Assessing the impact of microfinance on poverty reduction in the Kumasi Metropolis

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In Ghana, Microfinance Institutions (MFIs) are recognized as important development instruments in the fight against poverty. This recognition has paved way for establishment of microfinance institutions. This current study assesses the impact of Microfinance Institution on poverty reduction in the Kumasi Metropolis. The study adopted a descriptive research design and purposively sampled 338 loan beneficiaries from Multi Credit Savings and Loan Limited, First Allied Savings and Loans Limited, Opportunity International Savings and Loans limited and Sinapi Aba Trust Savings and Loans Limited in the Kumasi Metropolis. The study showed economically active poor had more access to finance as a result of the introduction of microfinance schemes. However, microfinance had not entirely removed all barriers to access finance. Microfinance institutions had improved incomes of the economically active poor, consumption of durable items (such as fridge, TV/ video player and stove/ cookers), health care and education among economically active poor household. The major challenges facing microfinance institutions were high rate loan repayment default and poor data of the clients. It was recommended that loan application form and other documentation as requirement for loan should be simplified. It was recommended that microfinance institutions in the Kumasi Metropolis should be encouraged and assisted to extend more loan to economically active poor. The stakeholders in microfinance industry should assist the industry to develop improved and adequate data on client for easy identification of clients.
A thesis submitted to The Board of Graduate Studies, Kwame Nkrumah University of Science and Technology, School of Business, in partial fulfillment of the requirements for the award of a Master of Business Administration (Mba Marketing),