DIRE DAWA UNIVERSITY COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF PUBLIC ADMINISTRATION AND DEVELOPMENT

MANAGEMENT

ASSESSMENT OF EFFECT OF YOUTH SAVING ON ECONOMIC

DEVELOPMENT IN CASE OF DIRE DAWA CITY: THE CASE OF
SELECTED KEBELES OF DIRE DAWA CITY

BY

ADVISOR:

A THESIS PROPOSAL SUBMITTED TO SCHOOL OF GRADUATE

STUDIES IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF
MA DEGREE IN DEVELOPMENTAL MANAGEMENT

June 2020

Dire Dawa

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 TABLES OF CONTENTS

1. INTRODUCTION 1
1.1. Background 1

1.2. Research Questions 4

1.3. Objectives of the Study 4

1.3. Statement of The Problem 4

1.5. Significance of the Study 6

1.7. Scope and Limitations of the Study 6

1.8. Organization of the Paper 7

2. LITERATURE REVIEW 8
2.1 Concept of Saving 8

2.2. Saving Motives 9

2.3. Theoretical Literatures 10

2.3.1. Rostow Stages of Economic Growth Theory 10

2.3.2. Absolute Income Hypothesis 12
2.3.3. The Relative Income Hypothesis (RIH) 15
2.3.4. Post Keynesian consumption and saving theory 16
2.3.5. Life Cycle Hypothesis on saving 16
2.3.6. Permanent Income Hypothesis 18
2.4. Importance of Saving 18

2.5. Saving in Ethiopia 20

2.6. Empirical Literature 22

2.7. Conceptual Framework 24

3. METHODOLOGY 25
3.1. The Study Area 25

3.2. Research Design 26

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 3.3. Research Approach 26

3.4. Type and Source of Data 26

3.5. Methods of Data Collection 27

3.5. Sampling Design 28

3.5.1. Target Population 28

3.5.2. Sampling Elements 29
3.5.3. Sampling size 29
3.6. Methods of Data Analyses 30

3.7. Ethical considerations 30

3.8. COVID-19 Mitigation and Adaptation Plan 30

4. WORK PLAN 31
5. BUDGET 32
6. REFERENCE 34

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 1. INTRODUCTION

1.1. Background

The shortest path of development has remained to be mysterious despite successes of some
countries. Many countries in the developing world are still trying to search for the root that helps
to traverse their population from living in abject state of life. Although it does not necessarily
ensure all-embracing improvements in the life of every person, economic growth is a necessary
condition for eradication of poverty at a country level. In turn, since economics started emerging
as an independent discipline during the era of mercantilists and Adam smith, accumulation of
wealth, (which is nothing but saving) has been identified as a key variable for growth. Saving is
easily converted into investment or capital and enables labour and other resources to be effectively
mobilized for the growth of overall level of output in an economy (Worku, 2011).

Youth in Sub-Saharan Africa represent a rapidly growing percentage of the region’s population.
More than one third of the population in Sub-Saharan Africa is aged between 10 and 24 years. By
2050, UNICEF estimates that 37 % of the world’s population aged younger than 18 years will live
in Africa, and two thirds of those will be in West or East Africa (Hervish and Clifton 2012). In
spite of advances in health and education in many African countries, Sub-Saharan youth face
multiple challenges to social and economic development and well-being. Nearly half of the
population in Sub-Saharan Africa lives below the international poverty level established by
UNICEF (US$ 1.25 per day), and the African continent has the highest concentration of death
among children and youth aged younger than 18 years of any region in the world (UNICEF 2014).

Ethiopia is Africa’s oldest independent country and its fastest growing economy today. World
Bank report (2020) indicated that an annual economic growth rate of 10% over the past 15 years,
it presents a unique opportunity. However, it is also one of the poorest, with a per capita income
of $850. Ethiopia aims to reach lower-middle-income status by 2025. According to the report of
UNDP (2019) Ethiopia has more than 112 million people, which makes the second most populous
nation in Africa after Nigeria. More than 70% of citizens in Ethiopia are under 30 years age, and
nearly 50% are under 15 years age.

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Ethiopians are proud of possessing ancient alphabets and numbers. Most of all, they are proud of
their traditional financial system called ‘iqub’ and ‘edir. Ethiopians. Average employees save from
20 to 300 ETB per week and 1000 to 10,000 ETB for companies (Allen et al. 2016). Iqub can be
a driver of economic growth and development. Study by Tegegne and Mulat (2008) as cited by
Wikileaks found out that the group surveyed most frequently used their payout for expanding their
business (41% of participants). At higher levels, a prominent local businessman described Iqubs
in Addis Ababa with pay-outs more than 5 million birr (over $500,000) and stated that much of
the construction boom in Addis is being financed with iqub rather than through the formal banking
system. A 1995 study estimated the volume of money in iqub to be in the rangeof 8-10% of GDP
(ibid).

In 2015, Ethiopia is the second-most populous country in Sub-Saharan Africa with a population
of 92.2 million. According the Central Statistic Authority (CSA, 2015), under the most optimistic
low fertility scenario the population size is projected to increase to 137 million by the year 2037.
This is an increase of 45 million people with an average growth rate of 2.2% per annum. In
Ethiopia, initially the population growth was concentrated at the child age group (0-14) which
dominated the structure (an average of 40% of the population), followed by the young adult age
group (15- 29), constituting an average of 28%, followed by the middle age (30-59) about 25%
and old age (60+) about 6%. Currently the Ethiopian population is increasing by about two million
people a year. Countries with a history of rapid population growth have a high potential of future
population growth with youth constituting the largest segment (CSA, 2015).

Saving, a sacrifice of current consumption, provides for the accumulation of capital which, in turn,
produces additional output that can potentially be used for consumption in the future. The process
is thus inherently intertemporal. Its presumed operation makes the saving behavior of citizens and
their governments central to the development of poor countries. Moreover, threats of
expropriation, repudiation and other hostile acts against foreign suppliers of capital, and donor
resistance to significant increases in aid, mean that domestic savings is likely to remain the
predominant source of capital accumulation in developing countries (Eaton and Gersovitz, 1983).

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Countries with higher rates of savings have had a faster economic growth than those with lower
saving rates. Capital accumulation creates greater opportunities for production and the productivity
of a country by providing an additional income stream for countries like Ethiopia. In that regard,
the United Nations Conference on Trade and Development “Development and Globalization: Facts
and Figures (2004) emphasizes that the main factor in increasing in-country capital is the increase
of savings and that, in that regard, developing countries should prioritize programs that promote
domestic savings, in order for capital to be invested towards the most productive practices.

In 2019, there are about 1.2 billion youth aged 15 to 24 years in the world, or 16 per cent of the
global population. Around 2065, the world's youth population is projected to reach its peak, at just
under 1.4 billion persons (13%). The share of youth in the total population peaked at 19.3 per cent
in 1985 (UN,2019). As these young people assume adult economic roles and responsibilities, they
will increase interactions with informal and formal financial institutions. A formal bank savings
account may be one of the most secure ways for youth to protect their savings and asset
accumulations for near and future purposes. In fact, available data indicate that most of the youth
in Sub-Saharan Africa are not saving or using banking services. The World Bank estimates that
9.32 % of young adults (aged 15–24 years) in Sub-Saharan Africa saved in a formal financial
institution in the past year (Demirguc-Kunt and Klapper 2012).

Ethiopian domestic saving performance is poor relative to other countries in the region. Even its
trend is not consistent - varied significantly from period to period. As a result, the gap between
saving and investment is still widening from though time. This dismal performance of domestic
resource mobilization and wider gap with investment leads the country to be dependent on external
loan and assistance, although these sources of finances are not a reliable source. This calls scholars
to conduct a research and investigate the reason behind this fragile performance of savings in
Ethiopia. To the knowledge the researcher, reasons are not well explored in Ethiopia. However,
few researches had conducted at macro level and some few at micro level and most of them focused
on youth in rural areas and households. As most of households and youth in rural areas are
illiterate, it is difficulty to get accurate and precisions data. Researcher also interested to focus on
youth because Youth means energy and enthusiasm. Youth are the precious assets of our country.
They are the future communities, states, and nation. Youth are the most potent segment of the

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population of a country. They are the backbone of the country. The youth of today are the hopes
of tomorrow. Thus, this study focuses on urban youth who are believed to have better awareness
towards their income and saving.

1.2. Research Questions

The study will answer the following questions:

1. What is the effect of saving on economic development?

2. What are saving motives of youth in the city?
3. What are the challenges of saving among youth in city?
4. What is the saving behaviour of youth in city?

1.3. Objectives of the Study

The overall objective of the study is to assess the effect of youth saving on economic development.
Under the umbrella of general objective of the thesis, the thesis has the following specific
objectives:

1. To assess the effect of youth saving on economic development

2. Identify saving motives of youth in city
3. To identify saving challenges among youth in city
4. To assess saving behaviour of youth in the city

1.3. Statement of The Problem

Saving is income not consumed (Eatwell et. al., 1987). It is one of the most important and perhaps
the chief sources of investment. In developing countries, about 45 percent of the incremental
saving is invested domestically, while in developed countries about 75 percent of the incremental
saving is invested domestically (Koirala: 1991). This suggests that capital is more mobile in
developing countries than in developed countries. Savings are of great significance in a country’s
development. While high saving results in high economic growth rate, rapid development leads in
turn to high savings. Ethiopia’s savings rate is lower as compared to other developing countries,

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however, even to Ethiopia, the share of gross domestic savings during the year of 2019 is 22.12 of
GDP (World Bank, 2021).

Savings in an economy plays a pivotal role in achieving the growth targets. Economic growth
attained with domestic savings is sustainable than the growth that is achieved through borrowed
capital. In fact, it is the savings that determine the economic health of a country. Even an economic
super power like U.S. and the industrialized nations in the Europe are resorting to the measures of
austerity and making serious attempts to save more then what they did till the cropping up of global
financial crisis in 2007 and the European sovereign debt crisis in 2010 respectively. The reason
for this structural shift in their saving behaviour is that they spent more than what could afford to.
Increasingly troublesome is the fact that the spending was driven by borrowed capital, instead of
their domestic savings. The result of the savings indiscipline: U.S. and Euro zone is paying a heavy
price in terms of lost output, high unemployment and increasing economic inequalities (Patra et
al., 2017).

Youth are an important group by virtue of their numbers, purchasing power, relatively high levels
of leisure time. They have access to abundance of information because of advent of technology.
Youth have a significance influence and demand for various products and play an important role
in consumption as they do not have any basic financial commitments like paying rent, bills and
have enough purchasing power. The spending habits vary from person to person. Youth involves
in conspicuous consumption regardless of the source of funds. They have no or limited experience
in saving and spending as they learn to live within their means. Individuals below the age of 30
years have high rate of debt because of their limited experience with finances and managing money
(Kim et al.,2016).

The case for offering savings accounts to youth is relatively straightforward. Proponents of youth
savings posit that youth savings can promote asset-building, install good financial habits, and
improve a country’s overall gross savings rate thereby economic development. Their premise is
that young people should start accumulating savings early (some would argue as soon as they are
born) so they can mitigate the obstacles they face to saving as they enter adulthood when they have
to pay for themselves to continue their education, start a business, buy a house, etc. Most of the

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youth in developing countries face a double disadvantage they are young and have low incomes
and therefore have limited options. Building assets through saving early on and developing sound
financial habits can positively influence the course of a young person’s life (Johnson and
Sherraden 2006).

While financial institutions, nonprofits, and governments have initiated youth savings products in
many countries, youth savings has received relatively little scholarly attention. (Rainier et al.,
2012). Moreover, first, there are very few studies on the assessment of effect of youth Savings on
economic development. Second, most of these studies adopted a macroeconomic approach yet the
behavior of economic units on the aggregate level may not necessarily be the same as on an
individual or youth. And third, even the existing limited research results in Africa related
household savings. Therefore, this study will fill the gap and contribute to policy recommendations
and to existing studies with regards to the effect of youth savings on economic development.

1.5. Significance of the Study

Knowledge of the extent to which saving effects on economic development is a principal agenda
to both the policy makers and to the academicians. Nevertheless, there are very few studies on the
assessment of effects of youth saving on economic development. Therefore, this study will fill the
gap and contribute to policy recommendations as regards youth saving for economic development.
In doing so, the researcher believes that the paper is having its own contribution to the existing
stock of knowledge about the challenges of saving and its effect to the economic development of
the Dire Dawa city. This will be helpful for any intervention planned by private, government as
well as non-government programs. It can be reference document for other similar studies.

1.7. Scope and Limitations of the Study

This study focusses on assessment of the effect of youth saving on economic development. It will
also assess saving behaviour of youth in the Dire Dawa and identify saving motives and saving
challenges among youth in city. Thus, the study will be limited to selected kebeles of Dire Dawa

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and limited in its method. This study will interview sampled youth whose age from 15-29 both
male and female.

1.8. Organization of the Paper

This research proposal has three chapters. The first chapter covers the introductory part which
includes the background of the study, statement of the problem, objective, research questions,
significance, scope, and limitations of the study are included. The second chapter deals with review
of related literatures of the effect of saving on economic development. Third chapter is about
methodology of the thesis.

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 2. LITERATURE REVIEW

2.1 Concept of Saving

The ability to save money is one of the many skills individuals must comprehend to become
financially well-off and is one of the most problematic things to do. There are countless
explanations of what saving is, but the most acknowledged definition is savings is the income that
is not consumed. In other words, saving is the unconsumed portion of real disposable income, and
it represents a large part of a nation’s aggregate savings and investment and thus is a major
determinant of the growth of future income and consumption. We often see that people have the
choice between consuming or saving money. How much a society chooses to save today for
consumption tomorrow has important influence for the welfare of the elderly, economic growth,
and consumption levels (Lakshmi and Virmani, 2003.)

Saving means different things to different people. To some, it means putting money in the bank.
To others, it means buying stocks or contributing to a pension plan. But to economists, saving
means only one thing consuming less out of a given amount of resources in the present to consume
more in the future. Saving, therefore, is the decision to defer consumption and to store this deferred
consumption in some form of asset (Kotlikoff, 1988).

The business dictionary (www.businessdictionary.com) defines savings as the portion of

disposable income not spent on the consumption of consumer goods, but accumulated or invested
directly in capital equipment, by paying off a home mortgage or indirectly through the purchase
of securities. The other form of saving is through putting money aside by saving it in a bank or
financial services provider, investing in a pension plan or in other forms of income generating
investments.

Saving as a macroeconomic concept refers to income that is not consumed during a particular time.
In a more dynamic sense this could be interpreted as postponed consumption that becomes part of
current expenditure at a future date. Process of setting aside a portion of current income for future

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use, or the resources accumulated in this way over a given period. Savings may take the form of
bank deposits and cash holdings or securities. How much individuals save is affected by their
preferences for future over present consumption and their expectations of future income. If
individuals consume more than the value of their income, then their saving is negative, and they
are said to be dissaving. Individual saving may be measured by estimating disposable income and
subtracting current consumption expenditures (Strydom, 2007).

2.2. Saving Motives

Saving motive is a desire to reserve a certain proportion of income for future needs. Savings of an
individual is highly dependent on one’s ability and willingness to save (Keynes 1936). Most
theories of saving are formulated in terms of individuals’ motives (Harris, Lounds and Webster
2002). The ability of an individual comes from the level of income, be it absolute income or
relative income. Households with a higher capacity (higher income) left with more surpluses to
save. While the willingness to save is the motive of an individual to save as power to save alone
will not be guaranteed to save and vice versa. Understanding what motives drive saving behavior
as well as their relative contribution to total savings will help us to understand differences in saving
rates among households as well as past and future trends in saving behavior (Schunk 2009).

Scientists have addressed the role of saving motives to explain household savings and have found
that households with saving motives have a higher propensity to save (Su Hyun and Kyoung,
2018). John Maynard Keynes (1936) listed eight motives for why individuals possibly save money.
Browning and Lusardi5 in their analysis added an extra motive to be labeled as the down payment
motive: (1) the precautionary motive is saving for protection against unexpected setbacks such
as a loss of job or illness (2) the life-cycle motive is saving to meet long term objectives such as
retirement, college and house. (3) the intertemporal substitution motive (4) the improvement
motive (5) the independence motive (6) the enterprise motive (7) the bequest motive is saving done
for the purpose of leaving an inheritance. (8) the avarice motive (9) the down payment motive.

According to Keynes, individuals keep savings accounts for a precautionary motive to cover
unexpected events. Not every person participates in the savings behavior. Individuals must have

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the ability to save in order to make savings decision (Sondra, et l, 2003)( There are many different
theoretical views about the prime motivation for saving. Every household has their own motive
for saving whether it be for physiological (basic) needs, safety needs, a need for security in the
future, love and societal needs or even for esteem and luxury needs. The interpretation of basic
needs has been modified over time. As an individual’s level of income increases, consumption
behaviors are then determined more by taste than by physiological needs. Households with limited
resources are now expected to save for daily expenses rather than for their wants and desires.
Saving for safety needs include purchasing a home, saving for rainy days, unexpected illness or
job loss and for investment.

2.3. Theoretical Literatures

2.3.1. Rostow Stages of Economic Growth Theory

Walt Rostow created theory of economic growth. Rostow stages of economic growth theory has
five stages of economic growth that is traditional society, pre-conditioning, take-off, drive to
maturity and maturity. Rostow made economic development dependent on the accumulation of
capital and distinguished five stages of development (Rostow 1960). According to Rostow, the
biggest problem for poor countries is to achieve the third stage, called “take off”. Poor countries
have a problem with the interruption of the “vicious circle” established through the years. Rostow
proposed to break it by accumulating capital. However, he realized that in cases where there was
an absence of opportunities to increase internal accumulation, external support would be
necessary. Also, according to Rostow, reconstruction of the economy from agricultural to
industrial would allow for the diffusion of economic growth over the entire country.

According to the Rostow doctrine, the transition from under development to development can be
described in terms of a series of steps or stages through which all countries/ and or individuals
must proceed. In advanced countries, it was argued all had passed the stage of “take off into self-
sustaining growth”, and the underdeveloped countries that were still either in the traditional society
or the “preconditions” stage had only to follow a certain set of rules of development to take off in
their turn into a self-sustaining growth. One of the principal strategies of development necessary
for any take-off is the mobilization of domestic and foreign savings in order to generate sufficient

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investment to accelerate economic growth. In 1971 Rostow added a sixth stage of economic
development, called “quality” - characterized by the continuous improvement in the quality of
goods and services (Rostow 1971).

According to this theory, Todaro and Smith (2010) explains that countries that can save 15% to
20% of GNP can grow at a much faster rate than those that save less, thus, this growth would then
be more self-sustaining. This follows that the mechanism of economic growth and development
are simply a matter of national savings and investment and in particular household savings and
investment. However, the main constraint on development according to this theory is relatively
low level of new capital formation in poor societies and countries.

There has been a serious debate on the implications of savings and investment in promoting
economic growth in many countries around the world. The central idea of traditional theory of
savings was that increasing saving would accelerate economic growth, while theory of investment
specified investment as the key to promoting economic growth. On the other hand, neoclassical
theory argues that increase in the savings rate boosts steady-state output by more than its direct
implications on investment. This is because the increase in income raises savings, leading to a
further rise in investment (Verma, 2007)

In explaining the implications of savings on economic growth, Abu (2010) stated that increases in
savings results to increase in capital formation and investment and thereby raising the growth of
the nation’s economy. Endogenous growth theory suggests that high investment and savings rate
are crucial in view of their strong positive correlation with the economic growth rate (Agrawal,
2001).

It is often argued that higher savings contribute to higher economic growth, so the savings and the
policies which foster savings are important. The neoclassical growth models by Cass (1965),
Koopmans (1965) emphasizing capital accumulation as the source of growth; tells indeed that
higher saving rates should foster growth because higher savings imply higher capital investment.
It also features prominently in the models starting with Harrod (1939) and Domar (1946), and then
by Frankel (1962) and Romer (1986) for closed economies. Although there is controversy

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regarding the relation between savings and economic growth, it is generally agreed that once
savings start to rise perhaps due to increase in income they enhance the potential to finance
investment, and lead to the creation of more opportunities in the economy and thus determines
economic growth and development

2.3.2. Absolute Income Hypothesis

Absolute income hypothesis is first introduced by Keynes in 1936. Keynes, instead of relying on
statistical analysis, he made conjectures about the consumption function based on introspection
and casual observation. Keynes exhibits three thoughts: First and most important, Keynes assumed
that the marginal propensity to consume (the amount consumed out of income) is between zero
and one. As a rule, and on average, men are disposed to increase their consumption as their income
increases, but not as much as the increase in their income. Second, Keynes posited that the ratio
of consumption to income /the average propensity to consume/ rises as income rises. Keynes
believed that saving is luxury so, he expected the rich to save a higher proportion of their income
than the poor. Third, as per Keynes thought, income is the principal determinant of consumption.
Keynes took it for granted that the present consumption expenditure is extremely dependable and
stable function of current income. The amount of aggregate consumption largely depends on the
amount of aggregate income (both measured in terms of wage units). He termed it a ‘fundamental
psychological rule’ of any modern society that when its true/real income is increased, its
consumption will not increase at exactly equal absolute amount, and stated a bit less definitely that
as a rule, a larger proportion of income is saved as real income increases. What this theory suggests
is that consumption is predominantly dependent on the level of household incomes. Keynes
thought as there would be a fairly stable pattern of consumption.

According to the absolute income hypothesis, factors that affect consumption are in general two
types- objective factors and subjective factors.

Objective factors of consumption include:

1) Changes in Income- as income increase so do consumption. Here we need to distinguish

between real income and nominal income. Real income means income in terms of what it can buy

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or income after thee adjustment of inflation. An increase in real income therefore leads to an
increase in consumption.

2) Changes in net income- which is the amount of money a person takes home /disposable income/
after various deductions is made.

3) Wealth effect or windfall changes in capital values- If house prices increase, homeowners may
feel themselves better off (even if this is illusory) and change their spending patterns accordingly.

4) Changes in Interest rate- If the cost of borrowing increases, consumers who were planning to
purchase items with credit will have to change their plans.

5) Changes in fiscal policy- As Keynes income means disposable income, that is, income after tax,
therefore, any increase or decrease in the tax rate (or benefits) that governments impose will affect
income and thus consumption.

6) Changes in expectation- the change in future expectation of consumers’ affects the propensity
to consume as well. If men are uncertain about the future, they reduce current consumption (or
increases their savings) and vice versa.

7) The distribution of income- if there are large disparities in income distribution between the rich
and the poor, the consumption function is low as the rich have a low propensity to consume and
the poor with very low income are unable to spend more on consumption.

8) Holding of liquid asset – if people hold larger liquid assets, they will have a tendency to spend
more out of their current income and the propensity to consume will go up.

9) Financial policies of corporations- corporations’ policies with respect to income retention,

dividend payouts and reinvestments tend to affect consumption.

Subjective factors of Keynes include enjoyment, short-sightedness, generosity, miscalalculation,

ostentation, and extravagance are also considered in this theory. Keynes is also mentions eight
distinct different individual motives for refraining from consumption that would influence the
marginal propensity to save: -
1) Precaution- which implies building up a reserve against unanticipated contingencies.

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2) Foresight- which comprises providing for anticipated future divergence between the income
and the needs of the individual or family (e.g. retirement, education of children or other expected
decreases in income or increases in expenditures).
3) Calculation- which refers to the wish to earn interest and appreciation.
4) Improvement- which means to enjoy or benefit from a gradually improving
standard of living over time.
5) Independence- which refers to the need to feel autonomous and to have the capacity to do things.
6) Enterprise- which means to have freedom to invest money if and when it is favorable.
7) Pride/bequest motive- which concerns leaving money to heirs.
8) Avarice- which concerns satisfying pure miserliness because of dislike of acts of expenditure
as such.

Although it is not the focus of the current study, Keynes further list out four motives of government
and business corporation’s savings. These are.
I) Enterprise motive is a motive to secure resources for further capital investments without entering
into debt or raising more capital in the market.
II) Liquidity motive is to have liquid resources to meet emergencies, difficulties, and depressions.
III) Improvement motive is a motive serve to secure a gradually growing of income, which
incidentally protect the management from criticism, because increasing income due to
accumulation is rarely distinguished from rising
income from efficiency.
IV) The motive of financial prudence and the anxiety to be ‘on the right side’ by making a financial
provision in excess of user and supplementary cost. The purpose is to discharge obligation and
write-off the cost of assets ahead of the actual rate of wastage and obsolescence.

However, Keynes saving/consumption hypothesis is criticized for its proposition of income and
consumption are proportional and every individual is independent, which are not always true.
Keynes theory neglects the other factors like asset holdings, urbanization, appearance of new
products, and the like.

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2.3.3. The Relative Income Hypothesis (RIH)

The relative income hypothesis of Duesenberry (1949) is based on the rejection of the two
fundamental assumptions of Keynes consumption theory. First, every individual behavior is not
independent of the other rather interdependent of the behavior of every other individual. Second,
consumption pattern is irreversible and not reversible in time.

Duesenberry, in the first part of his hypothesis, consumption is not depend on absolute income but
on the relative income –income relative to the income of every individual in the society in which
an individual lives in. Every individual behavior is not independent but interdependent of the
behavior of every other individual. According to Duesenberry (1949), real understanding of the
consumer behavior must begin with a full recognition of the social character of consumption
patterns. That means individuals attitude towards consumption and saving is influenced largely by
its income in relation to others. A rich person will have a lower average propensity to consume
(higher average propensity to save) as he needs a smaller portion of its income to maintain its
consumption pattern. On the other hand, a relatively poor person will have higher average
propensity to consume (lower average propensity to save) as it tries to maintain the consumption
standards of its neighbors’ or associates. There is a tendency on the part of the people to imitate
the consumption standards maintained by their confreres. That means when households care about
their consumption relative to others, individual saving rates decrease with their relative position.
The percentage of income consumed by an individual is dependent on its percentile position in the
income distribution. Thus, an individual is less concerned with absolute level of consumption
rather by relative levels.

In short, the percentage of income consumed by an individual depends on his perceived position
within the income distribution. So, an individual is less concerned with absolute level of
consumption than relative levels. In his second part of the theory, Duesenberry hypothesized that
the present consumption of the families is influenced not just merely by present levels of absolute
and relative income, but also by levels of past peak income/consumption once attained. According
to this hypothesis consumption spending of families is motivated by the habitual behavioral
pattern. At a period of propensity, consumption will increase and gradually adjust itself to a higher

15
level. Once people attain a particular peak income level and become accustomed to that standard
of living, it will be difficult for a family to reduce that level of consumption once attained. As
income decreases consumption falls but proportionately less than the decrease in income as the
consumer dissaves to maintain consumption. Thus, at the time of depression consumption rises as
a fraction of income while in prosperity consumption does increases slowly as a fraction of income.
In that the aggregate ratio of consumption to income is assumed to depend on the level of present
income relative to past peak income. In general, the relative income hypothesis focuses on relative
income (interdependent preferences) and past income (habit formation) as the predictors of saving.

The relative income hypothesis is criticized with its assumption of proportional increase in
consumption, direct relation between consumption and income, distribution of income unchanged,
irreversible consumer behavior, consumer preference depends on others and the neglecting of other
factors as asset holdings, urbanization, changes in age composition and the appearance of new
consumer goods.

2.3.4. Post Keynesian consumption and saving theory

In contrast to the assumptions of Neoclassical economics, Post Keynesian consumption theory

assumes that procedural rationality arises out of imperfect and incomplete information (Simon,
1976). Consumption decisions are thus made upon recommendations and in conformity to social
norms, and some of these procedures involve rules and conventions whilst, others are habits or
routines. Consumption distinguishes the hierarchy of needs as some are more basic than others,
therefore, there is order of priority to satisfy the different needs (Lavoie, 2003). According to Post
Keynesian class theory on saving, the saving rate of households of different income levels will
vary accordingly. This notion arises from the observation that low income households tend to save
proportionately less, as their income needs to be primarily used for basic necessities. Thus,
household saving tends to be mostly incidental (Lavoie, 1992, 1994), implying that as the bulk of
private savings are realized by businesses in the form of retained earnings.

2.3.5. Life Cycle Hypothesis on saving

16
The life cycle hypothesis is a hypothesis of spending base on the assumption that people make
intelligent decisions concerning the amount they want to spend at each age with the resources
available over their lives. The most path-breaking theory of saving formulated by Modigliani &
Brumberg (1954) is the Life Cycle Hypothesis (LCH). Certainly, the influence of the life cycle
hypothesis is so deep, and so automatic in economists’ thinking that it is no longer easily
documented (Deaton 2005).

This hypothesis is the basis for most modern researches on saving. Modigliani & Brumberg (1954)
used Fisher’s model of consumer behavior to study the consumption function. Life-cycle
hypothesis emphasizes on the assumption that income follows a regular pattern over a person’s
lifetime.

Modigliani & Brumberg criticize the implication of Keynes’ consumption function which held that
income receivers below some critical level would have negative saving. They also criticized
Duesenberry's relative income hypothesis for failing to explain cyclical fluctuations in the saving
ratio as well as how ‘relatively’ poor people could go on dissaving indefinitely. Modigliani &
Brumberg's fundamental idea is that the marginal propensity to consume with respect to life
income will equal one for all households independently of lifetime income (assuming no bequest
motive).

According to this LCH, the individuals aim is at zero saving during the entire life –meaning saving
in one period of life will be matched with dissaving in the other period. Using their experiences
about the typical life cycle of income (rising until retirement) and tastes (smooth consumption),
they developed their much-applied framework. Through building and goingdown assets, working
people can make provision to support their retirement. More generally, consumer makes their
consumption patterns to their needs at different ages, independent of their incomes at every age.
The foundations of the model hold that people, in general, are forward-looking and prefer smooth
consumption over time as they try to distribute current assets and remaining lifetime income evenly
over the remaining lifetime. They will make their consumption stream independent of their income
stream. The model is based on considerations relating to the usual life cycle income and

17
consumption needs of households. Moreover, it is based on the assumption that people rationally
determined how much they can consume over the rest of their lifetime so as to maximize utility.
Therefore, in any given year, the difference between the optimal level of consumption and income
will be the amount saved. The simplest version of the model holds that agents will try to keep the
marginal utility of expenditure constant over time, and, consequently, the lifetime path of income
and consumption are independent. Furthermore, in the stripped-down version of the model"
(denoted the certainty equivalent model, by Browning & Lusardi 1996), it is assumed that agents
have constant income until retirement and that they know the time of their death (the mortality rate
is assumed to be zero up to the assumed age, and then the rate equals one). The consequence is the
hump-shaped profile of wealth, rising until retirement and decreasing thereafter. Since everything
is assumed known with certainty, the lifetime consumption plan is made in the beginning of life,
with the consumer doing no more thereafter than following the predestined plan (Deaton, 1992).

2.3.6. Permanent Income Hypothesis

Friedman (1957) developed the Permanent Income Hypothesis (PIH). It proposes that
consumption is determined by an economic actor’s income over a lifetime, rather than during a
specific period. It assumes ‘symmetrical and homogenous’ (Smith, 1993) consumption over
different time periods, with effect on saving. In this perspective, bequest is one of the contributing
factors to the permanent income of a household. However, it has been found through this review
of literature, that bequest is a relatively unimportant motive for Chinese households to save as it is
not one of the key reported motivations. A study of the determinants of household saving in
Australia likewise shows that the bequest motive is relatively unimportant as a factor in saving
strategy (Harris et al., 2002).

2.4. Importance of Saving

For most people saving is something positive. Subjectively it is not merely a consequence of not
spending, but rather the result of substantial pressure directed toward achieving highly valued
goals of life. Saving is considered most important and its absence is greatly regretted (Katona
1960). National savings are important for the economic development of countries because

18
investments are generated through savings. Krieckhaus (2002) stated that countries, characterized
by less efficient capital markets, have ample dependency on domestic savings to finance their
development projects. Gale and Sablehause (1999) defined the savings as output of resources
which have been unconsumed in current year and available for future periods. Saving is an
important indicator of economic development where it is used to achieve economic growth in any
developing country.

Savings is cornerstone for economic development of country. It is laying the foundation for
financial inclusion on the state of practice in savings mobilization for the poor in developing
countries like Ethiopia. Saving deposits provide a relatively stable source of funds that could
enable an institution to become a sustainable, self-reliant financial intermediary. Savings
mobilization increases the supply of internally generated funds that can be invested in housing
microenterprise and small business loans. Saving provides a financial solution for life’s
uncertainties and increases feelings of security and peace of mind. Once an adequate emergency
fund is established, savings can also provide the “seed money” for higher-yielding investments
such as bonds and business startup. Saving also linked to increased happiness (Oromia State
University, 2015).

Elbadawi & Mwega (2000) state that, empirical studies conducted over time have indicated that
domestic saving and investment are highly correlated. It is recognized that saving as an important
factor in economic development as it enables the conversion of resources into capital. Strong
saving performance is crucial for macroeconomic balance and for the maintenance of financial
(inflation) and price stability (exchange rate). Savings is beneficial for the economy as a whole
and thus also for the citizens of the country. Sekgobela (2004) states adequate savings are
important for capital formation and have a direct impact on economic growth, and as such are vital
for achieving macroeconomic stability.

There is a lack of adequate domestic savings in most developing countries and as a result, more
reliance is placed on foreign savings in the form of capital flows into the country. The issue of low
levels of domestic savings is a major problem in developing states due to high levels of
unemployment, low wages, the engagement of a large proportion of the population in the informal

19
sector, and poor performance of the economy (Reddy, Naidu & Vosikdata, n.d.). Prinsloo (2000)
states that, the low level of domestic saving limits the country’s rate of investment; restrain the
rate of economic growth and make the country more vulnerable to international capital shifts.

Savings have always figured prominently in both theoretical analysis and policy design in both
developed and developing economies. This prominence emanates from their assumed direct
theoretical link to future economic growth and current expenditure levels via its link to
consumption. Early theories of economic growth emphasized the role of savings as a source of
capital accumulation and, hence, growth. Similarly, the aggregate demand-based theory of
Keynesian economics also focused on aggregate expenditure, which has a direct implication to
savings. Due to their pre-occupation with short-term macroeconomic adjustment and stabilization
policies, the emphasis on savings was relatively neglected in the 1980s in many African countries.
But the focus on economic growth and, hence, on savings seems to have resurfaced in the 1990s
and afterwards. This interest is partly due to the belief that one of the reasons for slow growth in
sub-Saharan Africa is the low rate of savings relative to other developing regions (Schmidt-Hbbel
et al., 1996; Aryeetey and Udry, 1999). This is in particular true when one compares the level of
domestic savings and investment in Ethiopia

2.5. Saving in Ethiopia

According to world bank (2020) Ethiopia average share of gross domestic saving in 2019 was
22.28% of the GDP. But previously the share of gross domestic saving in GDP increased from 9.5
percent in 2009/10 to 21.8 percent in 2014/15. According to National Bank of Ethiopia (2019) in
2019/20 gross domestic saving as percent of the country’s GDP is only 20.9% resulting in a huge
resource gap as compared to gross domestic investment (Gross Capital formation) which is 30.8%
of the GDP. Moreover, as stated in summary and statistical report by the National Bank of Ethiopia
(2011), an Ethiopian household, on average saves 875 birr per annum in financial institutions. This
is low to support viable economic growth and development in the country.

20
Ethiopia’s development efforts in the last decade were very impressive. Ethiopia has been involved
in implementing mega investment projects like building dams, railways, roads and so on by
developing a comprehensive successive five-year growth and transformation plans. Financing
these hydro investment projects in different sectors requires mobilization of large national saving.
The nation no longer needs to depend on the international development assistance and loans from
the international organizations like the World Bank and other lenders to finance its projects
because of the unpredictable nature of aid and the political interest of the donor nations. So
mobilizing the required resources to finance its investment projects and then foster development
makes the nation less dependent on aid on the road and provides the nation the much needed
freedom to invest according to its plans and fulfil the needs of its people (MOFED,2011).

Gross domestic savings (% of GDP) in Ethiopia was reported at 22.12 % in 2019, according to the
World Bank collection of development indicators, compiled from officially recognized sources.
Ethiopia - Gross domestic savings (% of GDP) - actual values, historical data, forecasts, and
projections were sourced from the World Bank on April of 2021.

Ethiopia -Gross Domestic Saving (%GDP)

30

25

20

15

10

Source: World Development Indicators, World Bank (2021)

21
2.6. Empirical Literature

Melaku (2017) found that there is a low saving behaviour of the youths in Yeka Sub-City in Addis
Ababa, Ethiopia due to have a poor awareness of the financial services and packages. As per his
study causes for low saving behaviour were the low financial literacy of the youths, the less
parental socialization regarding saving the money, peer influence and less self-control practices of
the respondents.

Aron, et al. (2013) conducted a research on Addis Ababa, Hawassa, and Mekelle cities residence
found out that causes of low saving behavior which includes lack of appropriate saving products,
lack of incentive to save, low income level, high level of debt, low interest rate, high inflation and
others.

According to Meron & Endrias, (2020), find out by studies on the Dire Dawa city on an assessment
of household saving determinant, showed that 70.5% of the entire sample households had saved
during the survey time. And 57% of the households used formal institution for saving. Moreover,
saving of the households is largely determined by income level. It is therefore important to ensure
the availability of credit service, create awareness and educate

Bhandari et al. (2007) examined the determinants of private saving rates in five South Asian
nations using annual time series data. The overall results in their study indicate that government
expenditure and past savings have a negative impact on private saving, while level of financial
development and per capita income growth have a positive effect. The degree of urbanization, the
real interest rates and dependency ratio have no noticeable impact on private saving.

Kanjanapon (2004) found out that the likelihood to save increases with the degree of perceived
level of financial wellbeing. While 56% of young people who perceived themselves as being
prosperous or very comfortable saved regularly, only 21% of young people who said they were
poor or just getting along financially did so.

22
Bime and Mbanasor (2011) in their research found reasons why people do save money. The
findings indicated that the 14%respondents are saving money because they want to minimize their
rate on spending, 23% save because of precautionary motives, 19% save or security purposes,
while 44% save because of high rate of internets involved in taking loan.

Balint and Horvathne (2013) in Turkey shows that 46% of the respondents are engage in saving.
The results revealed that that there are three reasons why the respondents save money: for
investment or any other thing

Lean H.H & Song. Y (2009) choose the whole country and 4 representative provinces as their
sample to analyse the relationship between economic growth and savings in china by using
Johansen cointegration and granger causality. The study found that there is bilateral causality
exists between the household savings and economic growth in short run and in the long run
unidirectional causality exist from the economic growth to savings growth.

Hugues Kamewe-Tsafack (2010) reported that low saving rate is hindrance to the economic growth
and in sub-Saharan Africa, saving rate is very low compared to other developing countries and
main reason for this low savings is the low interest rate and high inflation. These negative interest
rates encourage people to invest their money in tangible goods instead of investing it in the
productive financial sector.

23
2.7. Conceptual Framework

According to Regoniel (2015), a conceptual framework represents the researcher's synthesis of the
literature on how to explain a phenomenon. It maps out the actions required in the course of the
study given his previous knowledge of other researchers' point of view and his observations on the
subject of research. In other words, the conceptual framework is the researcher's understanding of
how the variables in his study connect with each other. Thus, it identifies the variables required in
the research investigation. It is the researcher’s “map” in pursuing the investigation.

Consumption
Income

Economic
Saving Investment
Development

saving behaviour saving motives

Source:(Own design)

24
 3. METHODOLOGY

This chapter aims to highlight the design and methodology used to obtain required data. It explains
thoroughly about the research design, data collection methods, sampling design, research
instrument, and methods of data analysis.

3.1. The Study Area

The study will be conducted in Dire Dawa city. Dire Dawa city is located at 515 km east of Addis
Ababa, the capital city of Ethiopia. Dire Dawa, established in 1902, owes its emergence to the AA-
Djibouti line. The City has a state status and is accountable to the Federal Government and the
Ministry of Federal Affairs. Dire Dawa has a two-tier system: the city and kebele administration.
There are nine urban kebeles in the city of Dire Dawa. Dire Dawa city, since its establishment, is
an important commercial and transport corridor linking the Ethiopian hinterland with the coast. It
is located at 9°35′35′′N and 41°51′57′′E with an altitude of 1191 masl. The city is an industrial
centre, home to several markets and the Dire Dire Dawa Airport. The city is the second largest
after Addis Ababa, though other regional capitals are expected to surpass Dire Dawa’s population.
Dire Dawa is located in the semi-arid regions of Ethiopia which deal with drought. In past decades,
the cities in the semi-arid region saw a decline in the annual rainfall and a rise in rainfall variability.
Satellite image for different years shows that the city had a built-up area of 6.2 sq km in 1973. By
the year 2016, the city grew to 29.3 sq km representing a near five-fold increase in size, expanding
beyond the administrative boundary delineated by the CSA in 2007 (World Bank Group. 2017).

According to the 2007 census, Dire Dawa is the second largest city in Ethiopia. With a population
of 341,834, of whom 171,461 were men and 170,461 women. 233,224 or 68.23% of the population
were urban inhabitants. The projected population for 1 July 2015 was 440,000 for the entire
chartered city and 277,000 for the city proper,and the population of Dire Dawa projected to reach
over 800,000 by 2037 (CSA, 2019).

25
Saving trend in Ethiopia particularly in the study area is very low. According to study by Meron
and Endrias (2020) only 70.5% of the entire sample households had savings during the survey
time. In the area as per the region youth and sport office there are about 171,258 youth (aged 15-
29) are living in city. City is known as a railway town, and service and industrial hub for eastern
Ethiopia. There also migrants who come to Dire Dawa because of economic push factors,
including land shortages and degradation in rural areas, which is particularly the case for migrants
from rural Dire Dawa, Eastern Oromia Regional State and Southern Nations, Nationalities and
Peoples’ Regional State (Dereje et al., 2018). The above conditions attract the researcher to
conduct the study in the area.

3.2. Research Design

This is an explanatory study on the impact of youth saving on economic development in case of
Dire Dawa City. Both quantitative and qualitative methods were employed by the researchers the
empirical assessments consist of numerical measurement and analysis and interview consists a
theoretical one. In the perspective of time horizon, the research can be classified as cross-sectional
study where data were collected from standard youth representing Dire Dawa city

3.3. Research Approach

In this study inductive reasoning type of approach will be employed. Moreover, through the
inductive reasoning approach which is the bottom up approach; the researcher will conclude the
effect of saving on economic development.

3.4. Type and Source of Data

Quantitative and qualitative data was collected from both primary and secondary sources. The
secondary data source for this study obtained from various sources of government offices at
deferent level and journals, reposts by deferent agencies. The primary data will be collected using
questionnaire from the sampled kebeles youth in the city, Key informants with relevant person in
the government offices.

26
3.5. Methods of Data Collection

To collect the necessary information, the study will use both the primary and the secondary source
of data. Two primary data collection techniques will be employed among all the others. These are
the questionnaire and the interview. Questionnaire is a list of a research or survey questions asked
to respondents and designed to extract specific information. The secondary data according to this
research are the journals, books, the figures taken from already done researches are considered as
secondary data. To this end the researcher will use these secondary information sources to use
them for literature review, statement of the problem and background of the study. Documents
related to the study have been analyzed to help on this research.

Five enumerators with undergraduate qualifications will be hired by the researcher to assist data
collection process. They will be trained on the contents of the questionnaire one day prior to the
household survey. In addition, the researcher will supervise and coordinate all the data collection
process. The study will employees’ the data collection methods such as questionnaires, key
informant interview and secondary source to ensure complementary strengths and improvement in
data validity and reliability.

1) Structured Questionnaires: The structured questionnaire consisting of both closed and open-
ended designed and administer to households for primary data collection. Questionnaire will be
designed to collect both qualitative and quantitative data. The questionnaire will be administered
to respondents through face-to-face interviews. However, face-to-face interview will be chosen
because they have several advantages over the other methods. According to Bless and Smith [15],
an interviewer- administered interview reduces omission of difficult questions by respondents. In
addition, it reduces the problem of word or question misinterpretation by respondents and it could
administer to respondent who can neither read nor write. In addition, the presence of the
interviewer increases the quality of the responses since the interviewer can probe those more
specific answers. In this study 385 sample respondent will be contacted from two kebeles will be
participated to fill structure questionnaires.

27
Reliability and validity are two very important qualities of a questionnaire. There are different
statistical ways to measure the reliability and validity of questionnaire. The statistical choice often
depends on the design and purpose of the questionnaire. Questionnaire reliability describes
consistency. It is the extent to which that same questionnaire will produce the same results if the
study is to be conducted again under the same conditions. Reliability is assessed by test-retest
reliability, inter-rater reliability, parallel form reliability and split-half reliability. This study will
apply inter-rater reliability to check questionnaire reliability. Questionnaire validity measures the
degree of agreement of the results or conclusions will be gotten from the research questionnaire
with the real world. Validating a questionnaire assess by criterion validity, Face validity, content
validity and construct validity. This study applies Criterion Validity to check questionnaire
validity.

2.) Key Informants Interview: key informant interview will be conducted with government
offices employees working on youth at different level to get more candid or in-depth information.

2) Secondary Source: Secondary data is the data that had already collected by and readily from
other sources. Such data was cheaper and more quickly obtainable than the primary data and may
be available when primary data not obtained at all. Secondary data enjoys the advantage of being
available, effortlessly, rapidly, and inexpensively.

3.5. Sampling Design

Sampling design is a process to select an appropriate number of units from the population of
interest to provide accurate information about the entire population (Hair, Babin, Money,
&Samuel, 2003).

3.5.1. Target Population

28
The target population is defined as the entire group of people the researcher is interested in (Easton
& McColl, 1997). The target population for this study is the youths of age 15 to 29 years old in
Dire Dawa city.
3.5.2. Sampling Elements

The target respondents are youths who work in different fields or areas in the selected kebeles of
in Dire Dawa. Accordingly, two Kebeles will be purposively selected which has highest number
of young people.

3.5.3. Sampling size

Sample size is the total number of units which are to be selected for the analysis in the research
study. However, it is not possible for researchers to get in touch with a big number of samples, as
the sample size is critical question in practice. The decision about the size and the sample needs to
consider about time and cost, the need of precision, and a variety of further
considerations (Bryman and Bell, 2003).
Sample size is calculated by the Cochran formula is:

Where: The z-value is found in a Z table.

e is the desired level of precision (i.e. the margin of error),

p is the (estimated) proportion of the population which has the attribute in question,

q is 1 – p.

Thus, we assume that p = 0.5. Now let’s say we want 95% confidence, and at least 5 percent—
plus or minus—precision. A 95 % confidence level gives us Z values of 1.96, per the normal tables,
so we get

((1.96)2 (0.5) (0.5)) / (0.05)2 = 385

29
3.6. Methods of Data Analyses

Data analysis enables describing and comparing variables numerically which enhances the
statistical analysis and data interpretation (Saunders et al., 2009). Five-Point Likert Scale, and
descriptive statistics such as mean responses, percentages will used as tools of analysis. The
researcher will use the content analysis to analyses qualitative data that will be gathered through
the interview, focus group and survey. The data will be categorized according to the themes, and
secondary data will be utilized to validate the received, which were also measured against the
existing knowledge set out in chapter two.

3.7. Ethical considerations

The title of the study was first approved by Dire Dawa University department of public
administration and development management. Study participants will also informed about the
general purpose of the study, their right to decide whether to participate or not on the study without
any penalty or negative consequences, the maximum time of duration of an interview, their right
to stop at any time they want, possible risks and benefits of participating, and issues of
confidentiality. In addition, the researcher shall not use procedures that could harm the participants
physically or psychologically. Generally, the study will be conducted after the explanation is
briefed and all study participants verbal consent will be acquired.

3.8. COVID-19 Mitigation and Adaptation Plan

COVID-19 mitigation plan was developed and followed. Cognizant of the need to undertake the
study by following internationally agreed guidelines and recommendations to minimize and
prevent the risk and exposure of the data collectors, researcher and participants to COVID-19, the
researcher will be prepared an adaptation (mitigation) plan to inform and guide the data collector
and interviewees in the data collection process. The adaptation plan will be developed with
reference to the National Comprehensive COVID-19 Management Handbook of Ethiopia. The
adaptation plan outlines essential considerations and actions that need to be implemented at
different phases of the study, from proposal to data collection and reporting phase.
30
 4. WORK PLAN

This work plan outlines to be carried out in the specified period. Hence, the proposed research
work is scheduled from starting to the completion date accordingly.

Table2. Tentative work plan

No Activity to be performed Duration

1 Proposal submission July, 2021

2 Purchase of stationary materials and August first week, 2021

supplies

4 Recruitment and training of enumerators August first week, 2021

and test and revision of questionnaire

5 Data collection September second week, 2021

6 Data cleaning, coding, and entering Third week of September, 2021

7 Data analysis and report writing Fourth week of September, 2021

8 Draft research report submission First week of October, 2021

9 Final thesis submission Third week of October, 2021

31
 5. BUDGET
Table 3 Stationery
No Description Unit Quantity Unit Price Total Price
(Birr) (Birr)

1 Printing paper Rim 1 900 900.00

2 Photocopy paper Rim 1 400 400.00

3 Note book(Big) Number 4 25 100.00

4 Note book(Small) Number 6 17 102.00

5 Pen Packet 1 60 60.00

6 Flip Chart Number 2 200 400.00

7 Marker Packet 1 120 120.00

8 Scotch tape Number 1 20 20.00

9 Rewriteable disk Number 5 25 125.00

10 Flash disk Number 1 6 360.00

11 Flash Disk 2GB Number 1 400 400.00

12 Laser jet Cartilage Number 1 850 850.00

13 Stapler Number 1 45 45.00

14 Staples Packet 1 8 8.00

15 Clip board Number 8 25 200.00

16 Journal Number 4 30 120.00

17 Binding (transparency, LS 200 200.00

hard cover and ring)

Sub total 4410.00

32
 Table 4. Personnel Expenses
No Responsibility Types of payment Unit No. sof Daily Total Payment
Payment (Birr)
Days (Birr)

1 Enumerators Training participation PerDay 5 4*300 6,000.00

and data collection
(per diem)

2 Major Advisor Supervision fee Lamp 4,500.00

sum

3 Student Per diem No 20 300 6,000.00

days

Sub total 16,500

Table 6 Miscellaneous Cost

No Items or service required Total cost in Birr

1 Photocopy, binding and secretarial services 800

2 Mobile Card 400

3 Film processing and development 200

Sub total 1,400

Table7. Budget Summary

No Description Subtotal expense

1 Stationary 4410.00

2 Personnel expense 16,500

5 Miscellaneous expense 1,400.00

Total 22,310

Budget source: - The total cost is going to be covered by the researcher himself.

33
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