The Role of Microfinance Institutions on Improving Household Income: The Case of Dire Dawa Microfinance Institution

The main objective of this Study is to assess the roles of the Dire Microfinance Institution on improving the households’ income in Dire Dawa city, there by seek feasible solutions to the observed challenges. The study employed qualitative. Interviews and focus group discussions tools used to collect the necessary data. Document review or document analyze was another method that was used by the study to collect the data. The findings of the study indicated that DMFI contributed in that many households or families have changed their attitude and developed a working culture and it helped many households grow their income which enhanced their economic potential, and build capital and assets. It encouraged these households to invest in the education of their Children and developed other social process like good social relations, increased social responsibility and better communication, and they were able to live a better lifestyle. As the challenges the findings of the study were showed inaccessibility of the institution, the institution is not updating itself and its service delivery system, Failure to use digital technology. The difficult unaffordable interest charged by the institution, an unfair charge as labor or operational fees and insurance fees by the institution, the existing inflation, the failure of the institution to retain loyal customers due to poor customer handling of the employees of the Institution, failure to retain faithfully households. Some of recommendations forwarded are: The DMFI should update and modernize itself and using technology, Have to assigned by the institution in one center services that strengthen the coordination between the City government and the Institution, an unfair charges as labor or operational fees and insurance fees by the institution, The institution must be accessible to the right citizen or society in order to achieve its mission and accessible to the real poor and Should work hard to retain loyal customers as well as to retain faithfully households.