MAKING MICROFINANCE WORK FOR THE POOR: EXPERIENCES OF WOMEN SLUM DWELLERS IN GHANA
Keywords:
Microcredit, Group Loan, Repayment Plan, Joint LiabilityAbstract
MAKING MICROFINANCE WORK FOR THE POOR: EXPERIENCES OF WOMEN SLUM DWELLERS IN GHANA
Monica Ofosu-Koranteng and Evans Frimpong-Manso
MAKING MICROFINANCE WORK FOR THE POOR: EXPERIENCES OF WOMEN SLUM DWELLERS IN GHANA
1* Monica Ofosu-Koranteng
Assistant Research: University of Cape Coast, Ghana
*Corresponding Author's E-mail: mofosu-koranteng@ucc.edu.gh
2Evans Frimpong-Manso
Assistant Lecturer: University of Cape Coast, Ghana
Abstract
Purpose: Microcredit has become a major tool for poverty alleviation. It may come in the form of either an individual loan granted to individual businesses or as a group loan granted to beneficiaries as a group. This research focuses on the factors that make group loans effective in its application and most importantly to enable the repayment of both loan and interest within the agreed timeframe for repayment
Methodology: The research employed a descriptive survey design. The entire population was more than 10,000 and therefore can be regarded as infinite population. In order to locate the beneficiaries a list was obtained from microfinance organizations operating in the slum communities under study. There are 200 groups, 120 from New Takoradi and 80 from Kojokrom. Systematic sampling was conducted where every 24th group was selected from the 120 groups in New Takoradi and every 16th group from Kojokrom. This yielded 5 groups from New Takoradi and 5 groups from Kojokrom. the researcher presented verbatim quotes in order to ensure that the the main thrust of the respondents comments and the issues raised were not missed out. The interpretations of the respondents comments and views were guided by the theoretical positions of the research in order to limit researcher bias.
Findings: the study found that the incorporation of mandatory financial literacy training programs as part of the loan application and granting process contributed to the effective application of loans by beneficiaries increased their productivity and thus enabled the timely repayment of loan and interest. The study also found that the principle of joint liability group lending and the timing of loan disbursement are also factors that can account for why group loans are effective.
Unique contribution to theory, practice and policy: The study recommends that to sustain poverty reduction requires action and policies that will improve both the productive and the human capital of the poor. Policy interventions must be well targeted if the benefits are to reach the poor. To achieve this, group-based lending which minimizes problem of repayment must be adopted by both formal and informal lending institutions.
MAKING MICROFINANCE WORK FOR THE POOR: EXPERIENCES OF WOMEN SLUM DWELLERS IN GHANA
Monica Ofosu-Koranteng and Evans Frimpong-Manso
MAKING MICROFINANCE WORK FOR THE POOR: EXPERIENCES OF WOMEN SLUM DWELLERS IN GHANA
1* Monica Ofosu-Koranteng
Assistant Research: University of Cape Coast, Ghana
*Corresponding Author's E-mail: mofosu-koranteng@ucc.edu.gh
2Evans Frimpong-Manso
Assistant Lecturer: University of Cape Coast, Ghana
Abstract
Purpose: Microcredit has become a major tool for poverty alleviation. It may come in the form of either an individual loan granted to individual businesses or as a group loan granted to beneficiaries as a group. This research focuses on the factors that make group loans effective in its application and most importantly to enable the repayment of both loan and interest within the agreed timeframe for repayment
Methodology: The research employed a descriptive survey design. The entire population was more than 10,000 and therefore can be regarded as infinite population. In order to locate the beneficiaries a list was obtained from microfinance organizations operating in the slum communities under study. There are 200 groups, 120 from New Takoradi and 80 from Kojokrom. Systematic sampling was conducted where every 24th group was selected from the 120 groups in New Takoradi and every 16th group from Kojokrom. This yielded 5 groups from New Takoradi and 5 groups from Kojokrom. the researcher presented verbatim quotes in order to ensure that the the main thrust of the respondents comments and the issues raised were not missed out. The interpretations of the respondents comments and views were guided by the theoretical positions of the research in order to limit researcher bias.
Findings: the study found that the incorporation of mandatory financial literacy training programs as part of the loan application and granting process contributed to the effective application of loans by beneficiaries increased their productivity and thus enabled the timely repayment of loan and interest. The study also found that the principle of joint liability group lending and the timing of loan disbursement are also factors that can account for why group loans are effective.
Unique contribution to theory, practice and policy: The study recommends that to sustain poverty reduction requires action and policies that will improve both the productive and the human capital of the poor. Policy interventions must be well targeted if the benefits are to reach the poor. To achieve this, group-based lending which minimizes problem of repayment must be adopted by both formal and informal lending institutions.
Downloads
References
Asiama, J., & Osei, V. (2007). Microfinance in Ghana: An Overview. Economic Web Institute, Research Department. Working Paper - Bank of Ghana, Ghana.
Barua, B., & Sane, R. (2014). Repayment in microfinance: The role of Financial Literacy and Caste. Indian Statistical Institute, Delhi Economics and Planning Unit. Delhi: Discussion Paper in Economics.
Biswas, S. (2010, December 16). India's Micro-finance suicide epidemic. BBC News report: (online). Available at: http://www.bbc.com/news/world-south-asia-11997571 access date: 26th September, 2017.
Boudreaux, K., & Cowen, T. (2008). The Micromagic of Microcredit. The Wilson Quarterly, 32(03), 27-31.
Boudreaux, K., & Cowen, T. (2009). The Micro Magic of Micro Credit. The Wilson Quarterly: Available at: http://www.jstor.org/stable/pdfplus/40262341.pdf.
Chowdhury, D. S. (2005). ''The Dominant Perspective, Institutional Ownership and Corporate Efficiency: An Empirical Investigation''. International Journal of Commerce and Management, 15(3/4), 255-271. DOI:10.1108/10569210580000201
Eijkel, V. R., Hermes, N., & Lensink, R. (2009). Group Lending and the Role of the Group Leaders. Small Business Economics, 36, 299-321.
Ledgerwood, J. (1999). Microfinance Handbook. Sustainable Banking with the Poor. An Institutional and Financial Perspective. The World Bank.
Lepenu, C., & Zeller, M. (2001). Distributing growth and performance of microfinance institutions in Africa, Asia and South America. FCND Discussion paper 114, Washington DC International Food Policy Research Institute (IFPRI).
Maurer, K., (2014) Where Is the Risk? Is Agricultural Banking Really More Difficult than Other Sectors?. In D. Koln (Ed) Finance for food. Towards a new agricultural and rural finance (pp 139 166). Springer Heidelberg New York Dordrecht London
Montgomery, H., & Weiss, J. (2006). Modalities of Microfinance delivery in Asia and Latin America. China & World Economy, 14(1), 30-43.
Morduch, J., & Haley, B. (2001). Analysis of the Effects of Microfinance on Poverty Reduction. Journal of Economic Literature, 98-115.
Otero, M. (1999). Bringing Development Back into Microfinance. Journal of Micro finance, 1(1), 8-19.
Paxton, J., Graham, D., & Cameron, T. (2000). Group Loan Repayment Behavior: New Insights from Burkina Faso. Economic Development and Cultural Change, 48, 639-655.
The Hunger Project. (2011). The Importance of Microfinance in Africa.(online). Available at: http://www.thp.org/the-importance-of-microfinance-in-africa/ access date:
Wall, S. (2012). Role of Microfinance in the Economic Development (online) Available at: http://www.wallstreetmicrofinance.org/microfinance-guide/role-of-micro-finance-in- the-economic-development.html aaccessed date:
.Wright, M., Westhead, P., & Ucbasaran, D. (2007). Internationalization of Small and Medium - sized Enterprises (SMEs) and International Entrepreneurship: A Critique and Policy Implications. Regional Studies, 41(1),
1013-1030.
Yelehi, G. (2013). Micro-Finance and its role in women empowerment: (online) Available at:
http://www.slideshare.net/facegopi/gopal-ym-second-seminar access date:
Downloads
Published
How to Cite
Issue
Section
License
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
