEE-GROWING HOUSEHOLDS

This study tried to see the link between access to finance and proximity to product markets and poverty in five coffee-growing zones of Ethiopia. The incidence of poverty was found to be rampant in the study area. Access to finance was significant in explaining the level of poverty in the sample households. Households who had an access to credit had more probability of getting out of poverty than households who didn't have an access to it. The welfare of households with nearer product markets was better than the welfare of households having distant product markets. Access to rural credit and proximity to product markets matter for the poor and were critical determinants of the welfare status of households in these coffee growing zones. Therefore, provision of rural credit to these households will help them finance investments and to insure against risks and thereby enhances their welfare. Making markets work for the poor is important because the poor rely on formal and informal markets to sell their products. Well-functioning markets are important in generating growth and expanding opportunities for the poor.