MICROFINANCE AND THE WELLBEING OF RURAL ENTREPRENEURS

Selassie Tay, 2017

Microfinance is not a new concept of financial intermediation in Ghana. It provides very low-income earners who have remained under-served by universal banks within the context of self-help to save for the future and to take small loans for trading, production, or consumption. This study attempted to access microfinance as a tool for poverty alleviation using women in Tamale Ghana as a case study. The general objective of the study was to find out the impact microfinance has on businesses, social lives, and the livelihoods of people who patronise it. The specific objectives included assessing the income levels of clients of microfinance institutions, finding out how credit is accessed and repaid, identifying the challenges they encounter in accessing micro financial services, and finally, evaluating the impact microfinance has on their socio-economic well-being and poverty levels of Ghanaians. It sampled 230 women using the Yamane taro 1967 formula. Structured questionnaire was administered to the sample for primary data which was analysed and presented using frequency distribution tables, bar and pie charts, and simple regression. It emerged from this study that, the average monthly income levels of most respondents increased as a result of enterprise expansion done with loans taken from microfinance institutions. This marginally improved their diet, access to healthcare, and education for their wards. The increase in income, however, did not reflect in respondents’ ability to save as almost of the income goes into loan repayment. This was attributed to high-interest rates charged on loans which are often accessed in solidarity groups and paid weekly. The non-payment of interest on deposits, the high interest charged on loans, and the frequent collapse of microfinance institutions due to high non-performing loan portfolios are challenges to accessing microfinance products and services. The study concluded that microfinance does have potencies that when channeled properly can unlock enormous economic benefits to lift the poor out of poverty. It was recommended that microfinance institutions be client-centered and industry regulators must be apt and dynamic in protecting clients and injecting sanity into the microfinance subsector. It is also recommended that further studies be done to understand whether reducing interest rates charged on loans by microfinance institutions will result in boosting repayments and enabling savings among loan clients.

Journal of Economics and Sustainable Development, 2013

Micro and small enterprises constitute an important feature of the economy of many countries. They are significant to socioeconomic development and serves as important sources of employment and wealth creation. However, small businesses face teething financial challenges to operate effectively and efficiently. The microfinance paradigm which emerged in the 1970s was geared at providing financial services to poor entrepreneurs to enhance their activities and social welfare. This paper assesses the contributions of the Upper Manya Krobo Rural Bank's (UPKRB) microcredit programme to business and household outcomes. The article is based on a doctoral research output that employed mixed methods approach. It therefore used structured questionnaire, in-depth interview guide and focus group discussion guide to gather both quantitative and qualitative data. The sample size was 420 exited, repeated and permanent clients. The data was processed and analyzed using SPSS version 16 to generate descriptive results. To assess the probability of microcredit clients experiencing positive or negative business and household outcomes, STATA was used to generate probit regression models. One main finding of the paper is that, 72 percent of microcredit clients have achieved growth in financial, human, social, physical and natural assets. It also emerged that, using part of the loan for other purposes has no correlation with loan repayment difficulties. It is recommended to Microfinance Institutions of the need to consider discouraging the deduction of risk management fees from loans granted to clients since groups are jointly liable in the event of a member's loan default.

European Journal of Business and Management, 2014

Micro-finance has received a lot of attention, both from policy-makers as well as in academic circles. Microfinance Programmes have been introduced in many developing economies to primarily alleviate poverty through providing financial services to the poor. This study was therefore to assess how these proliferating institutions are affecting their clients, which is the objective of this research. What are some of the motivations for people to go for loans and what are their effects on livelihood and assets ownership? The study adopted survey of clients based in the Offinso Municipality in Ghana and the data was collected through questionnaire administration. It sampled the opinions of clients who received loans on the extent to which MFIs have been able to positively changed their livelihood, confidence in life and asset holding capacity or vice versa. The results from the analysis reveal that almost 97% of clients confirmed little or much better livelihood. A chi square test proved that this was not by chance and the improvements in livelihood emanated from the credit facility. The main factor that entices clients to solicit credit facility is closeness and familiarity of the service. This factor was found to have a Relative Importance Index (RII) of 0.819, (approximately 82%) of the ranked factors that cause clients of MFIs to go for loans and the effects were that over 90% of clients had gained selfconfidence and have also acquired personal assets as a result of the patronage of MFI loan services. The results from the analysis also reveal that 88% of clients were females whose level of education did not exceed Middle School leaving certificate or Junior High School.

2010

The thesis investigates, from a contextual and user perspective, the implementation processes of microfinance interventions and the effect of the implementation processes on households and businesses. The thesis' central argument is that microfinance discourse has neglected the perspective of microfinance users and this can negatively affect microfinance interventions as development tools. The study examines two microfinance interventions, Nsoatreman Women Empowerment Programme and Sinapi Aba Trust, in Nsoatre, a rural community in Ghana. Data for the study is from secondary sources, 26 interviews and 100 questionnaires. The study was guided by the philosophical ideas underlying the Sustainable Livelihood Approach and the Interpretive Approach. Using qualitative, cross-tabulations and ordinal logistic regression, the analysis found that the microfinance institutions studied essentially employ top-down approaches and that the perception of microfinance as non-paternalistic is not supported by this study. The mode of group formation has significant ramifications on subsequent group activities and peer monitoring played a limited role in mitigating moral hazard. Service users exhibited noticeable lack of knowledge on intervention activities. Microfinance interventions contribute to household consumption more than it does to household asset accumulation. Poorer service users reported more household and business benefits. The findings suggest a reappraisal of the design of microfinance interventions, especially in rural areas. Dedication This work is dedicated to my dearest, Theresa and to the memory of my father, Major J.K. Yeboah (Rtd) ACKNOWLEDGEMENT My gratitude first of all goes to the Almighty God for his protection and guidance throughout my academic endeavour in Birmingham. My very special gratitude goes to the forbearing and indefatigable Dr. Hubbard, my supervisor, whose unwavering confidence in me and his excellent supervision has made the completion of this thesis possible. His concern for my academic as well personal wellbeing is what has sustained me through this arduous exercise. My appreciation goes to my co-supervisor Dr. Leurs for his insightful comments and guidance. I also wish to thank staff of the department for their contribution to the thesis during the department seminars. I am very much grateful to the International Development Department for the financial support I received for this programme. I wish to thank the management, staff and service users of Sinapi Aba Trust and Nsoatreman Rural Bank for their assistance and cooperation during the fieldwork period. My appreciation goes to Mr. Sarpong of the Apex Rural Bank and staff of GHAMFIN for their support during the data collection stage of the thesis. I wish to acknowledge the contribution of these special people to my academic career: Mr.

Poverty as one of the major development problems that Nigeria is faced with, is seen mostly as an unpleasant situation where poor people earn so small income, with consumption not adequate to be classified as a satisfactory living standard; addressing this situation is hence imperative for the country to progress. Microfinance is a vital development approach used in alleviating poverty as well as empowering the poor. Using Iwo Town as a case study, the research investigated the contribution of microfinance to the socioeconomics of the rural people where financial exclusion is high. The study was based on the Grameen Bank concept of collateral-free micro-credit advanced to poor entrepreneurs in a bid to enhance their productivity for income generation towards reducing their level of poverty. The research employed the twin methods of qualitative (interview) and quantitative (questionnaire) means of data collection. The questionnaire was administered over 60 clients of the microfinance...

2011

I hereby declare that this submission is my own work towards the Commonwealth Executive Masters in Business Administration and that, to the best of my knowledge, it contains no material previously published by another person nor material which has been accepted for the award of any other degree of the University, except where due acknowledgement has been made in the text.

Archives of Business Administration and Management, 2018

Access to adequate and affordable credit for businesses remains one of the key challenges to local economic development in Ghana despite efforts by both government and private sector organizations to address the problem. Issues of availability of financial institutions, proximity to clients, effectiveness of service provision, adequacy of loans granted, and timeliness and cost of services provided are among factors that have been deemed critical in addressing this perennial problem. A multitude of methodologies are being used to provide financial services such as savings, credit, and insurance to relatively poor clients, yet they follow the same philosophy of group lending, forced savings, small loan amounts and short repayment periods. To give practical meaning to poverty reduction agenda, the government of Ghana launched the Microfinance and Small Loans Centre (MASLOC) in 2006. Earlier studies acknowledge the difficulties that still exist regarding access to finance, domestic resource and the support necessary for Small and Medium Enterprises (SMEs) to grow and contribute to the economy. This research is therefore aimed at investigating how MASLOC is performing its mandate of expanding micro-credit to the economically active poor in the Tamale Metropolis. A case study approach was used as the research strategy by the researcher. The researcher employed the representative single case study, primarily designed to elicit information from a cross-section of local stakeholders (especially beneficiaries and management) of MASLOC in the Tamale Metropolis. The case study approach was employed due to the fact that it provided a basis for an empirical enquiry that allows the researcher to investigate and understand the role of MASLOC in the economic life of its credit beneficiaries. It created the avenue to use multiple sources of evidence, thus improving the quality of data for the study as it allows triangulation. It was found that there are some misgivings about MASLOC scheme. These were deduced from both clients and officials of MASLOC. In many respect, the establishment of MASLOC have made some strides in the area of accessibility to micro credit and fighting the indicators of poverty. It is however, worth noting that much of the efforts have seemingly resulted into uncoordinated stakeholder action and decision making due to small amount of credit lack of skills and capacity to utilize loans and political interference. It was therefore noted that without a clear and concrete effort at diversifying the loan portfolio, encouraging micro saving among clients, monitoring the performance of beneficiaries and depoliticizing the scheme, using MASLOC to enhance accessibility of individuals, groups and households will remain a vision on paper.

Journal of Sustainable …, 2012

This paper examines the concept of micro credit as a tool for alleviating poverty in Nigeria. Micro credit is about providing specialized credit savings and other financial services of small amount to micro entrepreneurs to enable them expand their business opportunities, increase their income and their living standards. This study utilizes primary data that were obtained through the use of structured questionnaires. The questions were structured in such a way as to gather pertinent and specific information on how micro credit has enhanced the quality of life of rural dwellers of the Ijebu North Local Government Area of Ogun state, Nigeria. This paper employs both descriptive and quantitative techniques in which chi-square technique was used to test the significance difference among the frequencies. The findings indicate that micro credit to some extent enhances the general welfare of rural dwellers thereby reducing the level of poverty in the economy if they are properly financed and managed.

Macrothink Institute, Journal of social science studies, 2019

The objective of the paper is to investigate the complexities that are prevailing in the micro financial system which has recently witnessed foray of digitalization and conceivably suggesting an integrated financial product system biased to demand side as a way forward for policy consideration towards mitigating poverty and unemployment in Ghana. For the said purposes, the study is based on secondary data and published official documents. Further, the filed observations of the principle author who has worked as a branch manager in Ghana have been taken cognizance of the empirical facts while doing in both descriptive analysis and drawing conclusion as well. The major bottlenecks that hinder smooth function of microfinance, include insufficient donor funds to MFIs, lack of proper adherence of rules and regulations improper monitoring system, loan delinquency in the supply side, and continued dependence on traditional money lender regardless of rate of interest poor clients protection and capability differential among 51 the poor clients of MFI in the demand side. For challenging these hurdles, a slew of suggestions which are made for policy considerations include arranging adequate investable fund through institutional linkages, candid identification of target group based on their capabilities as poor, poorer, poorest, designing integrated pro poor financial products and services (credit plus)capability building of the poor through financial and digital literacy and skill up graduation, client protection to the poor till graduation above poverty line, moral suasion to the actors for eschewing higher interest of rate microfinance. The study confirms the presence of challenges and bottlenecks in the MFI management and the need for due diligence for achieving their mission in terms of reduction of poverty and unemployment.

2012

This paper examines the concept of micro credit as a tool for alleviating poverty in Nigeria. Micro credit is about providing specialized credit savings and other financial services of small amount to micro entrepreneurs to enable them expand their business opportunities, increase their income and their living standards. This study utilizes primary data that were obtained through the use of structured questionnaires. The questions were structured in such a way as to gather pertinent and specific information on how micro credit has enhanced the quality of life of rural dwellers of the Ijebu North Local Government Area of Ogun state, Nigeria. This paper employs both descriptive and quantitative techniques in which chi-square technique was used to test the significance difference among the frequencies. The findings indicate that micro credit to some extent enhances the general welfare of rural dwellers thereby reducing the level of poverty in the economy if they are properly financed a...