The Management of Micro Credit and Poverty Reduction in Ghana: a Case of Birim Central Municipality

Abstract

Most development policies and programmes, including microfinance, have prioritised poverty reduction. As a result, it is critical in development practice to aim such policies and programs at the poor. The causes for these microfinance enterprises’ failure have sparked the researcher’s curiosity, pushing him to do advanced research into credit management in microfinance institutions in the Birim Central Municipality of Ghana’s Eastern Region. As a result, the study looked into the effect of credit management and poverty reduction in Ghana’s Eastern Region’s Birim Central Municipality. The effect of credit management, practices, causes and challenges were also explored. The study revealed that holding microcredit management in terms of client appraisal, credit risk control, and collection policy to a constant zero, poverty reduction would be 4.798, and a unit increase in microcredit management would lead to an increase in poverty reduction by a factor of 0.494. The study’s results showed a positive effect of microcredit management of the MFIs on the poverty reduction of beneficiaries of the institution. The study further revealed that issues of the board and staff influencing approval, disbursements, and recovery, customer business failure due to mismanagement, lack of appropriate security on the part of loan applicants, the problem of liquidity on the part of customers, inadequate information about the customers’ business, delay in the approval of loans and high overdue rate used by the bank were the common and major challenges faced by these MFIs. The study suggests that more research be done into all of the variables related to microfinance credit management and their effects on beneficiaries’ poverty reduction and the institution’s success.