Dissertation (MA Business Administration)This study has aimed to examine contribution of financial institutions in reducing women poverty taking in Bahi district as a case study. Specifically, the study intended to examine the extent of women empowerment through SACCOS and VICOBA in households in Bahi district, to assess the impact of SACCOS and VICOBA on the member’s socio – economic situation, to identify obstacles and challenges exist for women in gaining empowerment through micro-credit lending, and assess perception of the members on the microfinance institutions‟ contribution to poverty reduction. The research design adopted was a cross-sectional descriptive survey and a sample size of 60 respondents who selected through purposive sampling was employed. Questionnaire, interview guide and documentary review used as tools for data collection. Data was analyzed using both quantitative and qualitative methods. There is a general agreement among the members interviewed that these MFIs have positive impacts on their socio-economic situation among women. The results show that it helps to meet consumption needs, pay school fees, run small businesses, increase and diversify the income and the majority also believes that it can be a useful tool for poverty reduction. However, it doesn’t lead to poverty reduction automatically, it depends on how the loans are used and this study identifies several obstacles for IMFs to be more effective and contribute more to poverty reduction. The main obstacles found are low repayment status, lack of capital and lack of education in both entrepreneurship and how these MFIs operate. The study recommends that, the government should continue with its effort to improve the infrastructures as a means to support women empowerment, not only SACCOS and VICOBA but also other MFIs, in engaging in poverty alleviation among women. The government and other stakeholders are also advised to provide capacity building programmes to women members in SACCOS and VICOBA and others MFIs through training and seminars in order to empower them. So as to use Microfinance Institutions as a tool to reduce poverty among rural women