Access to Microfinance and Performance of Small and Medium Scale Enterprises in Ghana: A Case of Selected SMEs in the Kumasi Metropolis”

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The underlying focus of the study was to investigate the impact of services provided by the microfinance institutions on the profitability of small- and medium-scale enterprises that access those services. Employing cross sectional data gathered through the administration of structured questionnaire, the Ordinary Least Squares estimation technique was adopted. On the basis of MFIs services enjoyed by the SMEs in the Kumasi Metropolis, a number of respondents indicated that they have the opportunity to save, invest, and access loan facilities from the MFIs. However, it was made known to the researcher that not much advisory support is received from the MFIs. The results from the OLS estimation revealed that percentage of loans granted outright to the SMEs, cash collateral security required by the MFIs, interest charged on loans and the period of time allowed for the repayment of loans secured are the loan terms that critically influence the profitability of SMEs in the metropolis. On the contrary, the length of time taken to access loans, the grace period permitted by the MFIs, and cost of labour do not have any power in determining the profitability of the SMEs at the various margins of error adopted by the study. The researcher therefore recommends regularly monitoring of loans advanced to Small and Medium Scale Enterprises. The researcher also recommends that Microfinance institutions can partner enterprise development agencies to increase the advisory support rendered to Small and Medium Scale Enterprises.
A thesis submitted to the Department of Economics, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the award of Master of Science (Economics),