Impacts of rural microfinance credit on household food security in North Wollo, Ethiopia

Abstract

This study evaluates the impact of rural microfinance credit on household food security using mixed methods research conducted in Ethiopia’s North Wollo zone. The analysis incorporates survey data from 369 households, complemented by key informant interviews and focus group discussions. We analysed the key food security indicators of dietary diversity, calorie intake, and food consumption scores using an endogenous switching regression model. The results show that microfinance participants achieved significant improvements across all indicators. The model further indicates that non-participating households would have realised comparable gains had they participated in credit. These findings demonstrate microfinance’s effectiveness in enhancing household food security. Microfinance institutions should enhance credit-plus services and women’s empowerment to improve household food security. This approach would help achieve the sustainable development goal of zero hunger through agricultural investment and income diversification.