Impact of Social Capital on Poverty Reduction in Ethiopia: Evidence from the Amhara National Regional Staten

Fentahun Admassu Yayeh; Wondaferahu Mulugeta Demissie

doi:10.36923/iefrontiers.v27i2.248

Open Access Article Economics

Fentahun Admassu Yayeh ⁽¹⁾, Wondaferahu Mulugeta Demissie ⁽²⁾

(1) Political Economy and Governance, Amhara Management Institute, Bahir Dar, Ethiopia. , Ethiopia,

(2) Department of Development Economics, Ethiopian Civil Service University, Ethiopia

https://doi.org/10.36923/iefrontiers.v27i2.248

Issue
Vol. 27 No. 2 (2024): Continuous

Submitted
March 24, 2024

Published
June 30, 2024

Keywords:

Member Households, Poverty, Social Capital, Financial Cooperatives, Economic Development, Sustainable Development Goals

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Abstract

This study aims to investigate the influence of social capital on poverty reduction among members of financial cooperatives in the urban and rural areas of the Amhara National Regional State, Ethiopia. Adopted explanatory and used mixed research methods using the cross-sectional study from 348 stratified and randomly selected financial cooperative members. Primary data was collected through a structured questionnaire, focus group discussions, and personal interviews. Furthermore, the data was analysed using logistic regression and multiple linear regression models. Three types of social capital dimensions: cognitive, relational, and structural social capital is operationalized and measured in terms of members' understanding of shared mission and goal, cooperation, and trust. The regression result shows that structural social capital and relational social capital are associated with improved poverty reduction, whereas a lack of cognitive social capital is associated with a decline in the reduction in household poverty of financial cooperative members. Surprisingly, the finding indicated that dimensions of social capital are more effective in affecting monetary poverty than other variables in the Amhara region. The study underscores the importance of social capital in influencing poverty reduction among members of the study area. Recognizing the impact of different dimensions of social capital, policymakers can design targeted interventions to combat poverty effectively. Strengthening social capital within financial cooperatives and promoting collaboration with financial institutions are essential steps towards achieving the Sustainable Development Goal of alleviating poverty in the region.

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Authors

Fentahun Admassu Yayeh

Political Economy and Governance, Amhara Management Institute, Bahir Dar, Ethiopia.

https://orcid.org/0000-0002-1722-9173

devtecon04@yahoo.com (Primary Contact)

Wondaferahu Mulugeta Demissie

Department of Development Economics, Ethiopian Civil Service University

https://orcid.org/0009-0006-5087-6686

Author Biographies

Fentahun Admassu Yayeh, Political Economy and Governance, Amhara Management Institute, Bahir Dar, Ethiopia.

Fentahun Admassu Yayeh is a PhD student in Political Economy and Governance at Amhara Management Institute. He holds a Bachelor's Degree in Economics and a Master's in Development Economics. He has served as a Monitoring and Evaluation Expert in the Rural Financial Intermediation Program, a Cooperative Promotion Expert, the Rural Financial Intermediation Program Coordination Department Head, and the Director of the Financial Cooperatives Development and Leadership Directorate. He has developed various support materials such as cooperative guidelines, by-laws, feasibility studies, and project preparation and management training manuals. He played a significant role in establishing the Amhara Cooperatives Savings and Credit Federation.

Wondaferahu Mulugeta Demissie, Department of Development Economics, Ethiopian Civil Service University

Dr. Wondaferahu Mulugeta Demissie, born in July 1974, has been an Associate Professor of Economics since April 11, 2017. He holds a BA in Economics and an MSc in Economic Policy Analysis from Addis Ababa University, Ethiopia, obtained in 1999 and 2003, respectively, and a terminal degree from the University of Andhra, India, earned in 2014. With 25 years of teaching, research, and community service experience across three Ethiopian universities, he currently serves as a full-time academic staff member at Ethiopian Civil Service University (ECSU) in Addis Ababa and as a guest professor at eight other universities in Ethiopia. Dr Wondaferahu has published over 30 articles in reputable journals (indexed by Scopus and Web of Science) and authored the book "Fiscal Policy and Economic Growth in Ethiopia" in 2012.

Yayeh, F. A., & Demissie, W. M. (2024). Impact of Social Capital on Poverty Reduction in Ethiopia: Evidence from the Amhara National Regional Staten. Innovation Economics Frontiers, 27(2), 30–44. https://doi.org/10.36923/iefrontiers.v27i2.248

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