The Role of Saving and Internal Lending Communities in Building Resilience to Shocks for Households: The Case of Meta Woreda in East Hararge Zone of Oromia Regional State

Abstract

This research was conducted in Meta Woreda, East Hararge Zone of Oromia region to examine the role of Savings and Internal Lending Communities‟ (SILC) program in building the resilience of communities to shocks. Data were collected through quantitative and qualitative research approaches. Probability Proportional to size and simple random sampling used. The data were analyzed using central tendency, Chi-square, cross tabulation, Independent sample T- test, and partial correlation. The results showed that majority of households had been negatively affected by one or more shocks. Although, different shocks were identified, majority (98%) of respondents agreed that they are highly affected by drought and the impacts identified were loss of asset, malnutrition and displacement. Respondents confirmed that saving, loan and social fund are the three basic services of SILC that helped them to protect impacts of shocks. Independent sample T- test revealed that the difference on the amount of money saved and borrowed between members and non-members was significant at 5% significant level due to lack of awareness (training) and accessibility to saving facilities. The SILC membership increased social capital, improved technical knowledge, created discussion forums, and asset. The survey result depicted that even though SILC is important in building resilience, prevalence of shocks, illiteracy, smaller loan size, and shorter loan periods are bottlenecks which hinder better resilience building. To better improve the resilience of the communities‟ government as well as non-government organizations need to give attention to SILC by improving the performance of SILC which ultimately improve the livelihood of the community.