ABSTRACT The goal of most MFIs is to alleviate poverty by targeting clients who previously have not had access

to formal financial services. To a large extent, MFIs around the globe have succeeded in meeting this goal; indeed, it is safe to predict that the more MFIs there are, the more poor people will be able to invest in income-generating activities, accumulate savings, put their families on a more secure financial footing and generally improve their lives. It is obvious that microfinance interventions may lead to Socio-economic improvement of the poor people by increasing their incomes and social status, enhancing their knowledge and skills in production and trade, and increasing their social participation. Plan International Ethiopia, SNNPR,PU in partnership with Berhan integrated community development organization, has been promoting village saving and loan associations microfinance in Shebedino district through its food and nutrition security program(FNS) since April 2008. Ensuring household food security through improving household income is one of a FNS program strategy. With the purpose of increasing access to financial service and household income, PIE,SNNPR, PU in partnership with BICDO has been implementing village saving and loan association microfinance in Shebedino district. Though the project was successful in terms of poor people outreach, to what level the village saving and loan associations members socio-economic status were improved remained unanswered question. As a result, this study was initiated to fill this research gap. The objectives of the study are to assess access to financial services of village saving and loan associations members in the study area; to analyze the role of VSLs in terms of improving social status of members in the study area; to study the role of VSLAs in improving economic status of members in terms of increasing income, savings, asset creation , additional occupation, and increasing investment; and to identify factors affecting effective service delivery of VSLAs in the study area. Finings of the study revealed that the VSLA has significant role in improving social status of members than economic status. Whereas, results of the descriptive statistics on saving pattern of the sampled respondents showed that village saving and loan association members have shown significant improvement in their saving behavior. The overall result of the study underlies emphasis should be given for enhancing economic aspects of VSALs and strong linkage among promoters of village saving and loan associations microfinance, formal microfinance institutions and cooperatives promoters for sustainable results and better contribution of VSLAs in economic improvement of members.