THE IMPACT OF MICROFINANCING ON SME’s IN GHANA

THE IMPACT OF MICROFINANCING ON SME’s IN GHANA

      Ghana is a developing country located in African continent, this country continuously takes advantage of their resources and people in order to grow. With the help of micro-financing, cooperatives and other non profit and government as well as non-government organization they can easily achieve their goals.  

      Statistic shows that about only 43% of Ghana’s population is in formal labor force. Micro-financing, where its main concern is to empower the members and lift up the people in extreme poverty especially for women who are left at home. They can be of big help to support the needs of their family.  

      The process of micro-finance goes through women group themselves together as a co -workers to form a business usually related to agriculture, fisheries, crafts etc. They collaborate with the micro-financing organization to give them finance to widen up their small business. They are given funds without collateral and usually low in interest in order for them to pay in time and in installment basis.  The micro-financing organization may also offer special seminars and conferences for the members to cope up with the growth of their businesses.

      However there are few simple requirements they have to meet in order to be a member. You should be of legal age, physically fit to work, you should have a small business and members should be of good morale- character to the community.  Upon approval of loans all co-workers are obliged to pay an equal amount of mortgage respectively, and if one member did not pay on time the other co-workers must shoulder the payment of the other members who have not pay the amount.  Usually such instance is aggravating to other members and may cause indication of hatred and fighting among members. All members must participate to pay the mortgage in time or if the non- payment continues the whole group would be in trouble.

       All members should take advantage of the finance use it in their business to make it work in their lives, to make their business grow.  After a cycle of payment of the group they can take another credit for a bigger amount. Or if they consequently unable to pay on time they may never be an opportunity for them to borrow money. The secret goes through utilizing the borrowed money, pay on time and borrow again for a bigger amount.

      If ever a certain member goes through a very successful business they can leave the group to borrow on her own as an individual borrowers. They will be entitled to a bigger amount which they have to pay on their own without the help of the group. These are basically the process of micro-financing to help alleviate poverty in the life of the people in Ghana thus micro-financing has been a big help in creating a productive lives in their society. They have built a bridge of respect among nations for their ideals.

      This process created a long term and continuous impact in the lives of many. Potential business expansion have been taking place while people in remote areas can be considered a member if they meet the necessary requirement. A total cooperation of rural and urban communities has been achieved to create a well round program and a possibility for growth has been enormous. Many lives have been change in the process throughout the years. This has always been the mission of micro-financing organization to fulfill the dreams among nations.

      Because of the continues success of Micro-financing to help small and medium enterprise in Ghana World Bank sponsored a research and development institute for the development of best practices of micro-finance services.  (GHAMFIN) Ghana’s Micro-finance Institute Network continues to seek and identify for wider application and innovation techniques of financial services delivery that had been successful in improving access of micro entrepreneurs to financial services.  

Here are other list of microfinance institutions, networks and NGOs active in Ghana:

ActionAid /  31st December Women’s Movement/   Citi Savings and Loans/ Catholic Relief Services/ Freedom From Hunger/    Sasakawa Global 2000/  Women’s Revolving Loan Fund (CUSO)/  World Vision/  Women’s World Banking and many others.

      This organization regularly collaborate with government and donor organization in Ghana since their funding consist mainly of grants, fees of services, The World Bank, GTZ, USAID, IFAD  and Care International. As of year 2000 they cater to at least more than 100,000 clients nationwide and continuously increasing.

     

 

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