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Bachelor of Art, Metropolitan State University of Minnesota, 2003
Master of Business Administration, Argosy University, 2005

Term Paper Submitted to Dr. Rustin Wolfe of Saint Mary’s University of Minnesota in Partial Fulfillment of the Requirements for the Degree DOCTOR OF EDUCATION


Copyright © 2006


Alyou Alem Tebeje

Planning and Implementing TDA’s Microfinance Development Initiatives in Awramba Village, Ethiopia


The idea behind micro-financing is to provide access to capital in order to stimulate the local economy (Daley-Harris, 2002). TDA is a practice of financing directed at those people who do not have access to traditional banking systems, because of their lack of credit. The problem is increasing access to capital, deposits and investor equity, the ability to offer additional services such as savings and insurance products, and the ability to attract investors that may not have otherwise participated (González-Vega 1997). The problems of poverty, low productivity, population growth, unemployment, primary product export dependence, and international vulnerability are the major obstacles for the development in a third world country.  In order to eliminate the problem, modification of the present international economic order is needed. Microfinance organizations aim to have a positive impact on the life of the poor. Positive impact does not only mean poverty alleviation (where the poor become less poor, where their poverty becomes less severe); it should also indicate poverty reduction (a situation where there is no poverty). As Robinson (2001) described, microfinance stands as one of the most promising and cost-effective tools in the fight against global poverty.

Organization Background

Tana Development Association (TDA) organizations engaged in microfinance and dedicated to improving the outreach and sustainability of microfinance services. TDA is among the many program interventions of the country XYZ to positively contribute to the growth of economy. The TDA is a private management financial company, established to provide services to existing and potential micro, small and medium business enterprises. The services of TDA are mostly in the areas of business management, cooperative management, entrepreneurship, and training of enterprise trainers. The overall objectives of the TDA programs are among the most important interventions in developing country efforts to reduce poverty.

Problem Description

This paper deals with the problems and issues surrounding TDA. TDA has a challenges and problems associated with microfinance practitioners and staff members.  TDA is facing problems regarding skilled labour which is not available at local levels. Another problem is short of financial resources loans or grants, sustainability of the same is not ensured. And nearly a decade of falling output, increasing wage arrears and a growing dependent on international aid. TDA drop out is very high. With the rising of the costs associated with high levels of drop outs and their implications for achieving sustainability, there is a growing need to deliver client responsive products. At the same time microfinance practitioners with limited business knowledge is the other impeding factor for surmounting the problem (Harper, 1998). In an organization such as TDA, where they have different initiatives in the areas of control, poverty throughout country TDA in the four regions, it was not feasible to have a staff members and practitioners dedicated to microfinance.

TDA to become professional institutions (with capable and accountable staff members and practitioners) can reach larger numbers of poor in a sustainable and efficient manner with appropriate products and services through low cost and efficient delivery mechanisms. TDA better manage the challenges and problems associated with microfinance practice. Microfinance practitioners and staff members do, however, have access to various resources including online information, courses, and networks, as well as being able to access expertise from TDA. Microfinance practitioners and staffs members to be able to access and utilize other information sources are essential. It is important that the staff of TDA to be part of the development of appropriate microfinance products and the support of local entrepreneurs.

Microfinance Background

Microfinance is all about providing responsive financial services to the poor in order to help them improve their quality of life and to eventually move out of poverty (Coleman, 2001). It is about contributing to poverty alleviation and poverty reduction. As Schreiner (2003) described microfinance to have an impact, microfinance organizations must have an outreach component and sustainability. Designing and providing responsive financial services is a key to maintaining outreach and sustainability (Harrison & Shirom, 1998).). Finding the appropriate answers to key marketing questions through market research will increase your organization’s chances and ability to push the frontiers of microfinance so that more and more of the poor can be served!


The objective of TDA is to establish a sustainable network of self-reliant local microfinance institutions with a full range of financial services to their members, and to create a sustainable access of low-income people to financial services and income-generating opportunities. On the other hand, the objective of TDA program is to identify potentially successful entrepreneurs. The primary focus is rural economic development with emphasis on enabling community economic capacity through development of self-sustaining enterprise development/support infrastructure. The training will focuses on expanding and strengthening its affiliates and on broadening the range and coverage of financial services. The staff training will help coordinate the activities of all major stakeholders and will intervene in particular areas to extend the financial services of sustainable microfinance institutions in rural areas.

Given the TDA background the training has been designed to achieve several major objectives and outcomes. Expected objectives are as follows: organization’s mission; purposes of goals and objectives; define organizational goals and effectiveness; examine goals – distinguish between short-term and long-term goals, and effectively manage goals and objectives. The objective is to identify strengths, weaknesses, opportunities and threats of the training centers in order to carry out a needs assessment on how to improve the internal organization and the management of the offered services which will be paid by the microfinance business owners.

Limitations and delimitations

The major advantage of the research method was the flexibility afforded in terms of the approach, methods and orientation of emphasis. While working within a general framework agreed upon between the four microfinance training centers. As Fraenkel, and Wallen (2003) described the qualitative research approach facilitated the collection of detailed qualitative information based on in depth investigation.

The main limitation of the method was the time constraint. It is questionable whether the time period was sufficient to explore substantial areas of research. The nature of qualitative research means that it is inherently time consuming (Bernard, 2000). The researcher also, considered that the quality of information would be compromised because of the distraction of a tape recorder or if people felt uncomfortable about being recorded (this was sometimes the case when interviewing women in the rural areas) then the interviews were not taped. In these instances extensive field notes were taken by a second person.

Due to the brief nature of the five days workshop, participants will not learn how to carry out interviewing techniques, which is covered in the five days course. The logistical challenges add to this, in some cases the researchers found it difficult to generalize from the amount and level of detail of information gathered.

Justification for the training

The raining is justified given the MXM objectives of the research that aimed to create and disseminate findings that would enrich the knowledge base and enhance practitioner skills on microfinance. In reality, training benefits due to increased motivation and improved attitude of personnel also are extremely valuable to any organization.

Research Questions

  1. How can TDA improve its understanding of client livelihoods?
  1. How can TDA improve its knowledge of changes (and the processes behind those changes) that its services help to create?
  2. What are the general directions of these changes?
  3. What impacts or changes are taking place in relationships between clients and practitioners as well as staff members?
  1. How does access to different sources of funds, particularly government and donor funds, affect the mobilization of small savings?
  1. How can TDA improve its understanding of individual clients, practitioners, staff members, and communities? Of the relationships between these potential levels of impact?
  1. How does an improved sense of ownership empowering for microfinance practitioners to lead for greater participation in organizational processes?

Definition of terms


Microfinance means financial services for poor people, offering very small loans to low income, usually poor people, to help grow their small scale businesses or start new ones. As Robinson (2001) described the term has acquired a broader definition which covers any financial service reaching those excluded from the banking sector and involving small transactions (usually $200 to $300).


By definition, poor people have very few assets, particularly physical and financial ones living on less than one dollar a day (World Bank Report, 1999). The poor people economic condition of lacking both money and basic necessities needed to successfully live such as food, water, education, and shelter, (Harper, 1998). As Baker (2000) described, poor people have little access to productive assets and low capabilities in terms of health, education and social capital.


The definition of poverty by the World Bank (World Development Report, (2000) extended the conceptual dimension beyond the conventionally held ideas of permanent income/consumption to a more comprehensive notion of lack of opportunities. The usual definitions of poverty are based on lack of money, the condition of having insufficient resources or income (Wright, 2000).


The hypothesis will be tested whether professional development (with capable practitioners and accountable staff members) in the microfinance program has a positive effect on various outcome measures. In addition to the overall impacts of participation in the training programs, the researcher examine the professionals are constantly developing their skills to improve their delivery in order to reduce the proportion of people living in extreme poverty.


The training sample consists of  randomly selected, 70 staff members, including 120 microfinance practitioners including banks from four region training centers A, B, C and D and 10 non-practitioner institutions including non-bank financial institutions and NGOs. Non-practitioner institutions that provide technical assistance to microfinance worked in a variety of departments: public works, fire, police, and government administration.

Method of data collection

Data Collection Methodology

A qualitative research methodology was chosen for the purpose of collecting rich, in-depth information (Greenbaum, 1998).  Interviews were conducted within a small number of villages and with a small number of people in order to capture the complexity and variability of the post training environment. Secondary data was collected throughout the research period, and the primary data was collected at the beginning of training (Greenbaum, 1998).

Data collection process was conducted in region four training centers were visited. While the goal of the study is to obtain the specific information required to answer the study questions, the manual directs investigators to begin gathering information about MXM microfinance practice by engaging in broad discussion with people in the community. Talking with the people leads to the identification of persons who have a lot of knowledge about traditional financing and practices, and who are able to formulate clear ideas about micro-financing in the local area. People, who can talk effectively about their own financing practice, as well as about general practices, are sought out as key-informants. The response rate was 100% from meeting participants. In order to assess the need of the training centers, the methods were used interview using the structured questionnaire with the concerned individuals.

Two data collection methodologies are used to obtain information about the general MXM microfinance practice (mixture of semi-structured interviews and focus group discussions). The researcher carried out the interviews with all of the national language (Amharic) speaking informants. Where he was not familiar with the local language an additional person was employed for translation. The majority of interviews during the fieldwork were taped and transcribed. Interviews were either carried out in Amharic, English or the local language as appropriate.

The semi-structured interviews were designed to collect data from key informants and the community (Greenbaum, 1998). Semi-structured interviews with key informants were directed at exploring specific issues relating to their role in and perceptions of microfinance (Coleman, 2001). Key informants were primarily those involved in the delivery or support of microfinance programs. This included NGO staff, Microfinance Organization staffs, World Bank, independent consultants, etc.

As Greenbaum (1998) described focus group discussions were mainly designed for gathering information at community level, often a general discussion would begin in a group; individuals would provide more detailed information on certain points of interest. Focus group discussions and semi-structured interviews were carried out in various locations depending on the sensitivity of the subject matter and the interviewee.

Assessing MXM Background

The discussion also focused on the appropriateness of the financial products (Greenbaum, 1998). There is a clear recognition of the need for professional development. Popham (2000) notes high quality and context specific professional development are the key for enabling microfinance organizations to expand outreach and enhance their financial/organizational sustainability. Especially, for promoting organizational sustainability, capacity building is very crucial as it concerns transfer of core skills to microfinance practitioners and staff members succession planning (Paxton, 2002).) Building of appropriate systems to ensure continued functioning of microfinance programs (Schreiner, 2003). The consultant report of each training center is presented in five sub headings as follows: background, services, SWOT analysis, activity planning and proposal.

Based on the findings, particularly the SWOT Analysis and activity planning, the consultants forwarded his opinion on the support the training program. The background explains the establishment, number, qualification and experience of staff and management of the centers. The training programs or services offered by the centers, service fee, how cost is calculated, promotion and advertising measures are discussed under the sub-heading Services. As Harrison and Shirom (1998) describe SWOT is a powerful technique for understanding your Strengths, Weaknesses, Opportunities and Threats. Activity planning shows services planned to be improved and new services to be introduced, the role of the centers and partners to improve the services. Given the growing competition among microfinance institutions, limited resources require a new approach in assessing microfinance client needs (Daley-Harris, 2002). To be able to keep up with the industry trends and stay in the market, the microfinance organizations need to improve their product and services to be more clients responsive (Coleman, 2001).

Change Plan


MXM change plan depends not only on the correct identification of the existing problem but also on recognition of possible resistance to change, panned ongoing effort by organizations to change in order to become more effective (French, Bell & Zawacki, 2000). Organizational development efforts for the manager to recognize the need for change, diagnose the extent of the problems that create this need, and implement the most effective change strategy (Harrison & Shirom, 1998). MXM hire external consultants to oversee company‘s change planning and implementation. Consultants identify data sources for problem identification. Collect data from a variety of sources, identify and describe problems. List in order of priority the problems to be addressed by the implementation program. MXM examines organizational strategy to be implemented in the next upcoming physical years.

Theory of effectiveness of change

MXM were facing problems and challenges associated with their microfinance practice for a decade. To address this problem, a study was undertaken to develop and verify a set of measures that could be used to assess the effectiveness of MXM microfinance practice. MXM’s organizational structure must now be realigned to achieve this vision. MXM identified a number of key themes that affect their capacity to deliver its agenda. Their vision is of four regions free of poverty. Its overarching goal is poverty reduction. Their goal includes sustainable economic growth, good governance, inclusive social development, gender, and private sector development. MXM consultants’ studies, which focus on applying knowledge, provide practical advice for how MXM can become more effective at supporting opportunities for poor. Their key idea behind the change initiative is needed to improve their effectiveness; enhance the value they provide to microfinance communities.

Background Organizational Change

The ideas for change come from MXM management initiated by the practitioners and clients. MXM consultants after researching and working with clients in microfinance field, it became apparent to advance their mission. They need to foster positive change in how their organizations were functioning. A change in MXM organization creates conditions that encourage organizational integrity and interventions for improving micro-financing effectiveness. MXM organizational changes and effectiveness depend on under emerging conditions, such as globalization, cultural and social evolution, public policy changes, and technological innovations. The innovation and organizational change of MXM supports institutional arrangements contribute to functioning, effectiveness and innovation in organizations. Organizational change and effectiveness examines the relationship between organizational culture and employee experiences to yield insight into practices and strategies that attract and leverage diversity in the workplace (Lawler & Worley, 2006).

The concept of organizational change when used usually refers to planned, organization wide change (French; Bell. & Zawacki, 2000).Organizational Change includes activities to ensure that goals are consistently being met in an effective and efficient manner (Burke, 2002). As Harrison and Shirom (1998) indicated organizational change can focus on performance of the organization, a department, processes to build a product or service, employees, etc. Putting together a strategic planning determines where an organization is going over the next year or more (Burke, 2002).

There are a variety of approaches used in organizational change. The way that an organizational change is developed depends on the nature of the organization’s leadership, culture of the organization, complexity of the organization’s environment, size of the organization, expertise of planners, etc. As Daley-Harris (2002) described goals-based planning is probably the most common and starts with focus on the organization’s mission (and vision and/or values), goals to work toward the mission, strategies to achieve the goals.

Burke (2002) discusses a change is not separable from the ongoing work of the organization. Usually organizational change is provoked by some major outside driving force, e.g., substantial cuts in funding, address major new markets/clients. As Banner (1995) stated successful efforts at organizational change require an investment of time, human effort, and money. Harrison and Shirom (1998) also discusses organizational change is a generalized term for organizational development and organizational transformation theory and practice. However, Burke (2002) states that leaders should not assume that this thought process will then generate the necessary behavior for the organization change.

How well organizational changes are accomplished is a direct result of management’s ability and willingness to invest in the support and training necessary to achieve positive changes (Harrison & Shirom, 1998). The organization need to be clear about their goals; bring people together; focus more on the team itself rather than the outcome; overcoming the barriers to change includes leadership training for middle managers and working with staff and manager resistance to convert that energy into a positive force instead of a negative force (Burke, 2002).

Harrison and Shirom (1998) also examines the change process involves changing a job by adding additional tasks and by adding more responsibility. Typically, the concept of organizational change is in regard to organization-wide change, as opposed to smaller changes such as adding a new person, modifying a program (Burke, 2002).  Examples of organization wide change might include a change in mission, restructuring operations (e.g., restructuring to self-managed teams, layoffs, etc).

The Design Process

Banner (1995) described organization design begins with the creation of a strategy, a set of decision guidelines by which members will choose appropriate actions. The MXM strategy is derived from clear, concise statements of purpose, and vision, and from its basic philosophy. Strategy unifies the intent of the organization and focuses members toward actions designed to accomplish desired outcomes (Posavac, & Carey, 2007). As Burke (2002) indicated strategy encourages actions that support the purpose and discourages those that do not. Harrison and Shirom (1998) also indicates creating a strategy is planning, not organizing, to organize we must connect people with each other in meaningful and purposeful ways. Further, we must connect people with the information necessary for them to be successful. The process of organization design enhance communication and information flow among people (Harrison & Shirom, 1998). Change plans are designed to encourage individual responsibility and decision making process.

MXM Change Plan

After nearly a decade of falling output, increasing wage arrears and a growing dependent on international aid, there is now general agreement by management that MXM cannot survive without changing the way they do business. MXM attempts to intervene in organizations to improve their effectiveness; and the roles of change agents The MXM provides microfinance participants with techniques and tools to improve financial services and sustainability by training practitioners.

The new MXM chief executive did provoke organization wide change when his/her new and unique personality pervades the entire organization. How well organizational changes are accomplished is a direct result of management’s ability and willingness to invest in the support and training necessary to achieve positive changes (Lawler & Worley, 2006). Identifying the MXM barriers to change are essential, including: resource problems; legal obstacles; individual resistance; group resistance, and external resistance. Overcoming the barriers to change includes leadership training/coaching for middle managers and working with staff and manager resistance to convert that energy into a positive force instead of a negative force (Harrison & Shirom, 1998). Any change begins with a vision for the future (Burke, 2002).

Indeed, small changes can have big effects and little changes can have large consequences. Change is not separable from the ongoing work of the organization. Change is an open-ended process and is less predictable than established processes (Harrison & Shirom, 1998). Changing MXM organizational culture is the toughest task you will ever take on. As Lawler and Worley (2006) elaborate an organizational culture was formed over years of interaction between the participants in the organization.

MXM change plan include microfinance practitioners and staff members training and other continuous improvement strategies. MXM welcome the desire and commitment to continue reform and modernization expressed by microfinance parishioners and staff members in all four regions. Through consultation and dialogue with leaders and peoples in the region response to reform identified by the regions, including by the Amhara development council they have developed an initial plan of support for reform. The initiatives herein offer a broad range of opportunities from which governments, business, and civil society in the regions.

MXM as organization need to monitor the changing environment, establish them selves as soon as possible and build in sufficient flexibility to respond to important events and developments (Lawler & Worley, 2006). Change should not be done for the sake of change …. .it’s a strategy to accomplish some overall goal (Burke, 2002).  MXM analyze the political, social and economic situation at national and local Levels and understand the impact on microfinance activities (Harper, 1998). They must have the necessary expertise and technical support to provide sustainable financing system to the poor. MXM as microfinance provider should carry out a detailed analysis of demand in order to design appropriate interventions and products. Training is needed to carry out a gap between what is required to perform their work competently and what they actual know.

Organizational change is an evolutionary process, and resistance to change is an inherent part of that process (Lawler & Worley, 2006). Typically there are strong resistances to change MXM staff members. Many people think things are already just fine and don’t understand the need for change (Lawler & Worley, 2006). Many doubt there are effective means to accomplish major organizational change (Jones, 2004).Often there are conflicting goals in the organization, e.g., to increase resources to accomplish the change yet concurrently cut costs to remain viable. As Jones (2004) bed described organization-wide change often goes against the very values held dear by members in the organization. The change may go against how members believe things should be done. That’s why much of organizational-change literature discusses needed changes in the culture of the organization, including changes in members’ values and beliefs and in the way they enact these values and beliefs.

Open communication can go a long way toward overcoming resistance to change based on misunderstanding, lack of trust, or different viewpoints (Jones, 2004).Those who will be affected by the change identified, and the reasons for and details about the change must be conveyed accurately to them (King; Morris & Fitz-Gibbon, 1987). Keeping this information secret is bound to cause resistance. Also, the people who are the targets of the change should be involved in the change process. This is particularly important when true commitment to the change is critical and those affected have unique knowledge about the processes. Change is as much about organizational culture as it is about structures and procedures (Jones, 2004). The culture is defined by the shared beliefs, values, and patterns behaviors that exist in the organization in the way they do things (Burke, 2002). Successful change must involve top management, including the board and chief executive (Jones, 2004). Change is usually best carried out as a team-wide effort (Bernard, 2000). Communications about the change should be frequent and with all organization members. As Harrison and Shirom (1998) described to sustain change, the structures of the organization itself should be modified, including strategic plans policies and procedures.


Microfinance programs face many challenges and therefore we carefully examined the factors that increase a borrower’s chances for success (Rhyne, 2001). After in depth research, MXM concluded that rigorous training and support in several areas are needed for long-term success. These areas are: Loans and repayment; running a profitable business; becoming a responsible borrower; working as a team, and develop relationships of mutual support. As participants go through the program, needs for additional training and support may arise and will be addressed. Additional programs may include peer training, growing a business, and financial literacy.

Successful implementation of an organizational assessment requires a good understanding of the stage of development within which the organization finds itself (King; Morris & Fitz-Gibbon, 1987). Collecting and analyzing data is vital preliminary stage in implementing change (Harrison & Shirom, 1998). MXM identify opportunities for enhancing the effective implementation of change, and develops plans and implements systematic methods. Actions taken include developing new vision statements for deepening the reach of the financial sector; strengthening business plans and staffing of microfinance focal units; conducting portfolio reviews; implementing systems of project performance indicators; facilitating staff training, and introducing incentives for technical specialists to provide advice (Paxton, (2002).

Theory of effectiveness of implementation

MXM initiate a change that perseveres implementing new knowledge for action to overcoming barriers to organizational change. The need for change must be accompanied by effective implementation if outstanding performance is to be achieved. Effectiveness means being able to achieve set goals (Harrison & Shirom, 1998). The vision of MXM is to improve the quality of life of the poor to a level where they are no longer poor. The goal of MXM is poverty reduction as well as making profit while some propose that there is a trade-off between profits and poverty reduction (Coleman, 2001). In order to achieve these goals and objectives is possible through training and professional development of microfinance practitioners and staff members as well as clients. Training is a key activity in order to achieve successful capacity building. Training is a key activity in order to achieve successful capacity building (Lawler & Worley, 2006). New skills are gained through training, seminars and other didactic methods. Training is essential for empowering the participants through the acquisition of new skills which will better enable them to achieve their goals.

Assessing Program Implementation

MXM implementation program is focusing on tools to improve the efficiency of microfinance by providing adequate training. After crafting a strategic training supported implementation of the training plan. MXM effective implementation program enabling environment influences the effectiveness of microfinance in the other four areas (A; B; C and D) of poverty alleviation interventions. As Robinson (2001) described the development of the variety, flexibility and quality of financial services to meet the wide diversity of needs of the poor is the challenge for forward thinking and successful microfinance organizations.It’s necessary to define a microfinance business for the poverty alleviation, focusing first on the core functionality that provides the best and fastest payback (Schreiner, 2003). The successful implementation strategy should leverage the best practices built into the microfinance and processes should be realigned accordingly (Coleman, 2001). This requires knowledge of implementation and financial skills to determine how microfinance can best be applied to further the MXM’s goals.

The purpose of the Assessment         

The purpose of the consultancy is to assess the potential demand and the effective supply of microfinance products specifically designed for very low-income people in the country. As Daley-Harris (2002) described the results and recommendations are mainly directed to national and foreign investors MFIs, NGOs, etc willing to extend their operations to underserved markets. The assessment solves challenges for placement, promotion fit, succession planning, coaching, and self improvement and measures trust, empathy, conformity, focus, flexibility of the programs (Daley-Harris, 2002).

Assessment Objectives

Once there is a clearer picture of how MXM mission and activities are linked to possible client impacts. The realization that impact assessments can provide useful information to microfinance practitioners and their clients has broadened the impact assessment (Posavac & Carey, 2007). The impact assessment has number of objectives: proving the impact of MXM services to external stakeholders (e.g., donors and/or social investors); advocacy (e.g., conducting an impact assessment to generate interest in poverty-alleviation).  As Posavac and Carey (2007) indicated the assessment objectives may include strengthening relationships between stakeholders and improving the self-analysis skills of clients.

Organizational Assessment 

As Posavac and Carey (2007) described an organization learns about the impact of its operations, staff, clients, and other stakeholders involved in the process will be increasingly challenged to raise questions, initiate changes, and respond to issues raised by the assessment (Harrison & Shirom, 1998).An impact assessment is thus not a neutral information gathering exercise, but a process that can challenge many assumptions and practices of microfinance (Baker, 2000). An impact assessment can improve: clients’ ability to analyze their own situation; responsiveness to the expressed and underlying needs of its clients; client input into microfinance services ( Posavac & Carey (2007). The institution may better meet their needs; information available to managers on the services needed by target clients (Posavac & Carey, 2007).

An assessment is a large investment of time, money, resources (Posavac & Carey, 2007). An organization must be ready both to do the assessment and to accept its results (Banner, 1995). The director of MXM research center felt obliged to participate in an organizational self-assessment because it was suggested by the consultants. As Posavac and Carey (2007) described the assessment process got underway with the support of external consultants, it was evident that the director had some serious reservations about opening up the organization to scrutiny, even internal scrutiny. In the end, the assessment was carried out only by the director and someone from the office.

Organizational assessments open up dialogue. This includes examining the resources controlled by management, external forces (donors, legislation, and regulation), clients and staff, as well as considering how the assessment will affect each of these groups and how to generate a positive impact for all the interests involved. This does not mean that in every case everyone will be happy, or that there will be no organizational changes that result in management and staff changes. Rather, it means that it is essential to consider all these factors in the decision to design and implement an assessment to avoid or manage any undermining of the process by those who feel threatened. In some situations, this could mean delaying the assessment.

Trainings Assessment objectives

Training needs assessment confirmed the TDA microfinance recognition of the importance of professional development as it moves into the future. The objective of training assessment is to identify the priority training and professional building needs in the four regions. The assessment helps to identify existing training courses and other resources available; to examine and assess potential professional development centers and to outline pragmatic strategies by which gaps identified can be addressed. The training course was focused on the core skills necessary to run an effective, sustainable, market responsive financial institution.

Assessment before training course

The training course offered by MXM provides a systematic approach and tools for designing, costing and new or refined loan and savings products in line with client needs. In addition, the course looks at vital questions concerning institutional strategy, financial viability, organizational structure and systems all of which are critical issues that an organization must take. The MXM assessment was conducted by external consultants. A survey sent to potential participants prior to a training event. Asks for what the participants would like covered in the training and what they already know, and the consultants interviewed several stakeholders related with the MXM practice in all four regions, examined all the documents produced by the projects and visited the projects to assess the contribution of the MXM projects towards understanding the role, challenges and opportunities for microfinance.

  1. Why did you choose this workshop? Why did you come?
  2. What questions about (subject matter of the workshop) do you come with?
  3. What advice, information, or skills do you want to get from this workshop?
  4. What do you want to take away from this workshop? Name one thing/
  5. What knowledge or skills do you feel you need to have?
  6. What are your expectations about this workshop?

Training Plan

The MXM consultants have rich experience in microfinance business development program. Understanding the needs of clients and their perceptions of the microfinance services/products helps to improve their product development skills and strengths the MXM capacity building. Providing training in region A, B, C and D would contribute in addressing more microfinance entrepreneurs. With all the facility and experience it has, the institute could design demand oriented new short term courses that may bring benefit to the institute and the trainees get skill training from experienced and qualified instructors. The courses to be introduced should also be advertised and promoted using different measures.

The MXM consultants did spend ten days meeting the village leaders before the start of training with field staff members, microfinance practitioners as well as the microfinance clients. A major purpose of these field visits is to understand the depth of outreach of the program as well as program impact. The consultants did select areas visit four centers (area A, B, C and D). The consultants did have detail discussions with participants (staffs, practitioners, and clients) of the regions. The problems encountered in working there, the economic and social lives of clients, and the changes that have taken place.

Leaning Objectives of Training

Learning objectives of the training course is to gain a better understanding of customers need and expectations; to identify inefficiencies and waste, and to identify areas for future action. The following topics will be covered in the training course: operation environment for microfinance programs; the impact of microfinance programs; loan analysis and loan processing; a review of major lending methodologies (individual and group lending, and village banking); operational efficiency, focusing on the Loan Officers’ use of time; introduction to financial planning; viability and sustainability issues, and portfolio management: As French, Bell, and Zawacki (2000) described successful change is a continuous process. Indeed, although MXM enterprise is slowly improving the performance and their competitors are getting better. MXM aim should therefore be to effect a change to make them competitive, and then aggressively pursue continuous, rapid, improvement.

Who Should Attend

Participants drawn from middle-level management/staff in the MXM organization, but also include senior member and oversee the entire product development process. In order to get a critical mass of staff versed in the techniques, each MFI should send a minimum of two-four staff.

MXM Training Course

The training course (workshop) will provide management with all the essential information needed within five days. This course is structured to be highly participatory, with participants applying the poverty assessment tools planning framework to their own organizations. Since some of the exercises are computer based, participants should plan to bring a laptop to the five days session. The purpose of MXM training course is to equip microfinance practitioners and staff members with the basic skills of training design and group facilitation (Paxton, 2002). This module is most effective when delivered with a focus on a specific topic, and followed with an actual training session. The goal of the MXM is to improve income generating opportunities and job creation among the poor. Building on previous donor support, the purpose of the MXM is to help increase access to microfinance services for poor people, become self-sufficient.

Planning when the training will happen and who will be involved as trainers can be decide by MXM.  The company plan is about results and how to achieve them. A plan has no value if it isn’t implemented; thereby helping to increase sales, increase market share, increase cash flow and increase profits (King; Morris & Fitz-Gibbon. 1987). MXM plan to improve the services: in textile, hair dressing, auto mechanics, information technology and electronics technology will be given training. Organized and continuous training on maintenance of the new machines and equipment should be given (Lawler & Worley, 2006). The center shall provide training workshops, logistics and administrative support. As Lawler and Worley (2006) described the partner can give skill upgrading trainings to the mentioned workshops.

The course was designed by MXM who has extensive experience in microfinance including seven years of direct implementation and broader experience as a manager within international organizations. Participants should have a vital professional interest in microfinance and work directly in the field of microfinance. It is highly recommended that that the top management level staff attends the course (executive and financial directors, credit directors, their deputies, senior loan officers etc.). This is an introductory course that will cover the basics of planning and starting a microfinance program.

The MXM trainings offered by the center include: improve business; start business; competence based economics through formation of enterprise; basic business skills; management; saving and credit concept; community leadership management; training of enterprise trainers; accounting, information technology, marketing and salesmanship, purchasing and supplies management, banking and insurance, law, cook, bakery and confectionary making, hotel services, house management, hair dressing and beautification, tailoring (men’s garment), dress making, textile and garment, auto-mechanics, electricity, general mechanics, machine technology, electronics, building construction, surveying, drafting, road construction and wood technology. MXM services to be improved include assessment of the impact on what has been done so far, training to be supported by counseling and providing sector-based training.

This training course will examine the contextual factors that influence the implementation of development as well as the management skills necessary to implementing sustainable development programs (Posavac & Carey, 2007). Implementation discussed below, the MXM experience by those at its forefront seems to have grabbed the attention of staff members, practitioners and policy-makers as both simple and flexible enough to apply to different contexts.

In the last decade MXM was accused by NGO’s, government agencies, and other institutions of not learning, having locked itself into a standardized model and discouraging other organizations. At the time there were some grounds for making such a case, but one must admit that the MXM has learned and innovated over the last two years. This year MXM launched itself into with a promise to transform its services to clients. The new products include flexible loans, voluntary savings and micro-pensions. MXM has also been innovating in other areas including mobile telecommunications, reported to be especially successful (Schreiner, 2003)

Once the innovation has been identified the task that emerges is how to shift to service delivery on a large scale for a discussion of scaling-up pilot projects (Wright, 2000). In MXM case there were three main components to this process. Creation of an administrative structure that could steadily expand with only limited losses of effectiveness and efficiency and access to financial resources. In particular, MXM managed to create a human resources system that could turn out high numbers of effective fieldworkers and field level managers (Burke, 2002). Key elements of this included selection practical training, a rewards package that matched the market, merit-based promotion, and the active promotion of an organizational myth (Banner, 1995). MXM understood the invisible, management benefits that arise from staff feeling they are part of a high performing organization. MXM promote, through which field staff are insulated from many of the pressures of both the people with whom they work, and their own families, such that they are able to focus on operating as an effective team.

Assessment after training

Planning to assessment training course is offered to help them be more clients oriented and learn from their customers to enhance social and financial performance of their practices. The context and objectives of MXM will determine the type of impact assessment it will conduct, as well as the desired outcomes of that assessment (Posavac & Carey, 2007). Given the objectives of a training session, the participants will answer open-ended essay questions (Greenbaum, 1998). MXM have developed assessment tests inspired by the needs of staff members and practitioners created for use in microfinance business settings. These will work for MXM particular business situation by measuring the total person and delving below surface impressions to understand how each individual will perform on the job.

Additionally, microfinance practitioners are permitted to choose financial institutions at the level of with which they have a certain degree of comfort (Baker, 2000). In ultimate display, the MXM would have effectively, and efficiently communicated, and demonstrated to microfinance practitioners, their ability, and capacity to work microfinance practitioners.  Self-esteem and confidence can eventually be elevated by the application of this methodology of examination. It can as well allow for a prompt feedback from individual or personal observation, and also permits to make comparisons with other test takers and examiner or observer. Many practitioners and staff members of microfinance are eager to understand their clients. Committed to the related goals of poverty alleviation and development, they need to know what difference their programs are making and for whom. To ensure progress toward their overall goal, practitioners need answers to the following five questions:

Instruction to Exam

The following list contains the essential rules and instructions for those participating in an exam. The participants shall register for the exam prior to the exam. The exam will have the duration of approximately two hours. All paper handed out must be returned. The paper containing answers must be clearly marked and separated from any scrap paper. The identity of the exam participant will be verified when he or she hands in the answers. Please provide a brief overview of the situation followed by a detailed description of your response no more than one page in length to complete in 5-10 minutes.

  1. Who are the program’s clients?
  2. Are the program’s products and services the right ones for these clients?
  3. What are the challenges and issues of facing MXM?
  4. Is the Microfinance Organization reaching the poorest?
  5. What is outreach and sustainability of microfinance means?

The questions on the assessment instrument can be performed in accordance to the taxonomy of the learning domain. The table of specification utilized for this assessment applies a variation of the five content areas will be responsible for conducting the assessment of cognitive domain The following table of Specifications of assessment based on the research questions as indicated above.

Table of specifications assessment after training exam

Loan Cost Saving Insurance Money Transfer
Knowledge Q1 Q1 Q1 Q1
Comprehension Q2 Q2
Application Q3 Q3 Q3 Q3
Analysis Q4 Q4 Q4 Q4
Evaluation Q5 Q5 Q5 Q5


The desire to understand clients is expanding practitioners’ agenda beyond impact as they look from what has occurred in the past to what should change in the future (Paxton, 2002). Gaining an understanding of how clients interact with microfinance products and services will help practitioners evolve their programs in response to clients’ preferences and needs. As Lawler and Worley (2006) described achieving involves more than identifying change and linking it to program participation; the process of understanding clients spans a continuum from impact assessment to market research. MXM assessment is engineered to help the staff members and practitioners conduct studies with their own information and personnel and then used to help identify candidates who will be effective in each position.        

Self Assessment based on training Course

All participants for a quick easy to accomplish assessment about participant learning, circle the most significant respond range from one through five.  The ratings range one though five. One as the lowest rank and will be indicative of possessing basic skills only, three will be regarded as the middle ground, the highest score of five which will be reflective of the excellent and utilization of the necessary skills, therefore a score of (0) zero cannot be attributed to them. Reflectively, (1) would be indicative of serious problems, (2) would reflect that the trainee attempted to perform, nonetheless the participant seemed somehow weak, and (3) would indicate an adequate degree of performance. A score of (4) would be demonstrative of a considerably very good performance. (5) Would indicate that the individual was reasonably well organized, and demonstrated an acceptable excellent performance.



The quality of the training materials was excellent.  

5              4               3             2             1




The quality of instruction was excellent  

5             4              3              2             1


3. I thought the …,  was an excellent learning tool 5              4               3           2              1




I believe my experience in the program has provided me with tools that can help me improve the performance of my organization  

5              4               3            2             1




I would recommend this program to others without reservation.  

5             4              3              2             1




I am definitely interested in attending the follow-on courses of …  

5               4             3            2              1




Complies fully to the assignment Finances (e.g., debts, savings, income, livelihood strategies)  

5               4             3            2              1




Demonstrates Member Satisfaction, Goals and Priorities Setting Exercises  

5               4             3            2              1




Demonstrates knowledge, and correct use of microfinance practice.  

5               4             3            2              1


10. Increasing responsibility of microfinance practitioners for their own decisions and management  

5               4             3            2              1



Assessment interpretation:

Assessment questions can be used as effective instructional tools without embarrassing participants who don’t have the ‘right’ answer. Scores are subjective-some participants score themselves relatively high and some low, so comparisons between participants are not absolutely reliable, and this assessment is a guide and not absolute. The improvement from the revised or validated pre-trained ability to the post-trained ability could be for different reasons.

The outcome those who undergo financial literacy training are more likely to make informed judgments and effective decisions regarding the use and management of money (Daley-Harris, 2002). Therefore, these assessments will be eventually utilized as means to secure or obtain certification, and recognition from the National Association of Microfinance Institutions. It will as well be used to offer feedback to trainees, and other members in the microfinance industry with respect to the progress of their staff. Obviously, with regards to the assessment, a rank of three and beyond would reflect that the individual is relatively knowledgeable to practice in effective way.

The idea  behind designing a change to support organizational effectiveness is about achieving organizational mission; product/service quality and value; customer satisfaction; capacity for innovation and creativity; adaptation to organizational and technological change (Harrison & Shirom 1998). As Banner (1995) put it the first step in evaluating organizational effectiveness is to understand the organization itself how it functions, how it is structured, and what it emphasizes.

Effectiveness remains a top priority for MXM for poverty reduction strategies at the country level. Improve their effectiveness to achieve concrete development outcomes. Improving quality, increasing learning and maximizing human resources to enhance overall effectiveness and better meet client needs are often the explicit objectives of structural change (Gonzalez-Vega, 1997). The MXM real notion of financial sustainability is emphasized on income from microfinance should leave behind a surplus, after covering operating costs, loan loss provisions, financial costs, subsidies on borrowings, grant/subsidies and also opportunity cost of equity capital invested. This implies that microfinance programs will be able to carry on their activities and serve the poor, even if all the subsidies are withdrawn.

Efficiency is a key component of delivery channels with special emphasis on lowering transaction, operating and financial costs for clients, with a view to be a cost leader in delivery of microfinance services (Posavac & Carey, 2007). Operational self-sufficiency is a measure of how well the MXM is able to cover all of its operating expenses including staff costs, administrative costs, provision for loan loss and interest and fee expenses. Efficiency is influenced by the costs involved in providing the services (Harrison & Shirom, 1998).

Reliability and Validity

MXM intended to use a reliable test; a microfinance practitioner would expect to attain the same score regardless of when completed the assessment, when the response was scored, and who scored the response. As Black (1999) indicated, reliability refers to the consistency of assessment scores. MXM is familiar with the terms before /after training test reliability, statistical methods are used to establish consistency of microfinance practitioner and staff members. The two forms (before /after training test) of reliability that typically is considered in training assessment.

The instrument in its wholeness will undergo a test with reference to stability and alternate form reliability. The cognitive assessment will be considered for tests for internal consistency. This however, this will be achieved by utilizing the split half. Conductively, two weeks interval will be considered during the period that test re-test will be conducted.

In addition, efforts were made to ensure reliability; various sources are obviously liable to subjectivity (Popham, 2000). A reliance on qualitative research to collect factual information can therefore be affected by the five research questions described and each possessed various advantages and disadvantages. Doing table specification analysis table and the influence/importance matrix a brainstorming session was carried out. This had the advantage of being simple and participative. The tool was effective in identifying the range of participants involved in microfinance, both directly and indirectly.  Bernard (2001) point out how easily we can bias our results by an almost unconscious selection process, which means that the researcher ends up talking to certain kinds of people and totally overlooking others.

The consultants were introduced to the village leaders by former concern staff. While this enabled us valuable access to the community that would otherwise have been impossible, it also associated us with the organization. As a result, the community kept returning to concern’s intervention and the termination of the savings facility. While this in itself was extremely useful and informative, it limited the scope and breadth of the information gathered.

As Fraenkel and Wallen (2003) described, qualitative research is often charged with random investigations rather than systematic scientific evaluation and unfocused inquiry into a subject matter. Qualitative techniques can give you a richness and depth that you are not likely to get through other methods (Black, 1999).In order to avoid the hidden problem of qualitative research techniques, systematic steps were taken to ensure reliability and validity, both internally and externally (Bernard, 2000).

Internal reliability was achieved by strict methods of data recording and analyzing. The recording and analyzing of data in this way protected against selective note taking and individual interpretations of the information given.  The accuracy of informants is included in the report in order to provide the reader with access to raw material. The reader can therefore compare his/her interpretation with that of the researchers. The team comprised an international researcher, a national researcher and a research assistant when necessary. Effective coordination and constant communication between the researchers during data collection improved the process.

A systematic process of analyzing the data and the participation of all consultants in the data analysis limited any personal bias or interpretation of individual team members. The location/social setting of the interviews has been provided to ensure external reliability. Detailed information on the methods of data collection and how they were developed and modified have also been included for this purpose. Several steps were also taken to ensure internal and external validity. The conclusions are valid and that the reader understands the context and the environment in which they were developed. As research further progress, assumptions changed and developed during the research process.

The use of four different training regions and studies enabled the testing of these assumptions and hypotheses in different environments. During the analysis all the data was examined in a comprehensive manner. For example, when discussing types of products all post training references made to types and characteristics were identified. When all the information concurred, conclusions could be drawn. If the information was inconclusive then no generalizations could occur.

Given that the purpose of this research is to improve the provision of MXM microfinance practice in other microfinance organizations then external validity is extremely important. With this in mind, the researcher has endeavored to provide detailed description of the environment or context. Only with this information will microfinance practitioners be in a position to decide whether the findings of this particular research can be applied to a new setting.


The post training vastly exceeded its original objectives of MXM. For many borrowers, the provision of credit targeted toward people such as themselves, without assets or big businesses, has had a positive psychological impact, particularly important in the post training environment. Ninety-percent of the borrowers consider that the loan has significantly improved their economic situation, with increases in monthly household income averaging thirty percent. Twenty percent of businesses stated that they were able to employ one or more additional people after loan disbursement.

Results of semi-structured interviews and focus group discussions emphasized the great need for services, and products. Microfinance really works as a poverty alleviation mechanism for the poor. It provided the services target the poor as critical strategy for poverty reduction. Some of the most notable evidence of MXM microfinance practices to impact on poverty includes the following findings: After a two-year period, participants in four regions microfinance programs showed an increase in both assets and savings compared to a non participant group, and reported greater profits from their micro-businesses (Coleman, 2001). An evaluation in MXM discovered that three-fourths of members who participated for longer periods experienced marked improvements in their economic status (Baker, 2000).


Very little research has been undertaken on the impact of microfinance. However, microfinance has tremendous potential to generate income and expand employment. Over the past decade MXM services address the central problems the poor facing Daley-Harris, 2002). The research has clearly shown that principles of microfinance best practices established for normal situations apply in post-tanning situations. The study results generally strengthen the norms and wisdom regarding microfinance in general.  Although more challenge evidence is clear that microfinance offers impacts for poor well beyond changes in income and poverty level (Daley-Harris, 2002). Most researchers have examined the effects of microfinance on poor people’s empowerment and have discovered effects in all spheres. The ability to borrow and repay a loan and build savings is no doubt an empowering experience for poor. Coupled with the mutual support and collective courage offered through the group dynamic, the poor people are empowered to participate in community decisions, and are more able to overcome obstacles of inequality.


In conclusion then, I believe there is something lacking in most efforts towards facilitating organizational change. Microfinance can contribute to solving the problem of inadequate housing and urban services as an integral part of poverty alleviation programs. The challenge lies in finding the level of flexibility in the credit instrument that could make it match the multiple credit requirements of the low income borrowers without imposing unbearably high cost of monitoring its end-use upon the lenders. A promising solution is to provide multi-purpose loans or composite credit for income generation, housing improvement and consumption support. Consumption loan is found to be especially important during the gestation period between commencing a new economic activity and deriving positive income.




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