The Socio-Economic Impact of Kudi Nkosuo Credit of Ghana Commercial Bank Limited on Selected Communities in the Volta Region

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The informal sector of the business environment comprises the non-salaried private men and women who set them-selves up in small businesses. According to a report on Global Aging issued in 2008, members in the informal sector formed about 80% of the working population in Ghana. The informal sector contributes several ways towards economic growth. However, they are not considered for main stream credit by formal banks for lack of steady business, lack of Collateral and historical Financial Data for reference. They, therefore, depend heavily on Micro credit (the extension of small loans to those in the informal sector to spur entrepreneur) by informal financial institutions. Realizing the immense contributions of Microcredit to the informal sector, the United Nations (A/52/573) declared year 2005 as the year of micro credit as a way of encouraging all formal financial institutions to give the informal sector as much attention as they give to the formal sector and bring them into the main stream credit. For this and other implied reasons of increasing customer base and income generation, Ghana Commercial Bank Limited introduced Kudi Nkosuo loans in 2002. The problem here is whether the Kudi Nkosuo loans is a way of bringing the informal sector into the main stream finance industry and whether it is meeting, at competitive cost, the credit needs of those in the informal sector. Literature was reviewed and primary data were also collected using Interviews and Questionnaires. Quota Sampling Method was used to get equal representatives from each of the five selected communities to complete the questionnaires which were analyzed. In conclusion, it can be said that the Socio-Economic impact of the product in the selected communities is very low. To achieve greater impact more promotion is required.
A Thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Commonwealth Executive Masters in Business Administration, May, 2011