Financing Small – Scale Agro – Based Industries (SSAI) in the South Kwahu District

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The Gap between the level of socio-economic development and well - being of the rural and urban dwellers in Ghana continue to widen despite attempts by the government and other development institutions to narrow it. As a result, it has dawned on the rural dwellers to contribute effectively in the improvement of their own welfare by harnessing all the resources they have. An attempt to do this requires the diversification of the rural economy so as to improve on their income level. One way of doing this is the development of Small - Scale Agro-Based Industries (SAI) which can have integrative and multiplier effects on agriculture and. the rural economy as a whole. However, the development of SSAI in the rural areas is faced with serious financial constraints which impede their growth. The South Kwahu District is no exception to this problem. The study, therefore, sought out to analyse the characteristics of the financial constraints facing SSAI in the South Kwahu District. It was revealed that formal sources of finance such as the banking institution do not play any significant role in the financing of SSAI in the district as a result of their cumbersome lending procedures. Informal sources such as money lenders friends, relatives and ‘susu’ however, form the backbone for financing SSAI in the district, But the infernal sources also have such disadvantage as low capital base which cannot satisfy all the financial requirements of the industrialists. This also limits the sources of finance for SSAI. Policy guidelines for financing SSAI wore therefore, suggested within a long torn strategic framework and short terra action policies which centred, among others, on: improving access of industrialists, to sources of finance; improving marketing outlets and management skills and the formation of cooperation. It is hoped that these suggested policies could help in solving the financial constraints to the development of SAI in the South Kwahu District, and SSAI in other rural areas with similar financial constraints, so that the rural dwellers can improve on their socio - economic well-being.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Science in Development Planning and Management, 1988