Department of Accounting

Saving Mobilization and its Management

in the case of Bahil Adarash S.city Omo Micro finance S.C Sub Branch Office.

Aresearch proposal submitted to department of accounting in partial

fulfillment for the Requirment of Bachlor degree(BA) in Accounting.

Advisor: Tesfaye Jifar

Prepared By: Genet Seyum

Id No. 0637/05

HAWASSA, ETHIOPIA

APRIL, 2016
 ACKNOWLEDGEMENT

First of all I would like to offer my deepest thanks to Ato Tesfaye Jifar for his valuable
work and continuous help during the process of writing this research proposal, and also
I would like to thank, my friends those provides a constrictive idea for me to conduct
this research proposal.
 ABSTRACT

Background: The Omo Micro Finance Institution Bahil Adarash Sub branch is one type of
financial institution which is located in Hawassa City, of the Eight sub branch office
rested.

The study, therefore focuses this society in particular to assess saving mobilization and
its management system of the mention financial institution to the development of the
society.

Objective:- The main objective of the study will be to assess assess saving mobilization
and its management system of Omo Microfinance credit and saving institution to the
development of the society. It will be specifically analyses in depth the Microfinance
institution contribution to the Development of Local Saving people and the people
awareness about the importance of Saving Mobilization (The Microfinance Institution
under study).

Methodology: the study will mainly based on primary data that are obtained at origin
from the Institution and it`s customers, the data will be obtained through interview,
quaternary and observation. The secondary data also concerned.

Data processing and analysis:- after the data will gathered from the institution and it`s
Customers through different methods, it will be analysis and discussed qualitatively and
quantitatively to the indicated result.
 TABLE OF CONTENTS
ACKNOWLEDGEMENT....................................................................................................i
ABSTRACT........................................................................................................................ii
TABLE OF CONTENTS...................................................................................................iii

CHAPTER ONE..................................................................................................................1
1. INTRODUCTION...........................................................................................................1
1.1 Background of the study............................................................................................1
1.2. Background of the organization................................................................................3
1.3 Statement of the problem...........................................................................................4
1.4 Objective of the study................................................................................................5
1.4.1 General Objective...............................................................................................5
1.4.2 Specific Objectives.............................................................................................5
1.5 Significance of the study...........................................................................................6
1.6 Scope /Delimitation of the study...............................................................................6
1.7 Limitation of the study..............................................................................................6
CHAPTER TWO.................................................................................................................7
2. LITERATURE REVIEW................................................................................................7
2.1. Foreign AID/LOAN..................................................................................................8
2.2. Function of commercial bank...................................................................................8
CHAPTER THREE.............................................................................................................9
METHODOLOGY..............................................................................................................9
3.1. Source of data...........................................................................................................9
3.2. Method of data collection.........................................................................................9
3.3. Method of sampling..................................................................................................9
3.4. Method of data analysis..........................................................................................10
CHAPTE R FOUR............................................................................................................11
4.1. Time budget............................................................................................................11
4.2. Cost budget.............................................................................................................12
BIBLIOGRAPHY /REFERENCE.....................................................................................13
QUESTIONNAIRE...........................................................................................................14
 CHAPTER ONE

1.1 Background of the Study

The history of banking in Ethiopia goes back to 1905 when the Bank of Abyssinia established in
Addis Ababa. This bank was founded based on the agreement, which was supposed to last for
fifty years. With Anglo Egyptian National Bank. Apart from bank of Abyssinia, three other
foreign based banks were also established in the country in 1908. A new Development Bank by
the name of socitete national d’Ethiopia pour le Development de l’agriculture etdu commerce,
banque de l’indochine and the compagnie de l’Afrique oreintlae. All these banks were said to
contribute less to the country`s needs because they owned by foreigners, therefore, the Ethiopian
government shortly decided to recognize the currency and banking system of the country and
bought out the foreign company. By special charter on 29 th of August 1931 the bank of Abyssinia
liquidated. The bank renamed it as the ‘Bank of Ethiopia’ in the same year. This bank was the
first nationally owned bank in African continent. This was closed following invasion by the
Italian fascism in 1936.

During the short occupation by the Italians (1936-1941), the banking activities have
expanded with the emergence of Italian operated banks. The Ethiopian government was in
straggle with the British to establish its own bank. The government finally succeeded in
establishing the “State Bank of Ethiopia” in 1943. This bank was functioning as a commercial
bank and central bank to the country until 1963.It was split into two and give up to today
National Bank of Ethiopia (NBE) and Commercial Bank of Ethiopia (CBE) in1963. Other banks
were also established under the emperor Haile Selassie period but all those privately owned
commercial banks and insurance companies were all nationalized by 1975.

During the Military Regime, when the economy was under the command economic
system, all the nationalized commercial banks were reorganized to form what is known as the
commercial bank of Ethiopia (CBE). There were also two specialized banks that were set up by
the name of the Agricultural and Industrial Development bank (AIDB) and the Housing and
Saving bank (HSB). The commercial bank of Ethiopia took over the sole power over performing
the commercial bank activities. (Zewdu and Meberatu, 2002).

Today, it is realized than ever that commerce has come to be the bank bone for economic
development of a nation. To develop their trade, countries have laid different facilities that could
support the smooth flow of commerce. Among these, the service of banking has a paramount
importance. Banks are institutions specially designed to further enhance the capital formation
process through the attraction of deposits and the extension of credits.

In Ethiopia saving institutions formally started in 1994-1995. In particular the licensing

and supervision of institution proclamation of the government encouraged the spread of
institutions or Micro Finance Institutions (MFIs) in both rural and urban areas as it authorized
them among other things, to legally accept deposits from the general public hence diversify
sources of funds to draw and accept drafts, and to manage funds for micro financing business.
Currently there are 29 licensed MFIs reaching about 2.2 million active borrowers with an
outstanding loan portfolio of approximately 4.6 billion Eth. birr.

The term saving defined as being, “The money which we keep in account, bank or similar
financial organization.” Other definitions by the oxford and Cambridge dictionaries respectively
are “an economy of reduction in money, time or another resource for future use” and “an amount
of money that you do not need to spend”

Mobilization according to the Cambridge dictionary is “to organize or prepare something,

such as a group of people, for a purpose.” This definition is right, it lacks the sense of urgency
and the connection to resource (capital or money). It is organize peoples or resources in order to
be ready for action or in order to take action especially in military or civil emergency, or to be
organized for this purpose. (Encarta, 2009)

Mobilization of deposit is one of the main functions of banking business and so an

important source of working fund for the bank. It is an indispensable factor to increase the source
of the banks to serve effectively. The success of banking greatly lies on the saving mobilization.
Saving mobilization also makes financial institutions accountable to local shareholders.

1.2 Background of the Organization

Among these institutions Omo Microfinance credit and saving institution (OMFA) has
been established in accordance to Proclamation No 40/1988 in order to give full support to Micro
and Small Scale Business operation in SNNPR region. Currently the institution has 10 branch
offices, 116 service delivery posts and opining and micro bank. Since its establishment the
institution has been giving mainly credit, saving and develop different services like 3 rd party fund
management. Its vision is to become a sustainable financial institution active contributor towards
poverty reduction effort and would like to see improvement in the life of low income people. The
mission is to promote micro and small enterprises to alleviate poverty and unemployment
prevailing in SNNPR region through provision of sustainable financial and other related service
with particular attention to women. It has an objective to collect deposits and extend credits to
rural and urban farmers, and people engaged in other similar activities as well as micro and small
scale rural and urban entrepreneurs, maximum amount of which may be determined by the
National bank.

1.3 Statement of the Problem

Saving institutions from its nature; is a bit wide and modern which has a various
functions within its structure. Therefore, the profitability of it is affected, among other things in
their saving mobilization and its management. There are problems in the saving mobilization and
saving management of most saving and banks in Ethiopia. Therefore, this study would answered
the following decisive points the way Omo Microfinance credit and saving institution (OMFA)
mobilize and manages deposits, the need for requiring strong management and other related
important issues needs were answered.

This study was assessed the saving mobilization and its management system used by Omo
Microfinance credit and saving institution (OMFA)

The main research questions are :-

 what are the type of savings Omo Microfinance credit and saving institution gives?
 What are possible strategies followed by institution to change saving management
system?
 What are the overall challenges faced by MFIs with regard to saving mobilization?
 What challenges faced by the institution and it clients with saving mobilization?
 What factors contribute to its success and failure with regard to mobilizing and
managing savings?

1.4 Objective of the study

1.4.1 General objective

 To assess saving mobilization and its management system of Omo Microfinance

credit and saving institution

1.4.2 Specific objectives

 To examine the problem faced by the institution and clients in mobilization and
management of savings.
 To see the saving mobilization system of Omo Microfinance credit and saving
institution.
  To evaluate the saving management system of Omo Microfinance credit and saving
institution.
 To see the challenges of saving mobilization of Omo Microfinance credit and
saving institution.

1.5 Significance of the study

It is believed that this study would clearly reflect most of the difficulties observed in
mobilization of deposit by Omo Microfinance credit and saving institution and gives possible
solutions as to how saving officers should process potential healthy savings and undertake proper
follow up measures when problems occur regarding mobilization and management of savings
and for other researchers it cab used as an additional reference for their findings.

1.6 Scope of the study

This study would intend to address different issues regarding the strength and weakness on the
practice and presentation of saving mobilization and its management in the banking and saving
institutions. The study would be taken specifically saving department of Omo Microfinance
credit and saving institution as a way for practical considerations.

1.7 Limitation of the study

The study would be limited because of certain factors the first factor is time factor and the
second limitation factors are with regard to the data collection. The interviewer are not willing
to give all the information asked regarding to the institution failure and also give unnecessary or
an related information for few questions.
 CHAPTER THREE

3. Methodology of the study

3.1 Data sources

Data for this study would have been collected using primary as well as secondary sources. The
primary data would be taken through a questionnaire to deposit customers and also includes
interview with head of deposit manager. The secondary data would have been taken from
internal policies, annul reports, deposit manager recommendations and books which are relevant
to the subject matter.

3.2 Sampling method

The study of the sampling method would be applied in survey of data is purposive sampling it is
a type of non random sampling which conforms to certain criteria. It is a lower cost method of
sampling.

3.3 Sample size

Respondents No of representatives
Deposit manager 1
Deposit customers 15
Total respondent 16

3.4 Method of data analysis

The data I would collected through different methods mentioned in above would be analyzed
using tables and appropriate explanations of the corresponding tables.
 CHAPTER FOUR

4.1. Time Budget

In order to manage the overall research process it needs time budget. The table given
bellow shows that the time that will be taken from topic selection to final presentation.

No Activity Jan Feb Mar Apr May jun

1 Topic selection

2 Preparation of research proposal

3 Recommendation of comments to
1st draft of the proposal

4 Typing of final proposal (submit ion)

5 Collection of proposal

6 Data collection

7 Data analysis

8 Summation of first draft research

report comment

9 Typing of final report

10 Submission of final research

11 Presentation
4.2. Cost budget
In order to undertake the research process effectively and efficient, it is necessary to
prepare cost budget. The table given below shows the cost that is expected will be
incurred in the research process.

Item Quantity Duration in Unit cost Total cost

day

Personal cost

Researcher consumption 6 5 30 Br

Transportation 6 3 18 Br

Typist 150 150

Equipment printing and duplicating 3x50 0.30 45 Br

Paper 2 70 140 Br

Pen 4 3 12 Br

Pencil 2 1 2 Br

Ruler 1 2 2 Br

Miscellaneous expense 450

Total 849
 BIBLIOGRAPHY /REFERENCE

- Many Banking international trade 7th edition

- Economic development 9th edition.
- Loyd B. Thomas, many, Banking and financial markets, 1996
- Manual of the bank
 Africa Beza College

Department of accounting and finance

Questioner which will be forwarded to deposit customers

Dear respondents

The purpose of this questionnaire is to prepared for research on “saving mobilization and its
management in the case of Omo Microfinance credit and saving institution”. The response will be
used for academic purposes only. Your genuine response for the following questions is extremely
important for the successful completion of this research conclusion. Therefore, please fill the required
response below honestly and responsibly. Use a”  “mark. I would like to thank you in advance for your
co-operation.

Part I personal information

1. Sex Male Female

2. Age 18-25 26-35

35-40 Above 40

3. Job occupation

Civil servant Employees partnership

Business man/ Merchant association

Farmer religious organization

If other, please, specify __________________________

4. For how long you stay in your current job?

Less than 1 year I year 3-5 years

Less than 2 years 2 years more than 5 years

Part II questioner related to Omo Microfinance credit and saving institution service.

5. What make you to prefer Omo Microfinance credit and saving institution from other
institution?

Location Quality of service

Nature of saving requirement management system

6. For how long have you stayed as a customer of the institution?

Less than one year 1-5 years
5-10 years More than 10 years
7. What types of saving are you using currently in the institution?
Pre credit saving pass book saving
Monthly saving fixed time deposit
Insurance saving non interest bearing deposit
House purchase pre credit saving under age saving
If any other please specify
8. Have you had a regular saving habit before you become a member of the Omo Microfinance
credit and saving institution?
Yes No

9. Do you have enough knowledge about saving policy and procedure of Omo Microfinance credit
and saving institution?

Yes No

10. Do you think that the saving policy and procedure helpful?
Yes No

11. What is strength of the institution? (you can select more than one)
Encourage investment and saving
Use of New technologies
Saving interest rate
If any other please specify ___________________________________________

12. What is the weakness related to Deposit in the institution? (you can select more than one)

Failure to bring policies in to practice

Lack of encourage investment and saving

Use of old system

If any other please specify ________________________________

13. How do you evaluate the speed, courtesy & cooperativeness of deposit manager; employee,
experts their work?
Low Moderate High

14. Any suggestion on the deposit management system of Omo Microfinance credit and saving
institution?
______________________________________________________________________________
__________________________________________________________________
________________________________________________________________________
Thank you!!!
 አፍሪካ ቤዛ ኮሌጅ
የአካውንቲን ትምህርት ክፍል
ÃI SÖÃp ¾}²ÒË ው ለቁጠባ ደንበኞች ነው፡፡
ለመላሾቻችን

የዚህ መጠይቅ ዓላማ የባ/አዳራሽ ክ/ከተማ ኦሞ ማይክሮ ፋይናንስ ተቋም ቁጠባ ማበረታታት እና የቁጠታ አስተዳደሩን
ለማጥናት ነው፡ እርስዎ የሚሰጡት ምላሽ በአካውንቲንግ ትምህርት ክፍል ለመጀመሪያ ዲግሪ መመረቂያ ፅሁፍ
ማሟያነት ብቻ ነው የሚውለው፡ የእርስዎ ትክክለኛ ምላሽ ከታች ለተገለፁት ጥያቄዎች ለጥናቱ ማጠቃለያ በጣም
ጠቃሚ ነው. ስለሆነም እባክዎን ምላሽዎን በሚያስቀምጡ ወቅት በታማኝነትና በኃላፊነት ይሁን፡፡ የ”  “ ምልክት
በማድረግ ይጠቀሙ ስለትብብርዎ በድጋሚ አመሰግናለሁ፡፡

Part I አጠቃላይ ሁኔታ

1. ጾታ ወንድ ሴት

2. ዕድሜ 18-25 26-35

35-40 ከ 40 በላይ

3. የስራ ሁኔታ

የመንግስት ሰራተኛ ተቀጣሪ በሽርክና

ነጋዴ ማህበር

አርሶ አደር የሀይማኖት ተቋም

ሌላ ካለ ይግለፁ __________________________

4. አሁን ባሉበት የሙያ መስክ ምን ያህል ቆዩ ?

Less than 1 year I year 3-5 years

Less than 2 years 2 years more than 5 years

Part II questioner related to Omo Microfinance credit and saving institution service.

5. What make you to prefer Omo Microfinance credit and saving institution from other
institution?

Location Quality of service

Nature of saving requirement management system

6. For how long have you stayed as a customer of the institution?

Less than one year 1-5 years
5-10 years More than 10 years

7. What types of saving are you using currently in the institution?

Pre credit saving pass book saving
 Monthly saving fixed time deposit
Insurance saving non interest bearing deposit
House purchase pre credit saving under age saving
If any other please specify
8. Have you had a regular saving habit before you become a member of the Omo Microfinance
credit and saving institution?
Yes No

9. Do you have enough knowledge about saving policy and procedure of Omo Microfinance credit
and saving institution?

Yes No

10. Do you think that the saving policy and procedure helpful?
Yes No

11. What is strength of the institution? (you can select more than one)
Encourage investment and saving
Use of New technologies
Saving interest rate
If any other please specify ___________________________________________

12. What is the weakness related to Deposit in the institution? (you can select more than one)

Failure to bring policies in to practice

Lack of encourage investment and saving

Use of old system

If any other please specify ________________________________

13. How do you evaluate the speed, courtesy & cooperativeness of deposit manager; employee,
experts their work?
Low Moderate High

14. Any suggestion on the deposit management system of Omo Microfinance credit and saving
institution?
______________________________________________________________________________
__________________________________________________________________
________________________________________________________________________
Thank you!!!

Interview
Dear respondents.
The purpose of this interview is to collect data for research paper your genuine response
for the following question is extremely important for the successful completion of this
paper. I would like to thank you in advance for your co-operation.
Interview question that will be forwarded for deposit officer.
1) How many deposit customers are there in your institution?
2) Do you give enough orientation for your customers before granting of deposit
service?
3) How do you evaluate your deposit customer whether they know your saving policy
and procedure?
4) How many types of savings does Omo Microfinance credit and saving institution
give for its customers?
5) How do you mobilize your savings, customers?
6) What are the way you use for saving management?
7) What are the possible strategies followed by you to use a well deposit
management system?
8) Is there any challenges you face in saving mobilization?
9) How do you receive suggestions regarding saving policy and procedure of the
institution?
10) What are the possible factors contribute to the success or failure of saving
mobilization?
11) Is there any challenges you face in saving management the client may raise?
12) If you have any suggestion?