In Ethiopia, the economic dilemmas facing the country have had various effects on the society at large. Given this situation, the high rates of urbanization and uneployment has resulted in that more and more people end up in small-scale activities within the informal economy. Although the informal sector has become increasingly noticeable in Addis Ababa, it is commonly neglected and separated from the formal economy. In light of the contemporary Ethiopian society, this study has nonetheless argued that the wide range of economic activities found within the informal sector is indispensable and should be integrated with the formal economy. Instead of perceiving the informal economy as an economic malfunction, this study has aimed to explore its future potential through the help of microfinance institutions. It has also looked into how the informal sector can be defined and its main characteristics. To gain an increased understanding of how informal workers perceive their own life situation, semi-structured interviews have been carried out with informal workers from the Meklit Microfinance Institution. The theoretical framework of Friedmann's 'Whole Economy Model' and 'Disempowerment Model' was moreover applied in recognizing the role of the household as well as to which extent MFIs could be said to have increased the social power of the informal sector.             The main conclusions of this essay are that there are highly diverse features of informal workers and their businesses, which accordingly implies that MFIs need to reflect this diversity in their general operations. Although MFIs were recognized as carrying a strong potential for the development of informal activities, there were some identified obstacles in for example their organizational structure which consequently affected the profitability of their clients' businesses. The role of Community-Based Organizations (CBOs) was also recognized as having the possibility to develop into a new type of labout union as to empower the informal sector and gradually lead to a natural continuation of the formal economy.

Masters in Public Administration - MPA / The overall objectives of this thesis were to assess the theory and evaluate the development roles of MFIs in Uganda and Bangladesh. The study in particular focused on MFIs impact on poverty reduction, empowering women, promoting health, as well as promoting children's education in Uganda and Bangladesh. The study preferred the selected countries because Bangladesh is internationally considered as the best practice for microfinance, whilst Uganda is assumed to be well-positioned in terms of microfinance as compared to other developing countries in Africa. The question that guided this empirical investigation was whether MFIs empower women, reduce poverty, promote children's education as well as health among its beneficiaries in Uganda and whether Bangladesh has important lessons of experience for Uganda. / South Africa